‘Failed state’ America just ran a great election and produced an impressive vaccine advance

While some pre-election analysis dismissed the political impact of a vaccine-related October Surprise, today’s encouraging news from Pfizer and partner BioNTech sure feels like a big, important moment that would have been a real psychological stunner a week ago. Given how many people had already voted, who knows the exact effect of a November Surprise? But things seem pretty euphoric right now, at least in the stock market and on social media. More important, obviously, will be the health impacts, assuming all continues to go well. From The Wall Street Journal: “Pfizer said it is on track to ask health regulators for permission to sell the shot before the end of this month, if pending data indicate the vaccine is safe. The timetable suggests the vaccine could go into distribution this month or next, though U.S. health regulators have indicated they will take some time to conduct their review.”

Then there’s the economic impact of a successful vaccine. To a great extent, a v-shaped recovery might really be a v(accine)-shaped recovery. As Goldman Sachs explained over the weekend:

We are above consensus in most major economies in 2021, and everywhere in 2022. At the most basic level, we view the coronavirus recession as much more V-shaped than previous postwar cycles, which were mostly driven by financial shocks to asset markets and income. … Assuming the FDA approves at least one vaccine by January and mass immunization of the general population starts shortly thereafter, as we expect, growth should pick up sharply in Q2. The apparent lack of scarring effects from the earlier GDP plunge is consistent with this view.

Specifically, GS is looking for 5.3 percent in 2021 and 3.8 percent in 2022 vs. consensus forecasts of 3.8 percent and 2.8 percent, respectively.

Final point: There has been a lot of loose talk about the United States being a “failed state,” in part due to the government’s COVID response and overall political conflict. But the US just conducted a massively high-turnout election during the middle of a worsening pandemic, and everything seems to have gone pretty well. And can a state really be considered a failure if it is able to support a vibrant private sector able to push forward the technological frontier? As Pfizer CEO Albert Bourla said earlier today, “I believe this is likely the most significant medical advance in the last 100 years. It is a great day for science. It is a great day for humanity when you realize your vaccine has 90% effectiveness. That’s overwhelming.” Indeed, it is.

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