C-suite executives are keen to gauge when markets and economies are likely to reach a functioning normal, a new baseline/equilibrium of economic and social activity post COVID-19. This article presents a framework for monitoring four key factors–vaccinations, therapeutics, public policy and social practices–to anticipate the emergence of a functioning normal in local markets and six key actions resilient organisations are taking now.
Once a significant enough proportion of a population becomes immune to an infectious disease and its variants (i.e. herd immunity), the disease will substantially subside. However, for today’s senior executive, herd immunity is not the endgame: the broader goal is the re-emergence of markets and economies post-pandemic.
This article proposes a framework to help C-suite executives gauge when markets and economies are likely to reach a functioning normal, defined as the point where the public trusts that the contagion has been controlled sufficiently to establish a new baseline/equilibrium of economic and social activity. Beyond quantitative measures such as percentages of positive tests, distribution of vaccines and stimulus payments, the ability of an economy or market to return to a new functioning normal hinges on the public’s trust that the pandemic has been substantially suppressed.
In a functioning normal, people and goods will flow more freely across borders, although they might be subject to higher regulatory restrictions (e.g., vaccine passports) than before the pandemic. Consumers will feel more comfortable visiting friends and family, shopping in stores and eating in restaurants but some may still be reluctant to socialise in large groups. Employees will return to premises, although they might not commute to offices as frequently as they once did now that the alternative of virtual work has been demonstrated. Furthermore, global economies and employment rates will rebound, but it could take a long time to return to pre-pandemic levels.1
The public’s trust in institutions, in businesses and even in each other is a critical pre-requisite to achieving a functioning normal. Four factors—immunity, therapeutics, public policy and social practices—could collectively have a profound impact on building public trust. In this section, we provide a framework for C-suite executives to analyse each factor, assessing how it contributes to the suppression of the disease and thereby the re-establishment of sufficient public trust for markets to recover.
In the “What to watch” section for each factor, we also suggest key measures executives can monitor to anticipate when their relevant markets and geographies are nearing a functioning normal. These measures are indicative—not mutually exclusive and collectively exhaustive—and do not all have to be satisfied to reach a functioning normal. Also, the analysis below and proposed metrics consider our current understanding of variants (mutations), yet the progression of those variants is unpredictable and could have a material impact on the framework.
Our analysis was enhanced by running multiple scenarios through our Deloitte Scenario Modeling and Resourcing Tool (D.SMaRT), a customisable early warning system that can help forecast infection rates in markets around the globe. D.SMaRT’s models mirror the physical dynamics of infection-spread by simulating group interactions and by overlaying mobility trends with vaccine availability, compliance and efficacy to help organisations identify and plan for potential future COVID-19 outbreaks.
What to watch in a market: Immunity
What to watch in a market: Therapeutics
What to watch in a market: Public Policy
What to watch in a market: Social practices
1. Immunity/infection rates: Rebuilding public trust to reach a functioning normal requires the pandemic to be controlled and suppressed. This suppression requires a widespread immunity against infection and an identifiable reduction in infection rates, particularly among at-risk populations. As the most vulnerable members of the population are vaccinated, hospitalisations and deaths are likely to decline even if active infection cases do not decrease as quickly. Reduction in severe illness and deaths may result in returning to functional normal even without suppression in transmission; thus, vaccines that are effective in preventing serious illness can be an important intervention even if their overall effectiveness is less than expected.
Consensus estimates from medical experts indicate that herd immunity for this coronavirus will likely be reached when approximately 80% of the population is immune through vaccination and/or natural infection. Yet tracking the level of immunity can be elusive: early evidence indicates that existing vaccines may be less effective against variants (mutations), so 80% immunity to the initial virus might not assure 80% immunity overall. Furthermore, the threshold for herd immunity changes as innate infection reproduction rates, referred to as R0 or R-naught, increase or decrease for new variants,3 where R0 is the average number of people that one infected person will subsequently infect with no interventions.4
Our analysis suggests that when a market crosses the 80% immunity threshold and when vaccines are still at least 50% effective against known variants, it is an essential signpost that a market has momentum to potentially emerge into a functioning normal.5 Likewise, the U.S. Centers for Disease Control and Harvard have set a target of new daily infections at or below 1 per 100,000 people, without lockdowns, to indicate sufficient virus suppression.6
2. Therapeutics: While vaccines and natural immunity will help reduce infection rates, therapeutics can help minimise COVID-19 morbidity and mortality rates, easing public concerns and establishing trust in institutional responses. For example, preliminary data from recent clinical trials indicates that monoclonal antibody treatment may be useful as a prophylactic.8 Other trials suggest that drug combinations may reduce the severity, hospitalisation and mortality of the disease.9 We modeled the binary options of all eligible patients receiving typical therapeutics versus no patients receiving therapeutics in a single geography. Full access to and adoption of therapeutics yielded a one-third reduction in ICU bed occupancy and a 50% decrease in COVID-19 deaths.10
Since there is not a direct measure of therapeutics, we monitor the effects of therapeutics indirectly via proxy relationships like fatality rates and ICU occupancy (see “What to watch”). Although these variables may correlate with immunity status as well, they still provide indicative information about the efficacy of therapeutic treatments.
3. Public Policy: Decisive, coordinated policy decisions are shown to significantly impact COVID-19 outbreaks and infectivity, both in the immediate response to viral outbreaks and in longer-term vaccination approaches. Early in the pandemic, for example, New Zealand, France, Spain, Germany, and the Netherlands all introduced early-onset lockdowns and social distancing restrictions leading to an infection reproduction rate (Rt) of less than 1.5 over a 90-day period, which contrasts with the significantly higher Rt of 4.4 in Sweden where lockdowns were not implemented.12 The U.S. response varied as states adopted heterogenous responses and guidelines which consequently drove a Rt of 4.9 over an equal period, underlining the importance of coordinated policy action for slowing disease progression. Research in Germany, similarly, found that mandatory face masks reduced the number of new infections by 45%.13
As discussed in the Immunity section above, rapidly vaccinating a large percentage of the population is a significant enabler of reaching a functioning normal—and policy decisions play a large role in getting vaccines from aspirations to arms.
Effective policy decisions are essential for flattening the infection curve, identifying the most effective way to distribute vaccinations and ultimately discerning the appropriate time to relax restrictions for markets to reach functioning normal. Identifying markets that have established and enforced uniform policies provides a baseline to assess if a market is poised to reach a functioning normal. Similarly, tracking hospitalisation rates as policy restrictions are eased can help gauge whether the virus has been successfully suppressed or if a market is easing restrictions prematurely and hasn’t yet reached a functioning normal.
4. Social practices and attitudes: As vaccines and therapeutics become accessible, social practices and attitudes—such as adherence to masking, social distancing and public belief in their own risk/immunity—will continue to play a pivotal role. Although 80% of people who are infected with COVID-19 develop mild to moderate symptoms or no symptoms at all,14 non-pharmacological social measures will need to continue to ensure successful containment of the virus especially among vulnerable populations. Research from the Imperial College in London found that 65% of COVID-19 infections originate from individuals aged 20-49, demonstrating the importance of widespread compliance to protect at-risk groups.15
Beyond public policy decisions such as lockdowns and other restrictions, individual adherence to social practices is critical to reaching a functioning normal. Individuals who regularly wear masks and comply with social distancing were found to be one-tenth as likely to contract COVID-19 as those who didn’t participate in wearing masks or distancing.16
Research recently conducted by the UCLA Fielding School of Public Health reports that near-universal adoption of masks and social distancing could drive the COVID-19 Rt to near zero and add almost $1 trillion to the U.S. GDP.17 Additionally, infection transmission was 7.5 times higher in countries without masking than those with strict masking requirements and adherence.18 As discussed above, while decisive policy actions are necessary to curtail COVID-19 infection rates and distribute vaccines, social practices and attitudes are essential for reaching targeted immunity thresholds.
We have been in the midst of this pandemic—and its attendant economic consequences—for longer than many of us expected. While we anticipate and yearn for a return to economic stability, resilient leaders embrace the extended timeframe as an opportunity to predict and plan for when our markets will return to a functioning normal. Careful monitoring of key indicators across all four factors of immunity, therapeutics, public policy and social practice can signal when our markets are likely to emerge into a new baseline/equilibrium of economic and social activity.
1 For four economic cases to use in strategic, operational and financial planning, refer to The world remade: COVID-19 and beyond: 2021 scenarios for resilient leaders.
2 Pedro Mendes, “How many people need to get a COVID-19 vaccine in order to stop the coronavirus?” The Conversation, January 5, 2021.
3 Haley E. Randolph and Luis B. Barreiro, “Herd Immunity: Understanding COVID-19,” Immunity, May 2020, no. 52.
4 Anders Gunderson and Liana Woskie, “Understanding Predictions: What is R-Naught?” Harvard Global Health Institute, February 7, 2020.
5 Per consensus of medical doctors on Deloitte staff.
6 “Key Metrics for COVID Suppression,” Harvard Global Health Institute, July 1, 2020.
7 “Key Metrics for COVID Suppression,” Harvard Global Health Institute, July 1, 2020.
8 Matthew Herper, “Eli Lilly says its monoclonal antibody prevented Covid-19 infections in clinical trial,” STAT, January 21, 2021.
9 Victoria Rees, “Baricitinib and remdesivir reduce time to recovery in COVID-19 patients,” European Pharmaceutical Review, January 18, 2021.
10 Per Deloitte D.SMaRT analysis.
11 “Influenza: National Center for Health Statistics,” Centers for Disease Control and Prevention, accessed February 3, 2021.
12 Bruno Mégarbane, Fanchon Bourasset, and Jean-Michel Scherrmann, “Is Lockdown Effective in Limiting SARS-CoV-2 Epidemic Progression?” Journal of General Internal Medicine, January 2021: pp.1-7.
13 Timo Mitze, Reinhold Kosfeld, Johannes Rode, Klaus Wälde, “Face masks considerably reduce COVID-19 cases in Germany,” Proceedings of the National Academy of Sciences, December 2020, vol. 117, no. 51.
14 “Interim Clinical Guidance for Management of Patients with Confirmed Coronavirus Disease (COVID-19),” Centers for Disease Control and Prevention, December 8, 2020.
15 The Imperial College COVID-19 Response Team, “Age groups that sustain resurging COVID-19 epidemics in the United States,” Science, February 2, 2021.
16 “ Rapid Real-time Tracking of Nonpharmaceutical Interventions and Their Association With Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) Positivity,” Clinical Infectious Diseases, September 2020.
17 Lauren Ancel Meyers, “An evidence review of face masks against COVID-19,” Proceedings of the National Academy of Sciences, January 2021, vol. 118, no. 4.
18 Lauren Ancel Meyers, “An evidence review of face masks against COVID-19,” Proceedings of the National Academy of Sciences, January 2021, vol. 118, no. 4.
19 “Key Metrics for COVID Suppression,” Harvard Global Health Institute, July 1, 2020.
20 The Deloitte Chief Executive Program, “Fortune/Deloitte CEO Survey: January 2021 highlights,” 2021.
21 The Deloitte Chief Executive Program, “Fortune/Deloitte CEO Survey: January 2021 highlights,” 2021.
22 “From survive to thrive: The future of work in a post-pandemic world,” Deloitte Insights, January 28, 2021.