Among the many things President Joe Biden needs to accomplish during his State of the Union address Thursday is to turn the conversation about the economy around.
People often credit themselves for getting a raise, but blame the government, and especially the president, when life costs more.
Thirty-one percent of voters say the economy has improved, a 10-point increase in just a few months. The president, however, is not reaping the rewards.
Despite good, empirical data about the economy, people experience higher prices every day, everywhere they go, from restaurants to grocery stores. It’s what sticks in people’s minds. And while wages have gone up, from a behavioral economic standpoint, people often credit themselves for getting a raise, but blame the government, and especially the president, when life costs more.
That’s the predicament Biden finds himself in going into the election. Which makes the message around the economy crucially important.
Let’s start with the truth, even if it’s not universally acknowledged: A year ago, there was near total agreement a recession was coming.
Unemployment was expected to rise, especially as the Federal Reserve sharply hiked interest rates to slow inflation (and the economy). Instead, unemployment has hovered below 4% for nearly two years, something not seen since the 1960s. Today, it’s 3.7%. At the same time, employers are hiring at a furious pace. Last year, nearly 3 million jobs were created — maybe that has something to do with the 5.5 million new businesses started last year.
Consumers are feeling better about the economy. A recent survey found they’re feeling more confident about both the economy and that inflation will keep slowing. CEOs are more optimistic, too. Business Roundtable’s latest poll found their outlook for the economy jumped double digits and is now above the historical average. They plan to invest more in facilities and hire more.
Let’s not forget the stock market, which is setting new records on a regular basis. The average 401(k) is up 14% from a year ago and is now $118,600. The stock market is not the economy, but for many Americans, it serves as a daily temperature check for how things are going. While not everyone owns stocks, 58% of households do — the largest share on record.
Then there are all the bipartisan bills to promote economic growth today and for years to come: the American Rescue Plan Act, the CHIPS Act, the Inflation Reduction Act.
But let’s be honest, all this is not sinking in with voters. Poll after poll finds them generally unhappy about how Biden is handling the economy and uncertain about where it’s headed, especially because of inflation.
The good news is that prices are rising more slowly, but that’s coming off years of supercharged inflation, especially for groceries, which are up 25% since January 2020. Shoppers know this every time they walk into a supermarket — they see it and it’s maddening. People feel there’s nothing they can do, and it’s not like they can skip milk, eggs and bread. Today, Americans spend over 11% of their income on food, the highest amount in 30 years.
Biden can’t fix high food prices, but he can point to what his administration is already doing to help Americans save money. For just a few examples:
Increasing the amount of food assistance for low-income families.
Moving to block the merger of the No. 1 and No. 2 supermarkets, which could limit competition and choice.
Capping insulin at $35 per month, and next year capping Medicare prescription costs at $2,000 a year.
In reality, until recently, consumers have kept paying even as prices rose. But once consumers decide that meal or that flight simply costs too much and businesses see demand suffer, there might be a change. The problem is that everyday items cost more. For economically vulnerable families, that can be crushing. For wealthier Americans, it’s annoying and cause for discontent.
There’s a lot that is going right in the economy. It should be universally agreed on: It’s not a bad economy. Voters, however, are not economists and facts alone won’t convince them. Americans need to feel their financial lives are improving, and it’s on the president and his administration to show how they’re making that happen. And when Biden steps up to the podium Thursday evening, he has a chance to do just that.
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.
