A timetable for overcoming COVID-19

As a result, our analysis suggests, the United States can approach herd immunity in the second half of the year, consistent with our view in the Vanguard Economic and Market Outlook for 2021. As our forecast further notes, the timing of when herd immunity is achieved relates directly to our outlook for the global economy. The path of economic recovery hinges critically on health outcomes; we expect to see business and social activity normalize as we approach herd immunity.

The more quickly this occurs, the more quickly we’re likely to see unemployment rates trend downward, inflation move toward central bank targets, and output reach pre-pandemic levels.

Our analysis makes several assumptions, and we acknowledge that COVID-19 continues to present many unknowns. Our analysis assumes herd immunity thresholds—the percentage of a population that needs to be immune for herd immunity to kick in—of 66% and 80%. The 66% is a widely discussed COVID-19 threshold. If new strains in the United Kingdom, South Africa, and elsewhere prove more infectious, a more conservative threshold such as 80% may be more appropriate.

Finally, our analysis assumes that the vaccines now in use will prove effective against COVID-19 mutations. We know that the virus has mutated several times since its inception, yet vaccines based on its initial genetic sequencing have still proved remarkably effective.

The pandemic has upended the lives of nearly everyone. Despite some challenges still ahead, it’s gratifying to see increasingly clearly that a positive end is in sight.

I’d like to thank Vanguard economist Max Wieland for his invaluable contributions to this commentary.

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