President Joe Biden is pitching his $2 trillion infrastructure proposal as the “largest American jobs investment since World War Two,” a plan that will put millions of people back to work as the country emerges from the coronavirus crisis.
The economy, meanwhile, is showing signs of recovering on its own.
More than 916,000 Americans returned to work in March, the Labor Department reported on Friday, far surpassing consensus expectations and marking the biggest jump in employment since the summer as Americans get vaccinated and more states and cities allow businesses to reopen. The overall unemployment rate ticked down to 6 percent.
It’s the latest in a series of reports this week showing a resurgent economy, with consumer confidence jumping to levels not seen since the start of the pandemic and manufacturing activity surging to its highest peak in nearly four decades. The S&P 500 also closed the week at a record high. Together, the numbers signal the U.S. is well on its way toward a revival, one that’s widely expected to reach record levels of growth later this year.
And that in turn has blunted one of the central pillars of the Biden administration’s argument as to why the sprawling infrastructure plan is so sorely needed, even after $1.9 trillion in relief money passed just last month — that “it’s about jobs,” as White House press secretary Jen Psaki put it this week, and “the first part of his plan toward recovery.”
Most lawmakers in both parties agree, however, that a major investment in the country’s infrastructure would be well worth it, a step Presidents Barack Obama and Donald Trump both tried and failed to take. But pitching trillions more in spending as necessary to bring back jobs could become a harder argument to make as the economy looks poised to get there on its own.
“Spending at a much smaller level, but better targeted, would have better bang for the buck,” said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee. “We are wasting far too much of these dollars in areas that frankly aren’t related to the recovery.”
Biden sought to rebut those concerns Friday, emphasizing that while the March jobs data was promising, the economy still has a long way to go.
“Yes, we made progress by starting to build an economy from the bottom up and the middle out. And yes, the American Rescue Plan is laying the foundation for that economy,” Biden said at the White House. “But we still need the American Jobs Plan to build on that foundation to build this country back better.”
The White House’s argument could ring hollow in particular to Republicans and possibly even some centrist Democrats who have begun to try to tap the brakes over the eye-popping levels of cash being pumped into the economy. Congress passed roughly $5.4 trillion in emergency aid measures in less than a year, and the White House is putting another $2 trillion to $4 trillion on the table now.
“I don’t see much of a stimulus or jobs argument going very far, even as some try to make it,” said Brian Riedl, a senior fellow at the right-leaning Manhattan Institute. “The economic outlook is strong for the second half of the year. And it would have been strong without the next stimulus bill.”
The infrastructure package’s supporters maintain that while some further stimulus would still benefit the economy — no one in the administration wants to repeat the sluggish “jobless recovery” that followed the Great Recession — the broader objective is to strengthen the country’s infrastructure, making it more resilient against the effects of climate change while expanding access to clean water and broadband.
And that goal is worth pursuing even in spite of the record levels of cash Congress has already appropriated in the last 12 months, proponents say — especially given the current low interest rate environment.
“We’re not going to go fix 10,000 bridges just to put people to work. We’re going to fix them because those 10,000 bridges need to be fixed,” said Rep. Don Beyer (D-Va.), who leads the Joint Economic Committee.
“Even if there were no stimulus argument to be made, there’s a very powerful argument to be made that the American Jobs Plan is necessary,” he said. “Maybe you could call it something else — you’d just call it the Infrastructure Plan.”
Some economists argue that the infrastructure initiatives are so important that policymakers should be wary of allowing spending fatigue and the strengthening economy to become the reasons it doesn’t get done this year.
Diane Swonk, the chief economist at Grant Thornton, said it would “be a shame” if the earlier relief measures crowded out the infrastructure plans.
“It’s beyond a crisis point, and just because we’re coming out of a pandemic doesn’t mean we shouldn’t do it,” she said. “All the more reason to do it. Because we already know a rising tide does not lift all boats, and you don’t want to mistake the surge associated with unleashing the pent-up demand from the pandemic with long-term sustainability.”
Those long-term benefits are the most important reason to pass the infrastructure plan, supporters say, given that it would invest in projects that will pay for themselves within 15 years and benefit the country for decades after that.
And that extended timeline is the reason most economists have shrugged off any concerns that another multitrillion-dollar influx of cash could be too much, too fast for the broader economy. Much of the money as proposed under Biden’s plan would not be spent for at least a few years after it is signed into law, and it will be doled out over eight years. Biden is proposing paying for it, though over a longer timeline than it will initially be spent, with tax hikes on corporations.
“I don’t think that it exacerbates the overheating concern that I’ve expressed in an important way,” said former Treasury Secretary Larry Summers, a vocal critic of the administration’s $1.9 trillion relief plan, which he warned could funnel too much money into the economy, spark inflation and crowd out other progressive priorities.
But the infrastructure proposal, he said, is not about “short-term injecting money into the economy — but creating the infrastructures and the institutions that success in the 21st century requires.”
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.
