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Fed's Barkin: U.S. economy doesn't need 'herd immunity' to rebound

Ann Saphir
·1 min read

By Ann Saphir

Feb 11 (Reuters) - A slower-than-expected vaccine rolloutand the rise of coronavirus variants may make attaining herdimmunity against the novel coronavirus difficult, but thatshould not stop the economy from rebounding, a U.S. centralbanker said Thursday.

"I don’t think the economy requires herd immunity," RichmondFederal Reserve Bank President Thomas Barkin told Reuters."Consumers who get vaccines who have money in theirpockets...are going to be free to spend," he said.

Barkin's expectation is in line with that of many analystswho believe that economic activity will pick up as more peopleare vaccinated. It also reflects a growing understanding that aneconomic rebound and an ongoing pandemic are not mutuallyexclusive realities.

Barkin said he was surprised to hear recently from hospitaladministrators that only about 70% of their staff have beenimmunized. Meanwhile, top U.S. infectious disease doctor AnthonyFauci has said the United States may need 85% of the populationvaccinated to get to true herd immunity.

"It does make you temper somewhat your enthusiasm for thebig, pent up demand, hit the ground at full speed story," Barkinsaid.

For businesses, he said, spending on big-ticket items liketravel and conferences may take until the summer or longer toreturn because employers may "need some assurance that they arenot putting their people at risk."

Cases and hospitalizations may drive business spendingdecisions more than any notion of herd immunity, Barkin said.

But for consumers, whose spending accounts for about 70% ofthe U.S. economy, a vaccine may represent a license to spend onservices that last year were heavily curtailed, like travel. Andspending on goods, Barkin said, should also continue to bestrong.

Overall for consumer spending, Barkin said, "I’m actuallyquite hopeful that we see strong demand in the spring andsummer."(Reporting Ann Saphir; Editing Aurora Ellis)