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COVID-19 Vaccine Timeline Will Likely Extend to 2021 and Beyond

Source: Oliver Wyman; https://pandemicnavigator.oliverwyman.com/

Given the scale and impact of the COVID-19 pandemic, the typical vaccine development timeline of 8-15 years is unpalatable. It may be possible that a vaccine gets FDA approval by year-end, but operational challenges will extend the timeline for scaling the vaccine into 2021 and beyond. These challenges include high adoption and series completion, high volume production and equitable distribution, as well as Americans being less inclined to immediately take the vaccine.

Oliver Wyman modeling work suggests that vaccine uptake will need to be very high to suppress the pandemic — exceeding typical two-dose vaccination completion rates. Assuming two doses per patient, vaccinating 60% of just the adult population is about 6.5 billion doses. Production is further complicated by the range of vaccine platforms under development.

Lastly, vaccine production is centered in the U.S., China, and Western Europe, however people living in low- and middle-income countries account for 79% of the world population. Distribution logistics are also more complex than those of a typical vaccine. This week, the World Bank approved a $12 billion distribution strategy to help developing countries receive a future vaccine.

U.S. Fed Hikes Interest Rates By 0.75%

Source: Reuters

The U.S. Federal Reserve has increased interest rates by 0.75% points for the second consecutive time in an effort to check inflation from its four-decade high. The hike raises the Fed’s policy rate to a range of 2.25 to 2.5% from near-zero in March — one of the fastest monetary policy changes in U.S. history. Stocks and bonds rallied after the Fed announced its rate hike on Wednesday.

Inflation is rising around the world, as Russia’s invasion of Ukraine and the pandemic raise the prices of food and energy. In the U.S., inflation hit an annual rate of more than 9% in June. Federal Reserve Chairman Jerome Powell acknowledged that economic growth has slowed as high prices cut into consumer discretionary spending.

The rate hikes come as some experts predict a potential recession. But the Fed doesn’t see an economic downturn on the horizon, in part because employers added 2.7 million jobs in the first half of this year. “I do not think that the U.S. is currently in a recession,” said Powell, adding that too many areas of the economy are doing well.

Europe Braces for Russian Gas Cutoff

Europe is bracing for a potential cutoff or significant reduction of its main source of energy from Russia. Europe’s main pipeline for natural gas, 45% of which it imports from Russia, resumed operations after a routine 10-day pause, with flows 60% lower than usual.

About half of Russia’s crude oil exports went to Europe in 2021, including to the EU, the U.K., and Norway, according to the World Economic Forum. The EU spent roughly $105 billion on Russian energy imports last year. The EU’s latest sanctions against Russia, in response to its invasion of Ukraine, will ban about two-thirds of Russian oil imports. 

Not all member countries have agreed to the sanctions; Slovakia and Hungary, which import 74% and 43% of their oil, respectively, will continue buying Russian oil until the end of 2023. In response to the backlash from Russia, the EU is looking for other sources of oil, like Saudi Arabia. It also aims to speed up its transition to renewable energy.

Heat Waves Grip the Globe

Source: Joshua Stevens/NASA Earth Observatory

Global warming is causing a ripple of extreme heat waves around the world, including in Europe, North Africa, the Middle East, and Asia, according to NASA’s Earth Observatory. In some regions, temperatures have risen above 104 degrees Fahrenheit (40 degrees Celsius), breaking world records.

In Europe, the heat caused wildfires across Portugal, Spain, and parts of France. The U.K. also experienced record temperatures this week that reached 104 degrees Fahrenheit (40 degrees Celsius). In May, deadly heat waves engulfed India and Pakistan and caused India to ban wheat exports.

Global warming is caused by greenhouse gas emissions, which climbed by a record 6.4% in 2021. “This large area of extreme (and record-breaking) heat is another clear indicator that emissions of greenhouse gases by human activity are causing weather extremes that impact our living conditions,” said Steven Pawson, chief of the Global Modeling and Assimilation Office at NASA Goddard Space Flight Center.

Real Wages Fail to Keep Up As Inflation Bites

Real wages are falling, despite the pay hikes over the past three years. While nominal wages have increased 9% in the U.S. since March 2019 off the back of a hot labor market, when paired with the impacts of the pandemic and inflation of 8.6%, real incomes are down by 1%. 

For employers, recession and inflation leave little room for continued wage hikes. Yet, companies are scrambling to fill vacancies. Job openings still outnumber the number of people looking for work by almost two to one, according to U.S. jobs data. 

To attract and retain workers, employers need to cater to the changed needs and demands of the post-pandemic workforce. More than eight in 10 employees said they would forgo a pay increase in return for other benefits — the top benefit being more control over their work schedule, according to a Mercer study. 

More well-being benefits and the ability to work from anywhere were also highly desired. Companies in the U.K. are experimenting with a four-day work week, and employers putting programs in place to support caregivers show how firms are trying to respond to a broader set of employee needs to remain competitive in the talent market. 

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