As the COVID-19 pandemic stretches into its second month and shows no signs of slowing, President Donald Trump has pushed to relax the restrictions on travel and movement that are, right now, the best hope for controlling the disease. “We have to get our country back to work,” Trump said in a town hall at noon on Tuesday. “This cure is worse than the problem. Many people — in my opinion, more people — are going to die if we allow this to continue. Our people have to go back to work.” He named Easter Sunday, April 12th, as a potential end date for the restrictions since “you’ll have packed churches all over our country.”
But there’s a problem with trying to restart the economy by relaxing containment restrictions: economists say it won’t work.
The new coronavirus is spreading through the US, and several states have made emergency declarations. The World Health Organization has declared it a pandemic. Here are the basics:
The economy can’t recover until the pandemic is under control, says Maurice Obstfeld, a professor at the University of California, Berkeley and former chief economist at the International Monetary Fund. “Before we restart economic activity, we have to stabilize the level of infections,” Obstfeld tells The Verge. If we move too soon, he worries we would see a new surge in infections, “causing even more damage to the economy than if we confronted the health crisis decisively now.”
In recent days, conservative media has increasingly promoted the idea that the containment restrictions are doing more harm than good. In a Fox News interview on Monday, Texas Lt. Gov. Dan Patrick seemed to call for a broad repeal of restrictions, regardless of the human cost. “My message is, let’s get back to work,” Patrick told Tucker Carlson. “Let’s get back to living. Let’s be smart about it. And those of us who are 70-plus [years old], we’ll take care of ourselves. But don’t sacrifice the country.”
Former Fox host Glenn Beck put it in even starker terms. “I would rather have my children stay home and all of us who are over 50 go in,” Beck told his audience on Tuesday night. “Even if we all get sick, I would rather die than kill the country.”
As those pundits frame it, the recent economic collapse is caused by public health restrictions rather than the coronavirus itself, and loosening those restrictions could potentially lessen the damage. But the economists studying the recession see a return to normal activity as likely to cause yet more economic damage.
Given the exponential growth of the disease, University of Michigan economist Justin Wolfers says it is cheaper to stop the spread today than it will be tomorrow. “The relevant choice is whether to take dramatic actions today when the number of cases is measured in the tens of thousands,” he says, “or whether to take even more dramatic actions in the future when the number of cases is measured in the hundreds of thousands, or in the millions.”
The number of confirmed US cases is rising by roughly 38 percent each day, on pace to reach into the hundreds of thousands by the end of the week, according to data collected by Johns Hopkins University. Deaths have been rising at a slower rate, around 23 percent per day, suggesting some of the rise in case count may be the result of accelerated testing. Still, any relaxation of social distancing would likely cause those numbers to spike, with devastating consequences for both public health and economic activity.
As a result, even skeptical economists are recommending a measured response rather than a return to the status quo. Harvard economist James Stock, who is a member of the National Bureau of Economic Research, said he believed that the public health response had underplayed the ongoing economic crisis.
“I think the right framing is, how can we most efficiently reduce the spread of the virus while allowing some economic activity,” Stock told The Verge. Still, more testing is required before meaningful recovery measures could be put in place. “Random testing of the population is badly needed to understand prevalence and the asymptomatic rate.”
Countries like South Korea have been able to get the outbreak under control by testing the population broadly — whether or not people had symptoms — and then isolating those who tested positive. But the US still faces a massiveshortage of test kits, which means that doctors can’t even test every patient with symptoms. Without more tests, it will be hard to get a handle on who is at risk of transmitting the disease — and hard to relax restrictions without driving up infections.
It’s unclear how the White House plans to proceed. In a press conference on Tuesday at 5:30PM ET, the president continued to reference the Easter goal but seemed to lower expectations for an end to social distancing. “I’m hopeful to have Americans working again by that beautiful Easter day,” Trump said, “but rest assured that every decision we make will be grounded in the health, safety, and well-being of Americans.”
In the meantime, experts say the economic crisis will be hard to separate from the public health problem. “My worry is that right now, we have the worst of both worlds: a stalled economy and an ineffective public health response to the pandemic,” Obstfeld says. “The answer is not simply to pretend we can go back to business as usual.”
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
