The New Covid-19 Variant and What It Means for Economic Recovery
The New Covid-19 Variant
As 2020 came to a close, the circulation of coronavirus vaccines made consumers and investors alike optimistic about economic recovery. However, mutations of the virus have threatened to stall this progress. December 26th, 2020 marked the introduction of Tier 4 restrictions in London and other parts of the U.K. which were experiencing high rates of the new Covid-19 mutation. This new lockdown will “result in the closure of gyms, cinemas, hairdressers and most shops” (Suliman 2020), similar to the lockdown measures last March.
The majority of the U.K.’s recent Covid-19 cases have come from a new variant with 23 mutations. “One of the mutations has been conjectured to make it easier for the virus to bind to human cells. Another mutation may help the virus sometimes sneak past the human immune response” (Larsen 2020). The mutations have made the strain more easily transmissible (56% — 70%), and thus able to cause more infections than the original Covid-19 virus.
The new mutation has been found in parts of Europe such as France, Sweden, and Ireland, as well as Japan. Although many countries have restricted air travel and other migration from the U.K., it is likely that this new variant will spread to all parts of the globe. In the U.S., the new strain was first identified on December 29th, and several more cases have been reported since then.
What does this mean for economic recovery in 2021?
According to Chief Economist Robert Dye for Comercia Inc., the federal stimulus package and vaccine distribution has “brightened the longer-term outlook for most economists and financial analysts” (Sanchez 2020), and makes it unlikely that the U.S. economy will sink into a deeper recession. Stock market analysts have expressed a similar optimistic outlook; as the “third wave” of Covid-19 appears to peak in the United States, stocks that have been hit hardest by the virus will rally.
A resurgence in Covid-19 cases could easily reverse this economic recovery. As businesses, hospitals, and consumers have adapted to the virus, cities have replaced lockdowns with limited restrictions. According to one data columnist, if the new U.K. variant began to spread throughout the U.S., “we’d see cases begin to double in a couple of weeks. Without changes, they’d keep exponentially growing, and our hospitals would get overrun” (Larsen 2020). In this situation, states and cities would no doubt reinstate the lockdowns seen in early 2020. Even among economies that have been showing some growth, renewed lockdowns will push back economic recovery, and possible lead to a “double-dip recession”.
What is the U.S. Government Doing Now?
In an effort to prevent this new variant from spreading to the United States, the CDC has required a negative Covid-19 test from U.K. travelers coming to the U.S. Although government officials are hopeful that this will slow the rate of infections, California, Colorado, Florida, Georgia, and New York have already found the spread of this new variant. According to one infectious disease expert, “It’s very likely that it’s [the variant] in every state” (Woodward 2021). The only true solution is to increase the rate of vaccinations in the United States and throughout the world. Although there has been limited data, scientists are confident that the current Covid-19 vaccines will be effective on the U.K. strain. In the face of an increasingly contagious virus, the pressure is on the Trump and Biden administrations to increase dosages, outracing current and future strains of the Covid-19 virus.
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