We may have already lost the war against COVID19. If my calculations are right the USA will reach herd immunity by the summer...not because of vaccinations but because more than half the population will have already developed natural antibodies in response to the infection.
Many still fail to appreciate how our fight against COVID19 hinges crucially on the transmission rate, also known as R0. That rate is the number of people each sick person infects. The average time before an infected person experiences symptoms is about one week...and one week ago many of us ignored the warnings and traveled back home from visiting family and friends across the country.
A new strain of COVID19 is already established here in the USA. The UK strain has a roughly 70% higher transmission rate. What does that mean? Well...in the UK it spread from its first case in perhaps September to 60% of the cases in London by Christmas.
The UK transmission rate had actually been falling in November as measured by a roughly 5% decrease in new confirmed cases per day, corresponding to an R0 of roughly 0.95 before jumping to 1.35 in December. Given an average incubation period of one week...that translated into a doubling of confirmed cases in the UK during the first three weeks of December. And that was with the new strain accounting for less the half of all cases.
Headlines show that we have had 23 Million confirmed cases in the USA. But actual cases have perhaps been closer to 80 Million given the roughly 40% of cases that don’t show symptoms and many that got sick but never confirmed it was COVID19. That’s nearly 20% of the country.
But if the UK is any indication then we are already starting to see a massive increase in cases, hospitalizations and deaths. If we experienced the same exponential growth that the UK has since December 1st ... expect confirmed cases to double every three weeks.
Over the past week we already saw evidence of the transmission rate R0 increasing to about 1.05 to 1.3 as confirmed cases jumped from a little over 200k per day to 300k. At that rate we will hit 1 Million by early February. If we average only half a Million per day for the next two months or 15 Mil per month then total confirmed cases will reach 20 + 30 = 50 Million by early March. Given that there are about 3 unconfirmed cases for each confirmed case that translates to 50 x 4 = 200 Million total people in the USA having already been infected.
By the time we have 200 Million people infected the transmission rate will probably start to fall...not because of vaccinations, but because more than half the population will have already developed natural antibodies in response to the infection.
In other words ... we will have already achieved herd immunity.
IntuitEcon provided a deep dive on the potential impact of the new COVID19 strain on the reopening trade on December 22, 2020 that has only become more relevant. You can listen (no video) at the link below: