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A lost decade looms for America's economy – CNN

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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.
The CBO warns in a new analysis that the pandemic will reduce cumulative economic output over the next 10 years by $7.9 trillion, or 3% of GDP during the decade, compared to its projections from January. Without accounting for inflation, the damage totals $15.7 trillion, or 5.3% of GDP.
The CBO said the revisions reflect expectations of reduced consumer spending caused by business closures and social distancing. In addition, the recent drop in energy prices is expected to “severely” curtail investment in that sector, the CBO warned.
Recent legislation, which includes more than $2 trillion in stimulus, will only partially mitigate the economic fallout caused by the pandemic, the CBO said.
The big caveat: The CBO cautioned that there is an unusually high degree of uncertainty around its forecasts because the course of the pandemic is unknown and it’s not clear how the economy will respond.
The report from the highly respected government number crunchers further challenges hopes for a speedy economic recovery from the pandemic, which had been a common talking point in the early days of the crisis.
More than GDP: If recent history is a guide, it could take even longer for the labor market and household wealth to recover.
The 2008 global financial crisis took a much smaller bite out of GDP than what experts expect to see as a result of the pandemic. But 10 years after the Great Recession began, labor force participation rates for prime-age workers remained depressed in the United States, and household wealth had only started to recover.
Neil Shearing, the group chief economist at Capital Economics, said that most major economies are in a similar position — at least in the medium term —despite the recent pick up in high frequency data such as road traffic and electricity consumption.
“While the slump in output caused by the virus seems to have bottomed out, the recovery is likely to be slow going and uneven. Most economies are still likely to be below their pre-virus paths of GDP by the end of our central forecast horizon in 2022,” he wrote in a research note on Monday.
He cited three big reasons why a recovery in high frequency data doesn’t tell the whole story.
Reason 1: The recovery follows an extreme economic chock. “The fact that activity is recovering needs to be seen in this context of the huge loss of output incurred during lockdowns. Output in most major economies is still running at somewhere between 15% and 25% of pre-virus levels,” he said.
Reason 2: High frequency data doesn’t tell us much about what’s going on with demand —one of the biggest factors in any rebound. “The fact that more journeys are taking place is encouraging, but the extent to which this will translate into a recovery in consumer spending is unclear,” he said.
Reason 3: Governments and central banks still need to figure out how to transition from crisis mode to recovery, and to reopen their economies in ways that don’t do more damage.
“Policy needs to shift from combatting a crisis to supporting the recovery,” said Shearing. “Making this transition will not be easy. One of the biggest risks in the near-term is that governments move too quickly to embrace a new round of austerity.”

A walkout at Facebook

Some Facebook employees staged a virtual walkout on Monday to protest CEO Mark Zuckerberg’s decision not to take action on a series of controversial posts from President Donald Trump.
As part of the walkout, employees took the day off work. Managers at Facebook have been told by the company’s human resources department not to retaliate against staff who are planning to protest, or to make them use paid time-off, a source told CNN Business.
The public pushback from employees comes after growing scrutiny of Facebook’s inaction following controversial posts from the president. Trump and Zuckerberg spoke on the phone Friday.
What employees are saying: Jason Stirman, a design manager at Facebook, said he disagreed with Zuckerberg’s decision to do “nothing” about Trump’s recent posts. “I’m not alone inside of FB. There isn’t a neutral position on racism,” he wrote in a tweet on Saturday.
Andrew Crow, head of design for Facebook’s Portal devices, said on Twitter: “Giving a platform to incite violence and spread disinformation is unacceptable, regardless who you are or if it’s newsworthy.” “I disagree with Mark’s position and will work to make change happen,” he added.
Katie Zhu, an Instagram employee, tweeted that she was taking Monday off and that she’s “deeply disappointed” and “ashamed” with “how the company is showing up.” Zhu encouraged others who work for Facebook’s apps to join her and “organize.”
While only a small number of Facebook employees are currently speaking out compared to Facebook’s overall workforce of about 48,000, the protests underscore the company’s difficult position.
Taking action on Trump’s posts risks angering the White House and conservatives, who have long complained of alleged bias on the platform and are threatening new regulations, but doing nothing could alienate some of Facebook’s top talent.

What black CEOs are saying

Just four Fortune 500 companies in America have black CEOs. Three of them are speaking out following the death of George Floyd.
Jide Zeitlin, CEO of the luxury goods brand Tapestry, which owns Kate Spade, Coach, and Stuart Weitzman, posted a personal message on LinkedIn to his employees.
“I sat down several times to write this letter, but stopped each time. My eyes welling up with tears. This is personal,” Zeitlin wrote.
“We can replace our windows and handbags, but we cannot bring back George Floyd, Ahmaud Arbery, Breonna Taylor, Eric Garner, Trayvon Martin, Emmett Till, and too many others,” he added.
Lowe’s CEO Marvin Ellison posted a letter to his team on Saturday.
“I grew up in the segregated south and remember stories my parents shared about living in the Jim Crow South,” he wrote. “So, I have personal understanding of the fear and frustration that many of you are feeling.”
Merck CEO Ken Frazier told CNBC on Monday that he could have just as easily been George Floyd.
“What the African American community sees in that videotape is that this African American man, who could be me or any other African American man, is being treated as less than human,” Frazier told CNBC.
Frazier said that “huge opportunity gaps” exist in America.
“It is the responsibility of corporate America to bridge those gaps,” Frazier said. “If we don’t try to create opportunities for these people to be employed — joblessness creates hopelessness.”
Dick’s Sporting Goods will publish earnings before the opening bell.
Also today: CrowdStrike and Zoom earnings are up after the close
Coming tomorrow: ADP private employment report; US services data; Campbell Soup earnings

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Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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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 Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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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.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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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.

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