Falling cases of the coronavirus imply that the U.S. economy could improve over the next month or two as lockdowns ease and Americans resume their normal lives. There is, however, an unexpected short-term risk: that a vaccine will be ready by November.
To be absolutely clear, over the medium and long term a vaccine will be a godsend for economic growth. Even if it weren’t, a lower death rate is well worth a few more quarters of higher unemployment. Nonetheless, there is a possibility that the introduction of a vaccine could actually lead to a sharp if temporary deceleration in job growth.
Here’s why: As it now stands, there is no end to the pandemic in sight. While the numbers are currently improving in many parts of the U.S., there could easily be a surge of infections in the winter. After that, it’s anyone’s guess. Even the more optimistic estimates suggest that U.S. would have to endure several more waves before the entire country reached herd immunity.