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BoC eyeing supply, consumer demand for July economic outlook, deputy says –



OTTAWA — A senior official at the Bank of Canada says the central bank will be paying close attention to what the post-pandemic economy can supply and what consumers demand.

Deputy governor Toni Gravelle said Thursday it’s possible that supply could recover faster than demand if businesses reopen quickly while consumers remain cautious.

In a speech by video conference to the Greater Sudbury Chamber of Commerce, he said it will be key for the bank’s governing council to understand how the pandemic has affected demand, employment and the economy’s capacity to produce goods and services by its next interest rate decision in mid-July.

At that time, the bank will also release an updated economic outlook.

The Bank of Canada held its key policy rate at 0.25 per cent on Wednesday, but said the economy appears to have avoided a worst-case scenario due to the COVID-19 pandemic.

Gravelle made clear that’s as low as the bank believes the rate can go before it causes problems in markets, a nod toward talk about negative interest rates to spur spending.

The bank also reduced some of its market operations after it “cranked up the volume to 11” to allow the banking system to tap directly into much-needed funding liquidity, Gravelle said.

“Despite the positive signs, though, many risks and uncertainties remain,” Gravelle said, according to a text of his speech released by the bank.

“A lot will depend on whether we as a country are successful in managing the risk of possible future waves of COVID-19, and the pace at which containment measures are lifted. This applies to the global economy as well as Canada’s.”

He said the bank will pay close attention to how the pandemic is affecting growth and demand in key markets for Canadian exports.

Statistics Canada said the domestic economy shrank by 2.1 per cent in the first three months of the year. The Bank of Canada now expects output to drop a further 10 to 20 per cent in the second quarter, which is below its April expectations of a 15 to 30 per cent drop.

As bad as that sounds, Gravelle said, it would be closer to the best-case scenario the bank envisioned in April.

Gravelle pointed in his speech to silver linings in otherwise gloomy economic data.

Statistics Canada jobs figures showed that three million workers became unemployed over March and April as the pandemic took hold, but 43 per cent said they expected to return to their jobs once the pandemic passes. Gravelle said that figure was 15 per cent during the global financial crisis over a decade ago.

“These are all sort of subtle indications,” he said during a media teleconference following the speech.

“It was just more of a hopeful sign that the attachment rate of these employees will be stronger in this crisis or this environment than it was in 2008-2009.”

Inflation has dropped close to zero, driven mainly by plunging gasoline prices, and Gravelle said inflation will remain below the bank’s two per cent target in the near-term due to temporary factors.

Despite the positive tone of the speech, it’s clear no one at the central bank is breathing a sigh of relief just yet, said TD senior economist Brian DePratto.

“The multiple references to its ability to provide further stimulus, and the reiterated goal of keeping asset purchases running until the bank is certain the economic recovery is well underway make it clear that the foot will be firmly on the accelerator for some time to come,” he wrote in a note.

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OPINION | In Alberta, it's always the economy, stupid –



This column is an opinion from Max Fawcett, a freelance writer and the former editor of Alberta Oil magazine.

Staged photo opportunities are common fare in Canadian politics, but few have been more widely mocked than the gas station selfies taken by Alberta conservative politicians on the eve of the Jan. 1, 2017, implementation of a carbon tax.

As the National Post’s Tristin Hopper wrote at the time, Jason Kenney’s Dodge Ram 1500 “carries a fuel capacity of about 98 litres, so if Kenney rolled in running on fumes, at 4.5 cents a litre he dodged just enough tax to buy a New Year’s Eve Molson Canadian at the Legion (if it’s on special).”

As it turns out, though, those MLAs — and especially Jason Kenney — got the last laugh. 

Yes, as Hopper wrote in his piece, nobody was saving any real money by front-running the carbon tax. But that was never the point. Instead, it was about framing the new policy in terms of its financial costs, not its environmental benefits.

The lesson, in retrospect, is clear: if you want to speak to Albertans, you need to be using the language that they’re most familiar with: the economy.  

Moments of fluency

That lesson was driven home most recently on Monday, when the premier announced his “Alberta Recovery Plan.” But while the NDP has already taken a swipe at its contents, which include an acceleration of an already announced corporate tax cut and some additional stimulus spending, it’s not clear that they’ll be forthcoming with a competing economic narrative of their own.

After all, that was something they rarely talked about when they were in government. 

Yes, there were moments, like premier Notley’s speech in 2015 at the Stampede Investment Forum, where it flashed some fluency.

“We know there is only one way to succeed,” she told the people in attendance. “And that’s by supporting a free, open, sustainable and increasingly diversified economy.”

But it became clear throughout the course of the next three-plus years that the economy was the NDP’s second language, at best.

Instead, it preferred to talk about increasing supports for vulnerable populations, improving rights for workers and showing leadership on the environment — all important priorities, but ones that rarely spoke to Albertans’ economic concerns that only grew as oil and natural gas prices continued to fall and pipeline projects continued to get stalled or cancelled outright.

That focus on social issues continued into their 2019 campaign, which focused on Jason Kenney’s perceived shortcomings as a leader and the threat his government would present to certain Albertans. The results, in the end, say it all. 

If they want those results to be different in 2023, they’re going to have to become far more fluent in the language of jobs and economic prosperity — and fast, if the latest batch of polls are any indication.

It became clear during Rachel Notley’s time in office that the economy was the NDP’s second language, at best, according to Max Fawcett. (Jeff McIntosh/Canadian Press)

Yes, the sample size on the Innovative Research poll that was taken in early June was almost laughably small at just 297 people, but its results should still serve as a warning to Alberta’s New Democrats.

After all, despite its self-defeating war with doctors and a growing array of gaffes and missteps, Kenney’s party is polling at 42 per cent — the same as the combined total of the NDP (28 per cent) and Alberta Liberals (14 per cent).

“They’ve struggled to find their footing in opposition, and particularly during COVID, just as any opposition party has. I think they’ve done better than Scheer, but that’s a pretty low bar,” says Duane Bratt, a professor of political science at Mount Royal University.

“They had gained momentum between the election and our poll in March. [But] they lost that momentum by May.”

And while the province has been battered by bad economic news over the last few months, the recent bout of ultra-low oil prices could be seeding the ground for a much healthier economic environment in Alberta down the road.

Higher oil prices could be coming

Shale oil production, for example, may never recover to the levels it was at back in January, and it’s entirely possible that oil prices could be far higher than where they are today by the time Albertans head to the polls in 2023.

JP Morgan, for example, recently published a note that suggests $100 oil isn’t out of the question in the relatively near future, while Rystad Energy is calling for an oil spike “between 2023 and 2025.”

Even if those prices don’t materialize, the Trans Mountain expansion should still be nearing completion, Line 3 will be in service and Keystone XL could even be getting built. Fair or not, Kenney will be able to point to these developments as validation of his government’s approach — and a sign of its achievements. 

That’s why the NDP needs a competing narrative, one that directly challenges the UCP’s double-or-nothing approach to economic development and its apparently unshakeable faith in the oil and gas industry’s ability to turn back the clock. And as the CBC News-Road Ahead poll from March reveals, there’s lots of opportunity there.

For example, when asked if “oil and gas companies have too much say in Alberta politics,” 54 per cent either strongly or somewhat agreed. More importantly, those figures held in Calgary, with 26 per cent strongly agreeing and 27 per cent somewhat agreeing. That majority held across key NDP demographics, from younger people (indeed, 63 per cent of those aged 25-44 agreed) to lower and middle income families and the highly educated.  

Bill Clinton is shown, right, during one of the debates leading up to the 1992 U.S. presidential election. When progressive politicians win elections, it’s usually because they have a compelling economic message. (The Associated Press)

In a bit of a shocker, 54 per cent of Calgarians agreed that “Alberta should transition away from oil and gas.” And here, again, this majority held across the young, the working and middle class, and the highly educated.

When asked if “Alberta should transition toward renewable energy,” fully 80 per cent of Calgarians agreed. And when asked if Alberta should “do more to encourage the development of the technology sector,” support in Calgary hit 95 per cent.

Yes, the sample sizes here aren’t enormous, but they’re big enough to lend some credibility to these results, which should serve as a roadmap for the NDP’s economic message over the next 30 months.

And while it might be tempting to read these results as an invitation to talk about a “Green New Deal,” the political failure of the Climate Leadership Plan speaks to the dangers of putting environmental objectives ahead of economic ones in Alberta.

A compelling economic message

Instead, they need to remember that when progressive politicians win elections, it’s usually because they have a compelling economic message that connects with working and middle class voters. That was true of Bill Clinton’s “It’s The Economy, Stupid” campaign of 1992. It was true of Barack Obama in 2008. And to some extent, it was true of the NDP back in 2015. 

But those elections are the exceptions, not the rule.

“Typically,” Bratt says, “the NDP owns the issue of health care and education. They don’t [own] the economy.”

Even with all of the health-care and education-shaped rakes that the UCP has stepped on lately, it’s still polling ahead of the NDP — and that’s before any potential rebound in commodity prices.

In a recent blog post, progressive organizer Scott Harold Payne argued that “as long as we’re busy attacking Kenney on issues of his choosing, we’re not busy building an alternative economic narrative that could unseat the UCP.”

In other words, even if they can’t truly own the issue of the economy, they have to find a way to not get owned on it again.

And if it takes a few silly staged photo-ops to do that? Well, it beats losing another election.

This column is an opinion. For more information about our commentary section, please read this editor’s blog and our FAQ.

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There's still a gaping hole in the economy – BNN



June was another big month for job growth as employers called back workers from coronavirus-induced layoffs. As a resurgence of the disease in the U.S. raises lots of questions about whether the growth can continue, though, I thought it might be informative to take a look back.

That is, rather than focus on what happened in June, let’s add up what has happened to payroll employment since February, when this strange, awful adventure began.

“There’s still a lot of hardship and heartbreak in these numbers,” White House economic adviser Larry Kudlow said in an uncharacteristically sober reaction to the jobs report. Indeed there is. Nonfarm payroll is down by 14.7 million, or 9.6 per cent, since February, on a seasonally adjusted basis.

Every one of the 11 supersectors into which the Bureau of Labor Statistics divides the U.S. economy employs fewer people than it did then, although for some the damage has been far worse than for others.

Employment in financial activities — aka the finance, insurance and real estate sector — has so far been only modestly affected. The leisure and hospitality supersector has, not surprisingly, been by far the hardest hit.

Get down to narrower industries, and there are some interesting standouts. I’ve ranked the worst-hit here by percentage losses rather than jobs.

The motion picture industry numbers include theaters as well as production. Although employment in making movies and television shows will surely come roaring back soon — there are logistical issues in working around COVID-19, but it’s not like demand for the product has gone down — jobs at movie theaters may not.

The same goes for sports leagues that are starting to put their players to work again for TV audiences but won’t provide anywhere near the usual level of ancillary employment until spectators are allowed to come back.

Most of the other sectors in the above list similarly can’t expect to return to February’s employment levels until the coronavirus has ceased to be a major threat.

Finally, here’s the select list of gainers, only a few of which have added enough jobs to be of more than curiosity value (which is why I’ve gone back here to ranking by number of jobs added rather than the percentage gain):

Add up all the jobs gained at superstores, supermarkets and package deliverers — the big winners in a stay-at-home economy — and it gets you to just 9 per cent of the job losses at food services and drinking places. The U.S. economy isn’t really coming back until everybody thinks it’s safe to go out to eat again.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”

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Reopening the World: City leadership is fundamental to reopening the economy – Brookings Institution



U.S. cities have been at the forefront of the national response to COVID-19, as global connections and high density make them especially vulnerable. Local decision-makers banded together early on and also looked to their global networks to exchange knowledge, share experiences, and support each other in managing through the crisis. For example, Mayor Eric Garcetti of Los Angeles, chair of C40 cities, convened a virtual assembly in late March of 45 mayors from every part of the world, and the consensus was clear from counterparts whose cities had already been affected: act aggressively and quickly.

The cooperation has been paying off. U.S. mayors and local officials are receiving high marks for their response. In a recent Economist/YouGov poll, a majority (55 percent) said their local governments are doing a good or excellent job, while about two in five (38 percent) placed the same faith in the federal government. The most recent Edelman Trust Barometer shows local governments in the U.S. enjoying a level of trust 20 percentage points higher than the federal government.

On the one hand, reopening represents a complicated technical challenge. As Brookings and other experts have suggested, it requires getting a sequence of steps right, based on the best available evidence, and balancing public health with economic and social considerations amid uncertainty. At a deeper level, though, reopening presents a serious leadership challenge. Municipal leaders are likely to allow activity among certain groups of people, businesses, and neighborhoods before others, which may be perceived as unfair. Subsequent flare-ups of the disease may mean restrictions are quickly reintroduced.

Amid the urgency to restart the economy and restore jobs, these dynamics create high risk of increased anxiety, tensions, and social division. At the same time, mayors are more convinced than ever of the need to reduce vulnerabilities exposed by COVID-19. And they are faced with doing this as they are experiencing severe budget shortfalls. These local leaders recognize that the effects of the virus on their cities’ physical and economic makeup may be long-lasting. COVID-19 is yet another example of the extent to which their local realities are tied to global phenomena that ignore political boundaries: global health threats, climate change, migration. Their counterparts from across the globe have additional lessons to share.

For these mayors, social equity matters now more than ever, and they have elevated their city’s commitment to reaching their city’s most vulnerable and maximizing economic opportunity for all their residents.


As they emerge from lockdown, local leaders worldwide see reopening as an opportunity. The mayors of Milan, Helsinki, Bristol, and several other global cities whom we contacted are determined to reduce their cities’ vulnerabilities, and not just as they relate to COVID-19: they see a chance to build a healthier, more sustainable future that improves their cities’ resilience to a wide range of shocks and shifts. This means addressing the economic inequities and environmental stresses that make their cities susceptible—and doing so now.

As the city reopens, the government of Milan made a commitment to raise its ambition for the future of the city. It is starting to rethink community patterns and plans to construct expanded pedestrian and bicycle access on 22 miles of streets in the city this summer, reducing availability for cars. These throughways will follow subway routes to provide greater mobility for those reliant on public transportation and incentives for those who are not. Milan anticipates this will not only help lessen car usage and air pollution—its metro region has one of the highest in Europe—but create more space for commerce outside its restaurants and shops, which may be important in the era of social distancing.

Successfully anticipating global trends and integrating these transformations into reopening and recovery was a recurrent theme among these city leaders. None has set aside their city’s prior plans to address climate change, build cleaner infrastructure, and reduce inequality among their residents and neighborhoods. Helsinki, for example, has continued with its Helsinki Energy Challenge, a global competition to reduce its dependence on coal, which now heats half the city. Bristol remains committed to its One City Climate Strategy, launched in February, and is framing its model of economic recovery on the Sustainable Development Goals. COVID-19 may be a disruption, but it is not a moratorium; if anything, it has provided greater urgency for these leaders to accelerate their plans.


COVID-19’s widespread economic dislocation lays bare the implications of inequality. For these mayors, social equity matters now more than ever, and they have elevated their city’s commitment to reaching their city’s most vulnerable and maximizing economic opportunity for all their residents.

The mayor of Milan launched a Mutual Aid Fund for private donations to augment a special appropriation from the City Council, both to provide grants to the newly unemployed and, as the city reopens, to offer assistance to small businesses and entrepreneurs. To develop an equitable approach to enhance safety, the city is considering the possibilities of augmenting “social distancing” with “time distancing,” staggering openings and closings or the start of shifts to space out the use of public transportation.

Bristol’s mayor has also committed to an inclusive re-opening, and the city is providing emergency grants to small businesses. Its Economic Board is focused on reducing intractable inequality in the city by creating suitable job opportunities out of its recovery plans and implementation of the climate strategy.

This emphasis is becoming a widely shared view. Social equity and local economies were the top priorities for COVID-19 recovery planning in a recent survey of the cities participating in the Rockefeller Foundation’s Global Resilient Cities Network, which launched a coalition of Cities for a Resilient Recovery based on the results.


It may seem counterintuitive to remain steadfast about a city’s ambitions as uncertainty and disruption continue to define its daily realities. These leaders recognize that success will require resources and leadership that extend beyond their budgets and capacity, and pursue a model of governance that is as much community organizer and advocate as producer of public services. As one senior representative from Helsinki remarked, the mayor’s office is well-positioned to help the city build its collective leadership, acting as the connective tissue among many different sectors seeking to solve their problems.

Bristol’s Economy Board, for example, is one of six boards created before the crisis to involve a diverse range of stakeholders in developing and leading the implementation of its One City Plan. Activated immediately to develop a post-COVID-19 economic recovery plan, its membership has swelled to over 40 representatives from businesses, unions, universities, civil society, and gateways such as its port and airport. Its overlap with the city’s other boards and participatory nature is positioning the city to develop a strategy and shovel-ready projects that will have community-wide support and meet the city’s post-COVID-19 priorities.


Such consultation is an example of the type of regular and transparent communication these leaders see as essential to building support from constituents and the general public. Seoul, applying lessons from the MERS outbreak of 2015, has made transparency a core principle of its reopening strategy, offering real-time data on the number and location of cases to mitigate public fear, reduce the spread of fake news, and increase trust in government officials. Buenos Aires retooled its existing municipal WhatsApp chatbot for coronavirus communications and has achieved a response rate five times quicker than its traditional telephone emergency response.


It is one of the iconic images of the COVID-19 crisis, seen by 22 million people as it streamed: Andrea Bocelli, standing in the empty Piazza del Duomo in Milan on Easter Sunday, singing “Amazing Grace.” As Milan embraces its own commitment to open communication with its residents, it is unveiling a campaign that echoes that image to show how the piazza and the city will reopen “step by step.” In similar fashion, Bristol is using its #WeAreBristol campaign, launched in 2019 to define its diverse culture as one of the city’s hallmarks, to sign up volunteers for COVID-19 relief.

Such reminders of their city’s shared identity are useful as a way to build a sense of solidarity and togetherness. The crisis has had a deep economic impact on the cultural and creative sectors, and intentionally acknowledging the central role cultural institutions play in the life of their city signals the commitment by the communities to work toward their renewal. As U.S. leaders embark upon reopening and the first steps toward recovery, such goodwill will be important to sustaining their efforts—and remaking their cities for the future.

Max Bouchet contributed excellent research assistance to collect these lessons.

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