Economists and market analysts say that when President-elect Joe Biden takes the oath of office in January, he will inherit a battered economy. While most metrics of economic activity have risen from the record-shattering lows they hit in March and April, the pace of improvement has slowed, and analysts worry that burgeoning Covid-19 case numbers will throttle the hard-won economic momentum the country has eked out so far.
It won’t be easy. Control of the Senate is still up in the air, but many believe it’s likely that Congress’s upper chamber might still have have a Republican majority with Sen. Mitch McConnell, R-Ky, as Majority Leader. Although Biden has referenced his work with McConnell in the past to bolster his credentials as a politician who can successfully work across the aisle, McConnell’s public backing of President Donald Trump’s refusal to concede on Monday was, if nothing else, a clear indication that bipartisanship will be elusive for Biden.
“With a divided Congress, a handful of the major legislative priorities of a Biden administration seem unlikely,” said Ross Mayfield, an investment strategy analyst at Baird. “Any kind of major corporate tax hike or wealth tax seems incredibly unlikely with a Republican Senate.”
“Pfizer’s progress towards a vaccine is promising, but does not negate the need for lawmakers to act in the near term.”
Despite Biden positioning himself as a centrist, economists aren’t expecting much across-the-aisle cooperation. After a stimulus deal is passed, “I think it’s going to be difficult to do much beyond that, legislatively,” said Mark Zandi, chief economist at Moody’s Analytics.
Although Biden will be unable to put most of his — and his party’s — boldest initiatives into action, Zandi said the new president would likely implement a flurry of executive orders, many targeted at undoing policies Trump had unilaterally imposed the same way. “Biden’s going to reverse Trump on trade, on immigration, on climate change, on banking regulations,” he said. “It’s not big, fundamental shifts… it’s more incremental.”
Economists say these are the week-one, day-one challenges Biden will face as soon as he is sworn in — and how he might be able to meet them.
Corral the coronavirus
Although a public health crisis first and foremost, experts agree that containing and lowering the burgeoning number of Covid-19 cases is the only way to alleviate the economic crisis that has gripped the country since March. Getting the virus under control will ensure that stores, restaurants, hotels and entertainment venues can stay open, and that Americans will have the confidence — and the disposable income — to take flights, attend ball games, eat out at restaurants and shop in stores.
“He’s going to encourage the governors to recommend that face masks be mandatory in order to try and improve the chance of the economy opening as quickly as possible,” said Sam Stovall, chief investment strategist at CFRA Research. “I think everybody realizes that more action is needed.”
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His administration will need to invest in people, equipment and technology to improve the availability and accuracy of testing, production and dissemination of PPE and development of virus-mitigation and contract tracing protocols — all goals endorsed by public health officials. However, observers caution that Biden could run into resistance from Republican Congress members and governors over issues such as mask mandates and increased funds for testing and contact tracing.
Get America more stimulus
Congress was unable to come to an agreement on the terms of a stimulus package before the election. Economists are divided on whether or not — and when — another tranche of aid might be forthcoming. “Any kind of coronavirus fiscal stimulus legislation still seems likely, [but] some of the good recent economic data shows economic momentum that has pared the appetite for a big bill,” Mayfield said.
Most analysts, along with top officials like Federal Reserve Chairman Jerome Powell, do agree that additional stimulus is needed. The progress announced by Pfizer on Monday towards a Covid-19 vaccine was promising, some said, but did not negate the need for lawmakers to act in the near term.
“Regardless of the path of the virus, I think there’s pretty high awareness across the partisan spectrum that there needs to be some sort of bill to carry this recovery across the finish line,” Mayfield said.
A worsening public health picture could incentivize lawmakers to work quickly, some said. “Majority Leader McConnell’s reluctance to move ahead with a relief bill the last few months suggests it will be uphill sledding — though one might note that many experts expect the pandemic to be considerably worse by the time Biden is sworn in, which may make the politics of a broad relief and recovery effort somewhat more feasible,” said Mason B. Williams, a political science professor at Williams College.
Bring back jobs
A growing number of job losses are shifting from temporary to permanent, an ominous change labor economists say will get worse between now and the inauguration, particularly if the current alarming trajectory of case growth continues unchecked.
Economists agree that, even if a Biden White House is able to get a sufficient handle on Covid-19 to avoid reimposition of shutdowns, Americans will need the means as well as the willingness to spend. Securing more stimulus is an important first step, Stovall said. “He would want to focus on stimulus right away to save as many jobs as he can,” he said. With consumer spending the biggest contributor to GDP, putting money in the pockets of ordinary Americans is a quick way to insulate the jobs of countless cashiers, cooks, hairstylists, hotel staffers and others in high-contact service-sector positions.
Mayfield said another way Biden could contribute to job gains would be to coordinate more PPE production at American factories. “I think you’ll probably see some effort on some things like utilizing the Defense Production Act to mobilize some U.S. manufacturing,” he said. This would have a multifaceted impact touching on a few different Biden administration priorities: Adding jobs, securing enough PPE to combat Covid-19 and revitalizing American manufacturing with an eye towards rebuilding.
“In proposing a Public Health Jobs Corps, Biden is wisely copying from the New Deal’s playbook of providing short-term ‘emergency’ employment.”
Biden’s transition website calls for establishing a 100,000-person job corps to combat the coronavirus. “In proposing a Public Health Jobs Corps, Biden is wisely copying from the New Deal’s playbook of providing short-term ‘emergency’ employment in ways that will stimulate long-term economic growth,” Williams said.
Although hailed by some as a proactive way to tackle the nation’s considerable public health as well as economic challenges, this proposal would likely face resistance from Congressional Republicans. Likewise, Biden’s proposals to develop jobs in sectors as diverse as infrastructure, green energy and child- and elder-caregiving all would require the kind of spending outlays he would be unlikely to wrest from a GOP-led Senate.
“Republican Senators are even less likely to support Biden’s spending priorities than they would be likely to support some of Trump’s spending priorities,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance.
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.
