News about the early efficacy rate of the BioNTech/Pfizer vaccine is unambiguously positive for the economic outlook. Admittedly, a vaccine will not arrive in time to spare a probable contraction in GDP in many European countries this quarter. However, it gives us more certainty that economic activity will rebound strongly in 2021. One important tailwind through next year will be the substantial amount of savings that households have built up in developed markets since March. In the US, for example, aggregate personal savings over the past twelve months were $1.3 trillion higher in September than they were in February. If effective vaccines are rolled out, it appears probable that much of those savings will be unwound, with spending likely to be particularly strong in badly hit services sectors such as hospitality and tourism.
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