The effects of COVID-19 are being felt well beyond the health and wellbeing of the community.
While keeping people safe should absolutely be the priority, we have to keep one eye on the economy. We are going to need to be able to function as a society once the fog of this pandemic lifts.
Perhaps the most difficult part to that is the fact the coronavirus is already unprecedented in our modern world in how it has shut down the economy.
It is estimated by many observers that the federal deficit will hit $150 billion, much of which is due to pandemic spending and economic packages and supports for the unemployed and businesses facing economic hardship.
The province is also looking to blow past any concept of sticking to their budget and last week asked Ottawa to use its financial weight to help provinces get a better rate on loans, adding Manitoba would be looking for $10 billion in loans.
It is worth noting, Canada will hardly be alone in this deficit spending and borrowing. The U.S. recently announced a $2 trillion COVID-19 package.
This is while the Canadian Federation of Independent Businesses last week estimated a third of Canada’s small- to medium-sized business would not survive COVID-19. On Monday, they were estimating 21% of small businesses in Manitoba will have difficulty paying rent next month with another 11% reporting they don’t know if they will be able to.
Loren Remillard, president and CEO of the Winnipeg Chamber of Commerce, said he has seen similar numbers in Winnipeg, noting a week and a half ago, a large number of businesses said they had enough cash to float the business for 30 days. After that, it was a big question mark
These businesses will be critical to recovery as they were in the crash of 2008.
“I believe it was 80-90% of the new jobs created post-’08 were led by the small- and medium-sized enterprises of this country — a million jobs created by those companies,” he said. “We recognize the role those businesses have played coming out of crises and driving our economy back to ensure the quality of life we all enjoy.”
The chamber has been successful in lobbying for better supports for businesses from the federal government, including $40,000 interest-free loans and improved funding for employment support packages.
Something that will be important to watch is how the energy economy in Alberta is crumbling. It still had not completely bounced back from the last recession when oil powers Saudi Arabia and Russia undercut the price of oil and it has been in free fall to single digits for the price of Alberta crude.
Like it or not, our financial fate is still largely tied to the Alberta oil fields. The further oil drops, the fewer rigs are in operation and the fewer oil workers are collecting their big paycheques. That means the less money there is heading east in equalization payments.
Manitoba has a much more diversified economy, but still collected more than $2 billion last year in transfer payments.
“That’s the big problem going forward,” said Phil Cyrenne, professor of economics University of Winnipeg. “Most of the equalization is central to funding the public service.”
As a silver lining to the crisis, COVID-19 will force companies to adapt to more efficient ways of operation. Specifically, we are discovering just how many people can work from home which will allow companies to examine just how big of an office footprint they need. They can run leaner and potentially more effectively.
It is also forcing more companies online who may not have been online previously, thus opening up new markets to them.
While this is seen as a survival tactic right now, encouraged by the chamber to their members, the impact could be huge going forward.
“If this had happened 10 or 20 years ago, the effects would be even way worse,” said Cyrenne. “I think technology has allowed us to escape even some of the constraints in some sectors.”
We have some awful times ahead of us, but there is a light at the end of the tunnel.
NWT says its economy is weathering Covid-19 better than others – Cabin Radio
The NWT’s economy will come out of Covid-19’s initial months damaged but in better shape than other parts of Canada, the territory said on Friday.
The territorial government is forecasting a 3.3-percent contraction in its economy this year, which it says is “significantly less than the national average of 8.2 percent forecast by the Conference Board of Canada,” an economic think-tank.
Despite steep declines in the tourism and transportation industries, the territory said “steps taken to keep the diamond mines and the public sector active” had softened the pandemic’s blow.
Mining and government are by far the territory’s largest employers. The Ekati mine has suspended activities but the Gahcho Kué and Diavik mines remain fully operational.
The private sector is in worse shape. A GNWT-commissioned survey of businesses showed that 81 percent of NWT companies had experienced a “significant decrease” in revenues.
Tourism and transportation industries were the hardest-hit, telling the government they saw revenues drop by an average of 71 percent.
On the other hand, more than 90 percent of businesses surveyed by the territory in April and May reported they expected to make it through the pandemic.
Consumer spending and small business spending has rebounded since May, the territory said, and 71 percent of NWT residents surveyed were planning to travel within the territory in the next six months.
The Department of Industry, Tourism, and Investment said the results of third survey – carried out in June to examine the impact on consumer demand – is coming soon.
According to the territory, the various surveys are “part of … ongoing work to better understand the effects of Covid-19 on the NWT and how best to respond to them.”
Saskatchewan economy adds 30,000 jobs in June as businesses open up again: Statistics Canada – CBC.ca
Saskatchewan added more than 30,000 new jobs in June as businesses began to open back up from the COVID-19 pandemic.
Saskatchewan’s unemployment rate dipped to 11.6 per cent in June from a high in May of 12.5 per cent, according to a Statistics Canada report on Friday.
At the national level Canada added almost one million jobs in June.
The national jobless rate fell to 12.3 per cent, down from the record-high of 13.7 in May. There are still 1.8 million fewer jobs in Canada today than there were in February.
Jason Childs, an associate professor of economics at the U of R, said he was pleasantly surprised by the employment gains.
“To be gaining 30,000 jobs provincially and nearly a million jobs nationally is some unexpected good news, which is nice for a change,” he said.
The growth in Saskatchewan was split between 22,000 full-time jobs and 10,000 part-time jobs.
Childs cautioned that the jobless rate in the province is still more than six per cent higher than it was at this time last year, when it was 5.2 per cent, and there still about 40,0000 fewer jobs than before the pandemic.
“[Some people] don’t appreciate how deep the hole we’re in is and this is not a hole we’re going to get out of quickly,” Childs said. “[Unemployment] has more than doubled from this time last year.”
All those job losses have not been evenly distributed throughout the population.
Young workers are taking the brunt of the job losses in the province.
One in five people 15 to 24 years old are without a job, compared to 8.6 per cent of workers over the age of 25.
Unemployment among First Nations is 18.4 per cent and the Métis jobless rate is 17.3 per cent.
Childs said both those groups already have higher unemployment and they will have a harder time getting back in the workforce.
“People looking for that first job are going to have a really tough time right now because anything that opens up you’re probably going to be competing with somebody who’s got a lot more experience,” he said.
The one sector hit hardest by the pandemic is food and accommodation, where an estimated 400,000 workers across the country are still without a job.
Childs said those jobs are dependent on consumer spending and tourism, and that people’s financial habits have changed during the pandemic.
“I still think we’re going to see a drag [on the economy] as we get what’s called the Paradox of Thrift,” Childs said.
“As people begin to save for their own protection we may see that drag on economic activity as consumption falls off.”
He said people are beginning to cut back on ‘luxuries’ like going out to eat or grabbing a cup of coffee.
“That’s a place where you can cut back fairly easy,” he said.
“People are dealing with a massive amount of uncertainty right now and uncertainty breeds caution and doesn’t breed spending.”
Childs said no amount of fiscal stimulus is going to solve this crisis without consumer confidence.
“You need to get people back to a place where they feel comfortable and safe spending in order to return to the previous level of economic activity,” he said. “Or we’re just gonna have to get used to this.”
Jason Kenney sees supply shortage in oil and gas when global economy rebounds from COVID-19 – Edmonton Journal
COVID-19 has put Canada in a “deep fiscal hole,” and the only way to get out of it is to spark the oil and gas sector, Premier Jason Kenney said Friday.
Noting the federal government’s announcement Wednesday it expected to post a $343-billion deficit, Kenney expressed optimism that demand for oil would bolster Alberta’s recovery.
“When the global economy comes back from COVID, when demand returns for oil and gas, we are going to see something of a supply shortage, because of the upstream exploration that has been cancelled,” he said at a Friday news conference.
“So we’ll see prices go up, and that will be a great opportunity for Alberta especially as we make progress on pipelines,” Kenney said.
At Friday’s market close, West Texas Intermediate crude was priced at just over US$40.
TC Energy’s Keystone XL pipeline, which the government of Alberta has committed $7 billion in financial support, faced a legal hurdle this week when the U.S. Supreme Court refused to let construction begin on the project.
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