Two years ago, the Omicron scourge hit the U.S. hard. The Federal Reserve had been keeping interest rates ultra-low, but it wanted to begin a monetary tightening cycle. Fed Chairman Jerome Powell, though, couldn’t be sure how badly the Covid variant would slow the economy because he had no idea how viral the new strain would be. Would it shut down the economy again? Would it be more restrictive, causing the country to revert to the closing of all stores except those designated with emergency status, something that was simply wiping out all shops with stretched balance sheets? Who knew? The thing moved so fast that the last thing Powell could do was raise rates. Yet, the Fed chief was roundly criticized for avoiding tightening because the economy wouldn’t slow down; nor would inflation. He waited four months to be sure before taking rates in March 2020 up to a range 0.25% to 0.50%, a shrewd decision, in retrospect, because at that point Omicron had played out and the crippling impact had run its course. The U.S. ended its tough restrictions on Covid in the spring of 2022, right about the time the Fed began the most aggressive tightening cycle in its history. (Including the March hike, central bankers increased the fed funds overnight bank lending rate 10 more times to the current range of 5.25% to 5.50%.) U.S. gross domestic product (GDP) grew 2.1% in 2022, a decent rate all considering. Now consider China. The country adopted a strict Covid policy that prevailed through 2022 causing its GDP to fall to 3% way below the Chinese government’s 5.5% target. In retrospect, that was the beginning of phase two of the slowdown in China, phase one being when then-U.S. President Donald Trump began, and phase two when current President Joe Biden continued, if not accelerated, the economic separation between our two countries. We didn’t know it at the time but it wasn’t Trump’s tariffs as much as his admonitions that it was time to break with cooperation because it had been one-sided. Our continual building of factories and expansion together had failed to make for a level playing field. China could not be counted on as a reliable trading partner. There were really three reasons: (1) the Chinese no longer attempted to change their rapacious ways with American industry; (2) their foreign policy plans were unwavering in their insistence of domination of the lesser developed world via the Belt and Road Initiative; and (3) three their military, always the power behind the throne, decided to go toe-to-toe with the United States by appropriating the most sophisticated semiconductor chips while beginning a policy of intimidation of Taiwan in order to force Taiwan Semiconductor Manufacturing Company , the largest chip foundry, or factory, in the world, to favor the makers of Chinese chips. Given that we had pretty much ceded the making of our best chips to TSMC, the threat was real and nefarious, meant to drive home plans for a one-country strategy, a strategy never abandoned by China and one that had been sub rosa accepted unchallenged until August 2022 when then-House Speaker Nancy Pelosi (D-Calif.) visited the country. That break proved crucial to the geopolitical strategies of both countries. It signaled that not only was it no longer business as usual but that our nation was going to cease tolerating any designs on Taiwan even as China was unwilling to acknowledge that our policy had changed when Pelosi visited. The one country status that we had tacitly accepted ended – and with it any hope of economic connection with China save Nike and Club names Apple (AAPL) and Starbucks (SBUX), plus existing plants by some multinationals. New plants seemed and became out of the question, something in retrospect probably seemed unlikely when Biden replaced Trump. The hardline had gotten harder and with it new jobs coming from the U.S. In retrospect that was crucial to what has become of the two nations, at least as measured by the two stock markets. The S & P 500 advanced 14% over the next two years, but China’s market sank nearly 1.5% during the same period. The decline, as minor as it seemed, masked the tremendous rot underneath, as youth unemployment exploded to more than 20% before it ceased to be reported, and the cracks in the Chinese property market became evident and then accelerated to the point where we expect things to grow only worse. Meanwhile, Chinese President Xi Jinping acted as if nothing had weakened and only strengthened his hold on lifetime power. Now, cut to the most recent events, and we seem almost unaware of the significance of Xi visiting San Francisco. The trip seemed far more important to Xi than to us. In fact, we could ask what the heck was he doing here. Was it really about trying to restore more normal relations or was it about bringing American companies back to China and a hoped-for lessening of restrictions on Club holding Nvidia (NVDA), which makes the powerful chips most needed if China is going to be sure to control the thought processes of its industry and its people while bolstering its military. If those were the desires, it was apparently an abject failure on his end but one he can’t afford to accept if he is going to restart his economy. No other country is as strong as the U.S. or has the possibility of providing the kind of employment away from property, which we know is a total disaster even as we seem to think that a command economy can’t have such a disaster. Now we find a China that needs us so badly that its president’s hat and hand gesture must be followed up on with more enticement. Staying away from the U.S. seems out of the question. Unless Xi adopts Keynesian economics which he seems to rule out at every turn. The impact on our country is stunningly missing. Have you noticed its lack of import? It’s so obvious that we don’t need China. We don’t want their imports; witness our blocking of their cheap electric cars. We want to wean ourselves off their supply chain as it turned out to be a lot more fragile than we thought. It’s taking longer and many are recalcitrant as reshoring costs a fortune. We seem to want to ignore the low cost of doing more business in Mexico. It seems as if it might run afoul of a policy set by Trump. Did you notice how the U.S. auto companies were hesitant to suggest that they might move manufacturing to China? They were toothless in the face of the striking United Auto Workers (UAW) that seemed to know that the so-called nuclear option wouldn’t be used. The cowering auto execs lost it all to end the six-week UAW walkout – and yes, it does seem like it all, because they were boxed into the U.S., into the union portion of the U.S. even more so. What does it all mean to our country? I think it means that our soft landing is, in retrospect, more remarkable because China hasn’t helped one bit with commerce that at one point when Trump was president, seemed most needed. We have caught and passed the Chinese and seemed to leave them well behind us DESPITE the most aggressive Fed tightening cycle in our nation’s history. The gulf is not metaphorical. We ARE NOT going to help the Chinese. They don’t seem to know how to, or can’t, help us. I think the testament of our growth is ignored by those who can’t believe that Powell has the gumption to slow inflation far more than slow the economy. We handled Covid better than China. It didn’t help the Chinese cause that they refused the Pfizer vaccine. We handled the declines in our oil and natural gas and industrial and financial troubles better, in part because of our gigantic stimulus. Yes, our budget deficit is huge and should be crushing our stock market. But the two don’t seem to relate. Maybe something will be done about it, maybe something won’t. It just all seems so much more manageable than whatever the hell is going on in China. But as we close out this 2023 year with a stock market that has such a hard time quitting, we should be thankful that our nation came out of Covid stronger than it came in, while China came out much weaker without a plan to get stronger and without any chance of gaining largesse from the American government and American industry; the latter of which doesn’t seem to be suffering from the Chinese downturn. That included, of all companies, Apple, which took whatever share was to be gained from the once toothful colossal that now seems toothless despite our own inferiority complex otherwise. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust is long.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Federal Reserve Chairman Jerome Powell, wearing a face mask, testifies before the House of Representatives Financial Services Committee during a hearing on oversight of the Treasury Department and Federal Reserve response to the outbreak of the coronavirus disease (COVID-19), on Capitol Hill in Washington, U.S., June 30, 2020.
Tasos Katopodis | Reuters
Two years ago, the Omicron scourge hit the U.S. hard. The Federal Reserve had been keeping interest rates ultra-low, but it wanted to begin a monetary tightening cycle. Fed Chairman Jerome Powell, though, couldn’t be sure how badly the Covid variant would slow the economy because he had no idea how viral the new strain would be. Would it shut down the economy again? Would it be more restrictive, causing the country to revert to the closing of all stores except those designated with emergency status, something that was simply wiping out all shops with stretched balance sheets? Who knew? The thing moved so fast that the last thing Powell could do was raise rates.
Yet, the Fed chief was roundly criticized for avoiding tightening because the economy wouldn’t slow down; nor would inflation. He waited four months to be sure before taking rates in March 2020 up to a range 0.25% to 0.50%, a shrewd decision, in retrospect, because at that point Omicron had played out and the crippling impact had run its course. The U.S. ended its tough restrictions on Covid in the spring of 2022, right about the time the Fed began the most aggressive tightening cycle in its history. (Including the March hike, central bankers increased the fed funds overnight bank lending rate 10 more times to the current range of 5.25% to 5.50%.) U.S. gross domestic product (GDP) grew 2.1% in 2022, a decent rate all considering.
Now consider China. The country adopted a strict Covid policy that prevailed through 2022 causing its GDP to fall to 3% way below the Chinese government’s 5.5% target.
In retrospect, that was the beginning of phase two of the slowdown in China, phase one being when then-U.S. President Donald Trump began, and phase two when current President Joe Biden continued, if not accelerated, the economic separation between our two countries. We didn’t know it at the time but it wasn’t Trump’s tariffs as much as his admonitions that it was time to break with cooperation because it had been one-sided. Our continual building of factories and expansion together had failed to make for a level playing field. China could not be counted on as a reliable trading partner. There were really three reasons: (1) the Chinese no longer attempted to change their rapacious ways with American industry; (2) their foreign policy plans were unwavering in their insistence of domination of the lesser developed world via the Belt and Road Initiative; and (3) three their military, always the power behind the throne, decided to go toe-to-toe with the United States by appropriating the most sophisticated semiconductor chips while beginning a policy of intimidation of Taiwan in order to force Taiwan Semiconductor Manufacturing Company, the largest chip foundry, or factory, in the world, to favor the makers of Chinese chips. Given that we had pretty much ceded the making of our best chips to TSMC, the threat was real and nefarious, meant to drive home plans for a one-country strategy, a strategy never abandoned by China and one that had been sub rosa accepted unchallenged until August 2022 when then-House Speaker Nancy Pelosi (D-Calif.) visited the country.
That break proved crucial to the geopolitical strategies of both countries. It signaled that not only was it no longer business as usual but that our nation was going to cease tolerating any designs on Taiwan even as China was unwilling to acknowledge that our policy had changed when Pelosi visited. The one country status that we had tacitly accepted ended – and with it any hope of economic connection with China save Nike and Club names Apple (AAPL) and Starbucks (SBUX), plus existing plants by some multinationals.
New plants seemed and became out of the question, something in retrospect probably seemed unlikely when Biden replaced Trump. The hardline had gotten harder and with it new jobs coming from the U.S.
In retrospect that was crucial to what has become of the two nations, at least as measured by the two stock markets. The S&P 500 advanced 14% over the next two years, but China’s market sank nearly 1.5% during the same period. The decline, as minor as it seemed, masked the tremendous rot underneath, as youth unemployment exploded to more than 20% before it ceased to be reported, and the cracks in the Chinese property market became evident and then accelerated to the point where we expect things to grow only worse. Meanwhile, Chinese President Xi Jinping acted as if nothing had weakened and only strengthened his hold on lifetime power.
U.S. President Joe Biden and Chinese President Xi Jinping agreed to resume high-level military communication when they met in person Wednesday for the first time in a year in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.
Brendan Smialowski | Afp | Getty Images
Now, cut to the most recent events, and we seem almost unaware of the significance of Xi visiting San Francisco. The trip seemed far more important to Xi than to us. In fact, we could ask what the heck was he doing here. Was it really about trying to restore more normal relations or was it about bringing American companies back to China and a hoped-for lessening of restrictions on Club holding Nvidia (NVDA), which makes the powerful chips most needed if China is going to be sure to control the thought processes of its industry and its people while bolstering its military. If those were the desires, it was apparently an abject failure on his end but one he can’t afford to accept if he is going to restart his economy. No other country is as strong as the U.S. or has the possibility of providing the kind of employment away from property, which we know is a total disaster even as we seem to think that a command economy can’t have such a disaster.
Now we find a China that needs us so badly that its president’s hat and hand gesture must be followed up on with more enticement. Staying away from the U.S. seems out of the question. Unless Xi adopts Keynesian economics which he seems to rule out at every turn.
The impact on our country is stunningly missing. Have you noticed its lack of import? It’s so obvious that we don’t need China. We don’t want their imports; witness our blocking of their cheap electric cars. We want to wean ourselves off their supply chain as it turned out to be a lot more fragile than we thought. It’s taking longer and many are recalcitrant as reshoring costs a fortune. We seem to want to ignore the low cost of doing more business in Mexico. It seems as if it might run afoul of a policy set by Trump. Did you notice how the U.S. auto companies were hesitant to suggest that they might move manufacturing to China? They were toothless in the face of the striking United Auto Workers (UAW) that seemed to know that the so-called nuclear option wouldn’t be used. The cowering auto execs lost it all to end the six-week UAW walkout – and yes, it does seem like it all, because they were boxed into the U.S., into the union portion of the U.S. even more so.
What does it all mean to our country? I think it means that our soft landing is, in retrospect, more remarkable because China hasn’t helped one bit with commerce that at one point when Trump was president, seemed most needed. We have caught and passed the Chinese and seemed to leave them well behind us DESPITE the most aggressive Fed tightening cycle in our nation’s history. The gulf is not metaphorical. We ARE NOT going to help the Chinese. They don’t seem to know how to, or can’t, help us.
I think the testament of our growth is ignored by those who can’t believe that Powell has the gumption to slow inflation far more than slow the economy. We handled Covid better than China. It didn’t help the Chinese cause that they refused the Pfizer vaccine. We handled the declines in our oil and natural gas and industrial and financial troubles better, in part because of our gigantic stimulus. Yes, our budget deficit is huge and should be crushing our stock market. But the two don’t seem to relate. Maybe something will be done about it, maybe something won’t. It just all seems so much more manageable than whatever the hell is going on in China.
But as we close out this 2023 year with a stock market that has such a hard time quitting, we should be thankful that our nation came out of Covid stronger than it came in, while China came out much weaker without a plan to get stronger and without any chance of gaining largesse from the American government and American industry; the latter of which doesn’t seem to be suffering from the Chinese downturn. That included, of all companies, Apple, which took whatever share was to be gained from the once toothful colossal that now seems toothless despite our own inferiority complex otherwise.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
