Economy

Can the economy predict the next president? Yes, if history is any indication – USA TODAY

Published

5 years ago

March 12, 2020

Jessica Menton
USA TODAY

Published 12:01 AM EDT Mar 13, 2020

Fears over a potential recession and plunging stock markets fueled by the coronavirus pandemic could threaten President Trump’s efforts to secure a second term.

As it turns out, the U.S. economy has an impressive track record of predicting the next president, if history is any indication.

The U.S. economy predicted the winner of 16 of the previous 18 elections where a sitting president was up for re-election, according to LPL Financial. You have to reach back to Calvin Coolidge in 1924 to find the last time the economy was wrong regarding the re-election of a president.

“Incredibly, the last 11 times there wasn’t a recession within two years of a re-election, the sitting president won,” Ryan Detrick, senior market strategist at LPL Financial, said in a note. “Compare that to the seven times there was a recession, and the incumbent president didn’t get re-elected five of those times.”

It may feel like 2008 all over again: But here’s how the coronavirus crisis is different

Coronavirus: Dow drops into bear territory for the first time since the financial crisis

To be sure, the economy doesn’t appear to be in a recession. In fact, the U.S. economy headed into 2020 on a solid footing, driven by strong jobs growth, robust consumer spending and a firming housing market.

But stocks ended the longest-ever bull market Thursday as disruptions due to the coronavirus have rippled through the global economy. Bear markets and recessions typically go together, but not always. Stocks have dropped 37% on average in bear markets during a recession, while losing 24% when a downturn is avoided, according to Detrick.

Still, warning signs of a U.S. economic slowdown have emerged, raising fears the decade-long economic expansion could be on its last legs.

That has pushed economists to lower their growth estimates for 2020. Oxford Economics plans to cut its U.S. GDP growth outlook for the year to 0.8%, below its previous forecast of 1.3%, citing the stress in financial markets and plunging oil prices.

“The economy is flirting with a recession in the first half of the year,” says Gregory Daco, chief U.S. economist at Oxford Economics.

Before the outbreak, the firm projected a 25% chance that the U.S. economy would suffer a downturn. Now the odds of a recession are closer to 50% because economic activity is expected to contract sharply in the second quarter due to the global supply chain constraints from the virus, Daco says.

U.S. economic activity is poised to gradually rebound in the second half of the year from potential fiscal policy measures from the government, low-interest rates and cheaper gasoline prices. But investors are still anxiously awaiting details from the Trump administration on potential aid for the economy.

“The big question now is how quickly can this be contained?,” Detrick says. “A coordinated fiscal policy effort is one key part to stabilizing things.”

Coronavirus: Economy, stocks look shakier after Trump announces European travel ban, NBA suspends season

Trump has touted a strong economy and a booming stock market as a key focus for his reelection campaign. Still, the stock market’s gains since Election Day 2016 have been cut sharply recently, with the S&P 500 up roughly 16% since Nov. 8, 2016. That’s down from nearly 60% from Election Day to when the index hit a record on Feb. 19.

More times than not, an incumbent is granted a second term unless the economy slumps into a recession or the stock market has fallen into a correction or bear market, according to Sam Stovall, chief investment strategist at financial-research company CFRA.

Since World War II, only two presidents have run for reelection during the same year as a recession: Democrats Harry Truman and Jimmy Carter. Truman won, helped by the fact that the economy didn’t fall into a recession until November 1948, the same month as the election.

Carter, meanwhile, lost his re-election bid in November 1980 to Republican Ronald Reagan after the economy slumped into a six-month recession in January.

“Part of the reason the market is going down is that investors were hoping that the president would be decisive, not dismissive,” Stovall says. “With the prospect of a recession and a bear market, this could be the president’s undoing. He might be joining Jimmy Carter as a one-term president.”

Let’s block ads! (Why?)

Source link

Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

2 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

Source link

Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

6 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

Source link

Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

7 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

Source link