To an extraordinary degree, disease shapes human destiny. The Plague of Justinian (A.D. 542 to 755) decimated the enslaved across the Roman Empire and triggered a new era of feudalism. The Black Death’s toll centuries later sparked a social revolution that broke up the estates of feudal overlords and propelled the rise of new technologies—the iron plow in the countryside and, in cities, labor-saving devices like the printing press and water pumps.
Of course, history never repeats itself exactly. This pandemic hasn’t been nearly as deadly as those that depopulated the ancient world. And the novel coronavirus turns the Black Death paradigm on its head: rather than acting as a social leveler, it’s dramatically increased inequality. U.S. billionaires added almost $1 trillion to their fortunes during Covid-19, even as the new laboring underclasses face economic hardship and hunger.
Yet this respiratory disease has forced a profound reckoning. For better or worse, it has accelerated just about every transition we’re focused on at the Bloomberg New Economy, starting with the shift of wealth and power to the East, a journey that will in large part define the 21st century.
By one estimate, the pandemic has given China a five-year jump on its goal to overtake the U.S. as the world’s largest economy, the Chinese leadership’s reward for locking down hard and early while the Trump administration fumbled its response—and then exacerbated it with mixed messaging, like holding super-spreader events in the White House.
Sure enough, the moment that underscored how geopolitics pivoted in 2020 came this week with a European Union-China investment agreement. German Chancellor Angela Merkel and other European leaders chose to look past Uighur internment camps and a Hong Kong democracy crackdown to a Chinese economy that’s likely to deliver at least one-third of global growth year after year. Volkswagen’s future, for example, is in China. The idea of any country signing up for a program of “decoupling” from the soon-to-be-biggest global economy is dead. Likewise, the incoming Biden administration’s hopes for a grand coalition to counter Beijing have come crashing down, even if the EU deal doesn’t preclude cooperation on specific issues like intellectual property theft.
What else has changed? Businesses over the past year have seen the future rushing toward them, and that future is digital—in the way the world works, shops and searches for entertainment and medical advice. A weightless economy favors companies with intangible assets: brand, scale and the ability to raise capital. Investment banks all over the world have recorded their best year ever for fees while e-commerce has exploded.
“Covid has acted like a time machine: it brought 2030 to 2020,” Loren Padelford, vice president at Shopify Inc., told The Wall Street Journal.
Wait for the backlash, though. China’s assault on Jack Ma’s digital empire isn’t all about the Communist party’s fear of uppity entrepreneurs. Alibaba’s monopolistic pretensions sit no better with regulators in Beijing than Google’s do in Brussels. Covid-19 has brought forward the antitrust showdown.
The worst crisis since the Great Depression has also advanced the way economists think about money. Few worry about the trillions of dollars in state support for shuttered businesses and laid off workers. In the new economy, fiscal outlays—whether on stimulus checks or physical infrastructure—pay for themselves in future GDP growth thanks to rock-bottom interest rates.
Another outcome is that a new social contract is emerging from this catastrophe. Poverty, notes the economist Adam Tooze, is now a political choice. In Brazil, the right-wing government of Jair Bolsonaro has actually rolled back poverty and inequality during the pandemic to levels unseen since at least 1970 through welfare payments. Many countries have similarly replaced lost income with emergency benefits. What happens when they expire? As Tooze notes, a decision not to relieve poverty, when it’s fiscally possible, is also political, with life-and-death consequences. Democratic politics are about to become even more contentious.
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A pharmacist prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at a senior citizen care home in Premnitz, Germany, on Dec. 30.
Photographer: Liesa Johannssen-Koppitz/Bloomberg
Then there’s the vaccine itself. More than a century elapsed between the identification of the typhoid fever pathogen and the development of a vaccine in the U.S. The polio shot took half a century. The mumps vaccine was rushed through in four years, a record that held until Pfizer-BioNTech developed a shot for Covid-19 in 10 months or so, thanks in part to advances in genomic sequencing. Expect further accelerated development in biotechnology and pharmaceuticals: Healthcare will be a major driver of growth and employment in the post-pandemic world.
There’s hope, too, for the biggest challenge of all: the fight to slow global warming and the climate crisis. In a year when ExxonMobil was kicked off the Dow Jones Industrial Average, and Tesla’s share price rocketed by almost 700%, China pledged to go carbon neutral by 2060. Europe, the U.S. and China are now aligned on net-zero. Wall Street is buying the green story: According to Citigroup Inc., about 50% of all new exchange-traded funds in Europe, the Middle East and Africa in 2020 were ESG-related.
At Bloomberg New Economy, we’re not going to make any bold predictions for 2021. But we’re pretty confident that Covid-19 has sowed the seeds of change that will be every bit as consequential over the long term as the plagues that spurred Europe’s passage from the Dark Ages to the Renaissance.
In science and technology, not to mention the way we work and play, we’ve just entered a new age of discovery.
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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 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.
