Share this:

Like this:

Covid-19, endemic or not, will still make us poorer

The prospect of Covid-19 going from pandemic to endemic has brought the bulls forward on Wall Street. "Meaningful upside to our medium-term economic outlook," writes Bank of America Corp. "A positive for risk assets," says JPMorgan Chase & Co. Inc.

By "endemic" they mean that Omicron will leave almost everyone very immune through vaccination, previous infection or both. So, they reason, Covid-19 will be a more predictable, less deadly presence, just like the flu, and the world will return to normal.

Such optimism requires a reality check. This new normal will not be the same as the old normal: Endemic Covid-19 will still take a toll on health, work, and mobility; the question is just how big.

Predictions about the end of the pandemic have a disappointing record. The hope that vaccines would bring flock immunity, that more transmissible variants would always be less lethal, or that the Delta wave would be the last, was misplaced. So beware of predictions that Covid-19 is becoming endemic.

And if it does, "endemic does not mean really low," notes Caroline Colijn, a mathematician specializing in infectious diseases at Simon Fraser University in British Columbia. "It just means the system has reached some sort of steady state. Endemic can mean high levels of infections."

A team led by Prof. Colijn modeled endemic Covid-19 under the assumption of a highly transmissible variant that could escape vaccines, as Omicron has been shown to be, and declining immunity. They concluded that British Columbia infections could still be relatively high, comparable to 2021 levels. Even if this new variant was 80% less severe than Delta, they estimated that in its endemic state, it could result in enough hospitalizations to regularly burden the province's health system.

Comparisons with influenza are also incomplete. Assume that the U.S. death rate from Covid-19 fell to Vermont last year, the country's lowest, largely due to the state's high vaccination rate. It would still be three times the death rate from influenza and pneumonia in 2019. And Covid-19 would circulate at the same time as influenza, amplifying the tax.

The last few weeks have shown that even without lockdowns, Covid-19 can still create economic chaos through the widespread absence of infected people. A key question, therefore, is whether once Covid-19 is endemic, disruptive interventions such as isolation will continue.

It will depend on the balance between the disease and the financial burden of isolation, said Peter Chin-Hong, professor of medicine at the University of California, San Francisco. "We could isolate from the flu, but do not do it because the consequences are greater," he said. "It depends not only on what science says, but what your values ​​are." With established treatments for Covid-19, early infection and transmission need not pose as many risks in the future, he said.

However, depending on Omicron's long-term effects or the severity of future variants, failure to isolate infected workers can still cause serious or chronic illness in some employees, Prof. Colijn noted. "These are really difficult questions and are going to depend on things we do not know yet."

Thus, endemic Covid-19 could become a lasting "supply shock" that degrades how much economies can produce, similar to the rise in oil prices in the 1970s. In October, the International Monetary Fund estimated that global output this year would still be 3% lower than it had expected in 2019, with Western Europe and Latin America showing much larger hits than China and Japan, with Covid-19's tolls being much lower.

The US is an exception: Output in the last quarter of 2021 was roughly back to its pre-pandemic trend. But the economy, which has been distorted and disturbed by Covid-19, is struggling to maintain this level of production, as the rise in inflation to 7% shows.

Covid-19 may have increased efficiency in some industries by speeding up digitization and the introduction of teleworking. Goldman Sachs economists estimate this gave a 3% to 4% boost to US productivity.

However, some of the switch to remote operations is involuntary, and some of the increase in productivity may reflect an overworked workforce. In fact, the pandemic has made the workforce smaller, sicker and less happy. Sickness absence among employed workers has been on average 50% higher over the past two years. In early December, more than five million people did not work because they were sick with Covid-19, cared for someone with coronavirus, or worried about getting or spreading the disease, according to a Census Bureau study.

In the past year, workers have reported declining satisfaction with their wages and a rising "reservation wage," that is, how much they would have to be paid to accept a new job, according to the Federal Reserve Bank of New York. This may reflect inflation, changed expectations or stress due to Covid-19 testing, masks and vaccine mandates or their absence.

SHARE YOUR THOUGHTS

How will Covid-19 affect your life if it becomes more predictable and less dangerous? Join the conversation below.

For employers, it makes it much harder to attract the necessary staff. Nursing homes have increased hourly wages by 14% since the start of the pandemic, but staffing has plummeted by 12%, impairing their ability to receive new patients. Such deficiencies entail a cost that is not reflected in the gross domestic product.

To be sure, almost all of these things will get less nasty as the Omicron wave subsides. The United States has returned from wars, disasters, and diseases in the past. It returns from Covid-19, and once the virus becomes endemic, its burdens will no longer be at the top of the mind.

That does not mean they will be gone.

In the midst of an increase in cases, some countries are handing out other booster shots. In Israel, early data suggest that a fourth dose of vaccine may increase antibodies to Covid-19, but not enough to prevent Omicron infections. WSJ explains. Photo composed: Eve Hartley / WSJ

Write to Greg Ip at greg.ip@wsj.com

Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

.

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this:

Like this:

%d bloggers like this: