Vaccines & the Economy: COVID-19

Malin Phelan
Nov 18, 2021
3 min read

Author: Sara Chiang '23

Vaccination rate for COVID-19 in the US currently lies at around 60 percent, and the economy seems to be making some degree of improvement. These rates vary drastically from country to country and state to state, exemplifying negative or positive effects that vaccines have on our markets. Masafumi Muro from Bloomberg Businessweek found that counties with higher vaccination rates produced a higher GDP than unvaccinated countries, indicating that “low vaccination rates are likely to slow economic recovery.” Generally, the vaccination of more people means less sickness and risks, so the government is able to reduce restrictions on businesses, and people start to trust the economy again. Trust and certainty in the economy is key to stability because it leads to investors putting money back into the economy, resulting in an improvement in markets. In the United States, President Joe Biden has implemented vaccine mandates for workers in all large companies with a hundred or more employees, following in the footsteps of numerous business leaders and CEOs who have already instituted immunization requirements. Justin Wolfers, professor of public policy and economics at the University of Michigan, Ann Arbor said, “The mandate is actually good for business.” Immunization shots protect the overall health of our communities from the spread of COVID-19, permitting businesses to stay open and workers to continue doing their jobs. Under the mandate, vaccination levels have increased significantly which improves the health and safety for workers in the labor force. High vaccination percentages are important to protect the economy during the winter period, particularly from the harmful effects of the Delta variant.

This new variant has increased anxiety and the concerns of people being around others, causing an even slower recovery. Travel administrations and restaurant reservations report that “People are canceling plans to avoid exposure to the virus.” Delta has led to a reversal in the improvements and positive trend in the economy as people become more uncertain of when businesses will truly recover. Countries with low vaccination rates and limited access to shots have had more difficulty in rebounding their economies as a majority of their unvaccinated populations remain vulnerable to catching the virus.

As 2021 comes to an end, there are a few indicators of the state of the economy. Although still above pre-pandemic levels, unemployment rates have decreased since the height of the pandemic, and 194,000 jobs were added to the economy inSeptember 2021. In the second-quarter of 2020, the GDP rate reached around -30%, the lowest in US history but has promisingly gone up to 2% in the third quarter of 2021. Interest rates remain low to encourage businesses and consumers to lend in order to boost the economy, indicating that people are still hesitant of growth in the markets. The decreased demand in borrowing money shows that the economy still isn’t quite back to healthy levels yet. On the other hand, the stock market has actually reflected an optimistic recovery and did quite well since the start of the pandemic. The S&P 500 is almost up 50% since the beginning of the pandemic from its lowest price. Other index funds that are representative of the U.S. stock market reach record highs.

Many outcomes of the pandemic remain uncertain, but governments have done their best to create plans to protect people and the economy. Vaccines are a hopeful attempt at alleviating the recession and helping the markets reach pre-pandemic levels. High vaccination rates are crucial to the opening of international economies and full recoveries in health care, travel, and many other sectors.The economy still hasn’t rebounded to its pre-pandemic levels, but economic recovery might just be in the foreseeable future if people continue to receive their COVID-19 vaccines.