The writer is a senior fellow at Harvard Kennedy School
As the Biden administration staffs up, the new US president must hope that a certain Mr Murphy doesn’t join his government. Murphy’s law, of course, is that anything that can go wrong, will. At the start of this year, the consensus among economists and investors had been that much would go right: Covid vaccinations would release pent-up demand, driving growth that should push equities higher and bond yields up. But Murphy might have something to say about that.
The virus has driven the downturn, and its abatement will dictate the pace of recovery. So the first risk to the positive scenario is that vaccines disappoint. Rollout has so far been marred by bottlenecks and supply shortages. The seven-day rolling average daily number of jabs administered in the US is rising and now exceeds 1m. But Mr Biden’s vaccine strategy is in a race with new variants of the virus. According to a recent report by the US Centers for Disease Control and Prevention, the more contagious Covid-19 variants that emerged in the UK and South Africa could become predominant in the US as soon as March. This would require an even higher vaccination rate to achieve herd immunity, and new vaccine-resistant variants could yet develop.