The Memo: Biden faces risks as COVID optimism stalls

The wave of optimism that followed the approval of the first COVID-19 vaccines is receding — and that could spell trouble for President Biden.

U.S. deaths from the virus hit 80,000 in January, making it the nation’s deadliest month. And new strains are worrying scientists, including a mutation emanating from the United Kingdom that is more contagious, and potentially more deadly, than those previously seen.

On Wednesday, the new head of the Centers for Disease Control and Prevention, Rochelle Walensky, said total U.S. deaths from the virus will hit around 500,000 on Feb. 20 based on the current trajectory. More than 425,000 people have died so far.

There have also been problems with the rollout of vaccinations, with state-level officials complaining that they are not getting clarity on how many shots will be available at any given time.

While the new administration has been in power for just one week and cannot reasonably be blamed for many of the current issues, the problems are reverberating in the economy — posing a sizable political risk to Biden.

The Dow Jones Industrial Average and the broader-based S&P 500 each fell by more than 2 percent on Wednesday, the latter having its worst day since October, as the Federal Reserve left interest rates near zero. 

Retail sales have been below expectations for the past two months. The latest monthly employment report showed the nation experienced a net job loss for the first time in eight months in December.

Any further deterioration could sap Biden’s political capital with abrupt speed. 

Fairly or otherwise, he will be held responsible for a prolonged economic malaise, much as President Obama’s poll ratings declined early in his first term as a financial crisis that began under the previous administration caused jobs to hemorrhage.

“I think his approval rating and popularity will depend, critically and first and foremost, on the rollout of the vaccine. If that doesn’t go well, he’ll be blamed whether it is his fault or not,” said Mark Zandi, chief economist of Moody’s Analytics.

“If the pandemic is off the rails, so is the economy, and he will get blamed for that too,” Zandi added.

For the moment, there is a growing consensus that a quick economic recovery looks increasingly unlikely. 

“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic,” the Federal Reserve’s Open Market Committee said in a statement Wednesday.

Biden is making a big effort to mitigate the economic effects of COVID-19 with his proposed $1.9 trillion rescue package. The proposal, which calls for direct payments of up to $1,400 for millions of Americans and the minimum wage to be lifted to $15 an hour, faces uncertain prospects in Congress.

Biden has also been asserting that the situation with the pandemic is even worse than he had feared, preparing the nation for many more months of a grueling battle.

Speaking at the White House on Tuesday, the president equated the struggle against COVID-19 with “a wartime effort” and noted that it was “no secret that we have recently discovered … the vaccine program is in worse shape than we anticipated or expected.”

Biden has appointed a coronavirus response coordinator and resumed regular White House briefings from medical experts, including Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases. The president pledged on Tuesday that states will have “a reliable three-week forecast on what supply they’re going to get” in terms of vaccinations.

There have been small missteps.

White House press secretary Jen Psaki told reporters Tuesday that Biden had not been setting a concrete goal when he had suggested that 1.5 million people per day — rather than the previously stated figure of 1 million — could soon be receiving vaccinations.

“The president didn’t actually say, ‘The new goal is…’ The president said, ‘I hope we can do even more than that,’” Psaki said.

Biden claims that 300 million Americans could be vaccinated by the start of fall. In one way, that is a note of optimism. But it also underlines how long there is to go before anything approximating normal life — or normal economic activity — resumes.

Earlier this week, California Gov. Gavin Newsom (D) surprised many observers by announcing an easing of restrictions, despite the fact that his state’s coronavirus cases were at heightened levels only recently.

“The bigger threat is that Californians will take this as a signal to drop their guard, even as the virus continues to rage,” a Los Angeles Times editorial warned. “The state cannot afford to continue the cycle of one step forward and two steps back that has kept us firmly in the pandemic’s grip.”

Public health experts like Kavita Patel, a physician and nonresident fellow at the Brookings Institution, fear there are real dangers ahead.

“I know restrictions are tough. People are tired,” she said. “But the new strains, combined with a fatigued population, is very concerning — a recipe for disaster.” 

The public mood on the virus remains dark, despite the existence of vaccines. 

In an Economist-YouGov poll released Wednesday, just 17 percent of Americans believed “the worst part of the pandemic is behind us.” Almost twice as many, 31 percent, believed “the pandemic is going to get worse.” Thirty-two percent said that we are “currently in the worst part” of the battle against the virus.

It’s still possible that the worst-case scenarios, in terms of public health and economic impact, could be averted. 

The vaccination process could improve, the new virus mutations could have minimal effects and, economically, pent-up demand could drive new growth as the health threat recedes.

Right now, however, all of that seems far from certain.

“The economy is struggling and the path of the pandemic has become more uncertain,” said Zandi.

The Memo is a reported column by Niall Stanage.