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Biden faces moment of truth on the economy this week – CNN

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This story was adapted from the July 25 edition of CNN’s Meanwhile in America, the daily email about US politics for global readers. Click here to read past editions and subscribe.

(CNN)Every week is a tough week for this White House right now.

But as he recovers from his Covid-19 infection, President Joe Biden faces a new moment of truth this week about an economy that is stuck in an identity crisis and buffeted by unpredictable outside forces — and his White House knows it, as advisers scramble to front-run what many think could be a week of more gloomy data.
“This is not an economy that’s in recession, but we’re in a period of transition in which growth is slowing,” Treasury Secretary Janet Yellen told NBC News on Sunday, though she noted that there are “threats on the horizon.”
At any other time, a President presiding over a 3.6% unemployment rate — a shining number that normally would suggest a healthy economy — would expect his approval rating to be around 50% and be cruising to a second term. But Biden’s job performance rating has slumped into the 30s, and Democrats are bracing for big losses in midterm elections in November.
The culprit is inflation, a corrosive force that can demoralize every voter. Inflation has raced to 40-year-highs on the back of raging demand and Covid-compromised supply chains, exacerbated by a spike in oil prices. And depending whom you believe, Biden’s $1.9 trillion economic rescue plan pumped a torrent of cash into the economy at the wrong time.
In short, almost everything got more expensive this year — especially the everyday expenses most Americans cannot avoid, like food, housing and gas — which is bad news for the party in power in Washington heading into an election. Notably in that CNN poll, 75% called inflation and the cost of living the most important economic problem facing their family. Last summer, that figure stood at 43%.
Expect several key reports this week on US economic health and consumer prices to offer a glimpse of how bad things could get. On Wednesday, the Federal Reserve is also expected to raise interest rates again in an attempt to tame inflation, though some experts think the Fed’s new aggressive strategy came too late and risks tipping the economy into a recession.
As CNN Business’ Nicole Goodkind wrote in a piece titled, “What the Fed and Madonna have in common,” over the weekend, “The central bank’s dependability hinges on Americans believing that it’s … dependable.”
“If Fed Chair Jerome Powell says the Fed will reduce historically high inflation rates, Americans believe him and change their behavior to reflect that. It’s a self-fulfilling prophecy, the Fed’s version of The Secret,” Goodkind writes.
“But perception doesn’t always line up with reality, and the economists at the Federal Reserve are as susceptible to capricious economic shifts as you and I. There is no official rulebook to follow; they make their monetary policy through trial-and-error, and there have been errors,” she continues.
“The Fed, much like Madonna, is constantly evolving. This institution that aims to project an aura of stability is not beyond surprising us.”
Meanwhile, amid all the focus on inflation’s erosion of the strength of US paychecks, Goodkind notes that this week marks a sobering milestone for struggling American families: It’s been 13 years since the last time the US federal minimum wage was raised, to $7.25 an hour, making it the longest period without a raise since the federal minimum wage was enacted in 1938. (About 30 states and Washington, DC, have minimum wages above the federal standard.)
That can’t be helping Biden in the face of dismal poll numbers on the economy. Only 18% of Americans in that CNN survey described the nation’s economy as in good shape, while 82% said economic conditions are poor.
The latest Consumer Confidence Index from the Conference Board is due to be released Tuesday, after last month’s report showed souring confidence in the face of high gas and food prices and rising recession risks. Another closely watched snapshot of data — the Personal Consumption Expenditures Price Index, which charts changes in the prices of goods and services bought by US consumers — is out on Friday.
Responding to the news earlier this month that inflation had surged to a new pandemic-era peak in June, with US consumer prices jumping by 9.1% year-over-year, the White House seized on a more recent dip in gas prices, while complaining that the tumbling price was not being covered by the media with the same intensity that accompanied the hike in prices.
But public perceptions of the economy aren’t likely to change that fast.
While a recession is commonly defined by two consecutive negative quarters of gross domestic product growth, there’s no steadfast rule governing what defines a recession in the United States.
The National Bureau of Economic Research’s Business Cycle Dating Committee abides by a relatively vague definition that allows for wiggle room: A recession, it says, “involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
The committee also takes its time in defining when a recession begins and ends, making sure to look at data on a broad timeline. The designations often come retroactively — which means the US could currently be in the middle of a recession without anyone officially recognizing it until after the fact.
Brian Deese, the director of the White House’s National Economic Council, said on CNN’s “New Day” on Monday that the second quarter data would be “inherently backward-looking” since it reflects the situation from April through June.
“I think the bottom line is if you look at the labor market, if you look at what consumers are spending, what businesses and households are investing, you continue to see this resilience. But that’s no reason for complacency,” Deese said.
The attempt to get ahead of potentially bad economic data mirrors the White House’s approach on inflation when it recently argued that inflation numbers for June that showed the 9.1% year-on-year rise were “out of date” since they didn’t reflect a dip in gasoline prices.
But if the economic data this week suggests that the US economy is heading anywhere near a recession, it will mean another round of bad headlines for Biden and an opening for Republicans just over three months before the midterm elections.
And even if this week’s data suggest that the economy isn’t heading for a recession, it will still be a hard sell for the White House. Any president arguing that the economy isn’t really as bad as it feels to voters is in trouble.

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Economy

Mark Carney to lead Liberal economic task force ahead of next election

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NANAIMO, B.C. – Former Bank of Canada governor Mark Carney will chair a Liberal task force on economic growth, the party announced Monday as Liberal MPs meet to strategize for the upcoming election year.

Long touted as a possible leadership successor to Prime Minister Justin Trudeau, Carney was already scheduled to address caucus as part of the retreat in Nanaimo, B.C., this week.

The Liberals say he will help shape the party’s policies for the next election, and will report to Trudeau and the Liberal platform committee.

“As chair of the Leader’s Task Force on Economic Growth, Mark’s unique ideas and perspectives will play a vital role in shaping the next steps in our plan to continue to grow our economy and strengthen the middle class, and to urgently seize new opportunities for Canadian jobs and prosperity in a fast-changing world,” Trudeau said in a statement Monday.

Trudeau is expected to address Liberal members of Parliament later this week. It will be the first time he faces them as a group since MPs left Ottawa in the spring.

Still stinging from a devastating byelection loss earlier this summer, the caucus is now also reeling from news that its national campaign director has resigned and the party can no longer count on the NDP to stave off an early election.

Last week, NDP Leader Jagmeet Singh ended his agreement with Trudeau to have the New Democrats support the government on key votes in exchange for movement on priorities such as dental care.

All of this comes as the Liberals remain well behind the Conservatives in the polls despite efforts to refocus on issues like housing and affordability.

Some Liberal MPs hope to hear more about how Trudeau plans to win Canadians back when he addresses his team this week.

Carney appears to be part of that plan, attempting to bring some economic heft to a government that has struggled to resonate with voters who are struggling with inflation and soaring housing costs.

Trudeau said several weeks ago that he has long tried to coax Carney to join his government. The economist and former investment banker spent five years as the governor of the Bank of Canada during the last Conservative government before hopping across the pond to head up the Bank of England for seven years.

Carney is just one of a host of names suggested as possible successors to Trudeau, who has insisted he will lead the party into the next election despite simmering calls for him to step aside.

Those calls reached a new intensity earlier this summer when the Conservatives won a longtime Liberal stronghold in a major byelection upset in Toronto—St. Paul’s.

But Trudeau held fast to his decision to stay and rejected calls to convene his entire caucus over the summer to respond to their concerns about their collective prospects.

The prime minister has spoken with Liberal MPs one-on-one over the last few months and attended several regional meetings ahead of the Nanaimo retreat, including Ontario and Quebec, which together account for 70 per cent of the caucus.

While several Liberals who don’t feel comfortable speaking publicly say the meetings were positive, the party leader has mainly held to his message that he is simply focused on “delivering for Canadians.”

Conservative House leader Andrew Scheer was in Nanaimo ahead of the meeting to express his scorn for the Liberal strategy session, and for Carney’s involvement.

“It doesn’t matter what happens in this retreat, doesn’t matter what kinds of (communications) exercise they go through, or what kind of speculation they all entertain about who might lead them in the next election,” said Scheer, who called a small press conference on the Nanaimo harbourfront Monday.

“It’s the same failed Liberal policies causing the same hardships for Canadians.”

He said Carney and Trudeau are “basically the same people,” and that Carney has supported Liberal policies, including the carbon tax.

The three-day retreat is expected to include breakout meetings for the Indigenous, rural and women’s caucuses before the full group convenes later this week.

This report by The Canadian Press was first published Sept. 9, 2024.

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite down more than 200 points, U.S. stock markets also fall

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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.

The S&P/TSX composite index was down 239.24 points at 22,749.04.

In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.

The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.

The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.

The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.

This report by The Canadian Press was first published Sept. 6, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

Here’s a quick glance at unemployment rates for August, by province

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OTTAWA – Canada’s national unemployment rate was 6.6 per cent in August. Here are the jobless rates last month by province (numbers from the previous month in brackets):

_ Newfoundland and Labrador 10.4 per cent (9.6)

_ Prince Edward Island 8.2 per cent (8.9)

_ Nova Scotia 6.7 per cent (7.0)

_ New Brunswick 6.5 per cent (7.2)

_ Quebec 5.7 per cent (5.7)

_ Ontario 7.1 per cent (6.7)

_ Manitoba 5.8 per cent (5.7)

_ Saskatchewan 5.4 per cent (5.4)

_ Alberta 7.7 per cent (7.1)

_ British Columbia 5.8 per cent (5.5)

This report by The Canadian Press was first published Sept. 6, 2024.

The Canadian Press. All rights reserved.

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