By Ann Saphir
(Reuters) – A slower-than-expected vaccine rollout and the rise of coronavirus variants may make attaining herd immunity against the novel coronavirus difficult, but that should not stop the economy from rebounding, a U.S. central banker said Thursday.
“I don’t think the economy requires herd immunity,” Richmond Federal Reserve Bank President Thomas Barkin told Reuters. “Consumers who get vaccines who have money in their pockets…are going to be free to spend,” he said.
Barkin’s expectation is in line with that of many analysts who believe that economic activity will pick up as more people are vaccinated. It also reflects a growing understanding that an economic rebound and an ongoing pandemic are not mutually exclusive realities.
Barkin said he was surprised to hear recently from hospital administrators that only about 70% of their staff have been immunized. Meanwhile, top U.S. infectious disease doctor Anthony Fauci has said the United States may need 85% of the population vaccinated to get to true herd immunity.
“It does make you temper somewhat your enthusiasm for the big, pent up demand, hit the ground at full speed story,” Barkin said.
For businesses, he said, spending on big-ticket items like travel and conferences may take until the summer or longer to return because employers may “need some assurance that they are not putting their people at risk.”
Cases and hospitalizations may drive business spending decisions more than any notion of herd immunity, Barkin said.
But for consumers, whose spending accounts for about 70% of the U.S. economy, a vaccine may represent a license to spend on services that last year were heavily curtailed, like travel. And spending on goods, Barkin said, should also continue to be strong.
Overall for consumer spending, Barkin said, “I’m actually quite hopeful that we see strong demand in the spring and summer.”
(Reporting Ann Saphir; Editing Aurora Ellis)
