The covid pandemic was front and center today in economic news, when its impact was felt throughout the January payrolls report (if not to the same extent as December payrolls), whose disappointing +49k reading could be easily explained by continued job losses in the Leisure & Hospitality sector due to COVID-19 outbreaks and associated lockdown measures and restrictions.
However, as BofA's Hans Mikkelsen writes, "given that the US COVID-19 situation is improving rapidly – for example the number of people hospitalized is down one-third over the past month – and restrictions are lifted in many large states like California, it is straightforward to expect much stronger payrolls going forward."
Indeed, the latest Covid data shows that absent any major shocks - such as a mutant strain that is fully immune to any existing vaccines - the pandemic should be a thing of the past relatively soon.
Here are the latest facts: the number of people hospitalized with COVID-19 in the US has declined dramatically to 88,668, or 43,806 – one-third - off the peak which occurred on January 5th (Figure 4) - a rapid turn in the crisis (Figure 5). The decrease is broad-based (48 states+DC, except for AK, MT and VT that saw minimal 1, 1 and 7 person increases over the past week, respectively).
The weekly percentage change in US COVID-19 hospitalized is consistent with the largest declines seen during the Coronavirus crisis (Figure 6). Moreover the 7-day test positivity rate has declined to 7.6% from the 13.6% peak on January 8th (Figure 7).
Since hospitalizations are lagged relative to time of infection the US Corona outbreaks peaked back in the second half of December. Finally, the vaccine rollout continues in the US at a rapid pace of around 1mn doses per day and a cumulative 35.2mn doses administered through February 2rd (Figure 8, Figure 9).
Finally, and in the clearest indication that we are almost out of the woods, even "scientific models" expect Covid to be a non-event by June. BofA notes that "a fresh update to the University of Washington IHME’s COVID-19 model shows they had underestimated the current rapid pace of improvement in the US coronavirus situation", but are now forecasting another wave of increasing daily new infections starting in the second half of this month (Figure 2) – probably due to the new more infectious strains of the virus. However, and as we previewed first back in December, "due to ongoing vaccinations of the most vulnerable, the negative consequences in the form of hospitalizations this time around are expected to be diminished significantly."
In fact IHME expects the number of people hospitalized in the US with COVID-19 to continue to decline every single day through June 1st, which is the end of their forecast horizon (Figure 3).
This continued improvement – and acceleration of economic growth due to little need for lockdowns and restrictions – suggests that the US economy - and broader society as well - should be able to move beyond covid some time in the early summer.