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Canada's Economy Is Seen Lagging U.S. for Fourth Straight Year – Bloomberg

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With many vaccinated, Israel reopens economy before election – NEWS 1130 – News 1130

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JERUSALEM — Israel reopened most of its economy Sunday as part of its final phase of lifting coronavirus lockdown restrictions, some of them in place since September.

The easing of restrictions comes after months of government-imposed shutdowns and less than three weeks before the country’s fourth parliamentary elections in two years. Israel, a world leader in vaccinations per capita, has surged forward with immunizing nearly 40% of its population in just over two months.

Bars and restaurants, event halls, sporting events, hotels and all primary and secondary schools that had been closed to the public for months could reopen with some restrictions in place on the number of people in attendance, and with certain places open to the vaccinated only.

Israeli Prime Minister Benjamin Netanyahu’s government approved the easing of limitations Saturday night, including the reopening of the main international airport to a limited number of incoming passengers each day.

Netanyahu is campaigning for reelection as Israel’s coronavirus vaccine champion at the same time that he is on trial for corruption.

Israel has sped ahead with its immunization campaign. Over 52% of its population of 9.3 million has received one dose and almost 40% two doses of the Pfizer vaccine, one of the highest rates per capita in the world. After striking a deal to obtain large quantities of Pfizer/BioNTech vaccines in exchange for medical data, Israel has distributed over 8.6 million doses since launching its vaccination campaign in late December.

While vaccination rates continue to steadily rise and the number of serious cases of COVID-19, the illness caused by the virus, drops, Israel’s unemployment rate remains high. As of January, 18.4% of the workforce was out of work because of the pandemic, according to Israel’s Central Bureau of Statistics.

At the same time that it has deployed vaccines to its own citizens, Israel has provided few vaccines for Palestinians in the West Bank and Gaza Strip, a move that has underscored global disparities. It has faced criticism for not sharing significant quantities of its vaccine stockpiles with the Palestinians. On Friday, Israel postponed plans to vaccinate Palestinians who work inside the country and its West Bank settlements until further notice.

Israeli officials have said that its priority is vaccinating its own population first, while the Palestinian Authority has said it would fend for itself in obtaining vaccines from the WHO-led partnership with humanitarian organizations known as COVAX.

Israel has confirmed at least 800,000 cases of COVID-19 since the start of the pandemic and 5,861 deaths, according to the Health Ministry.

Ilan Ben Zion, The Associated Press

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Powell's Dashboard Shows How Far US Economy Has to Go on Jobs – BNN

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(Bloomberg) — Federal Reserve Chair Jerome Powell says he and his colleagues have learned a lot over the last decade about the meaning of full employment. Now, they’re looking at a new set of labor-market indicators as they chart a recovery from the steepest economic downturn on record.

Call it the Powell dashboard.

The Fed chair has recently highlighted several data points that underscore the central bank’s shift in focus beyond headline numbers and toward the most vulnerable sections of the workforce. It’s an important development for Fed-watchers to graspin guaging how long policy makers will keep interest rates near zero as they judge incoming data, including Friday’s jobs report.

The approach marks an evolution from that of Powell’s immediate predecessor, Treasury Secretary Janet Yellen, who maintained a “dashboard” of metrics to help determine remaining slack in the labor market created by the Great Recession. It focused Fed-watchers on an array of statistics like job openings, layoffs, underemployment and long-term joblessness that applied to the entire labor force.

By comparison, the statistics on Powell’s list home in on things like Black unemployment, wage growth for low-wage workers and labor force participation for those without college degrees, categories that historically have taken longer to recover from downturns than broader metrics.

“It’s a pretty notable change,” said Seth Carpenter, a former Fed official who is now chief U.S. economist at UBS. The new definition of full employment reflects a growing understanding among policy makers that they can’t conclude the economy has reached such a state until “you really are starting to see businesses compete for workers at every part of the income distribution,” he said.

Here are some of the numbers Powell is watching that underscore the challenges ahead:

Black Unemployment

Covid sent Black unemployment surging to 16.7% in April and May of last year. By January it had recovered to 9.2%. But it reversed some of that progress last month, rising to 9.9%, according to Labor Department figures published Friday.

The Fed has faced growing pressure to acknowledge the uneven expansion in recent years, and the experience of the pandemic has only added to it. Powell has repeatedly said he wants to see broad-based gains in employment, and not just in the aggregate or at the median. In August, the Fed announced changes to its monetary policy strategy to codify a more inclusive approach.

The long economic expansion that preceded the pandemic continually defied forecasts of accelerating inflation even as unemployment dwindled, indicating potential for further labor-market gains. By mid-2019, Black unemployment had fallen to 5.2% — a record low in nearly a half-century of data.

During the financial crisis of 2008, Fed officials cut their benchmark interest rate to nearly zero, and didn’t begin raising it until December 2015. By then, the overall unemployment rate had recovered from a high of 10% to just 5%. But they didn’t take into account the unemployment rate for Black Americans, which at the time stood at 9.4%.

Low-Wage Earnings

As Fed chair, Yellen often cited wage growth as a metric for judging progress toward full employment, including a measure produced by the Atlanta Fed in her dashboard.

In a Feb. 10 speech, Powell cited pay for the bottom 25% of earners in particular. Just before the onset of the pandemic in the U.S., wage growth for this group of workers was 4.7% on a 12-month average basis, according to the Atlanta Fed. That marked its highest rate relative to overall wage growth since the late 1990s.

By January of this year, the latest month for which data are available, it had moderated to 4%. In the wake of both the 2001 and the 2007-09 downturns, earnings growth for the lowest wage quartile took almost three years to bottom out.

No College

Powell has also highlighted labor force participation rates specifically for those without college educations. The pandemic has had an outsize effect on them. As of last month, their participation rate was just 54.7%, according to the Labor Department figures published Friday.

Compare that with February 2020, when it stood at 58.3%, up from a low of 56.9% in 2015.

The magnitude of job losses during the Great Recession made the recovery from it a slow process. Many individuals looking for work eventually became discouraged and gave up, leading them to stop being counted as unemployed.

Under Yellen, the Fed elevated the labor force participation rate in its analysis of the state of employment to account for the likelihood that many of the so-called labor-force dropouts would take jobs if work was available. But the slow pace of recovery fanned arguments among policy makers over whether everyone who had lost work — especially the least-educated — would be able to find new employment and should therefore be counted in the shortfall.

In 2015, the year Yellen’s Fed began raising rates, “many forecasters worried that globalization and technological change might have permanently reduced job opportunities for these individuals, and that, as a result, there might be limited scope for participation to recover,” Powell said in his Feb. 10 speech.

But the next five years proved them wrong as those without college degrees were increasingly drawn back into the workforce.

As the Fed chair put it during an event on March 4: “Today, we’re still a long way from our goals.”

©2021 Bloomberg L.P.

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Growing the economy, not cutting debt, must be our priority – The Irish Times

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The economic policy response to the pandemic has been compared to wartime. Coronavirus has changed many things, not least the terms of the debate about government intervention in the economy. The raw numbers speak for themselves.

In Ireland, the initial response consisted of measures that totalled around €24.5 billion. This amounted to 14 per cent of the annual size of the economy, as measured by GNI* – which tries to strip out some of the distortions caused by the multinational sector. The cost has grown as restrictions have been extended. The eventual size of the bill will, of course, depend on how long those restrictions last.

Fourteen per cent (and growing) of your economy is a bill that would have been unimaginable a year ago, particularly as most of it has been borrowed. Most economists would have said that it is a fiscal trick impossible to pull off, at least not without a crisis in government debt markets.

We haven’t had a crisis because most of the money was lent to us by the ECB. Depending on which looking glass you use, we are either borrowing from ourselves or printing the money. Or, ultimately, a bit of both.

The UK chancellor, Rishi Sunak, last week made, by my calculations, his 16th fiscal announcement of the pandemic. He called it a budget. It was really just another update (albeit an extensive one) on spending and taxation in the wake of the crisis. Pages of estimates and pure guesses about the future of the UK economy revealed a pandemic bill, so far, reckoned to be £407 billion. That’s about 19 per cent of UK GDP. Sunak stated, correctly, that nothing like this has ever been seen, apart from during the two world wars.

So it looks like the UK has been more generous than Ireland. But we are probably not comparing like with like. It is too early to be reaching that kind of judgement. Either way, we are looking at jaw-droppingly large numbers, amounts of borrowed money that have caused barely a flutter of excitement in government debt markets. Until very recently, at least.

That wartime comparison was also drawn recently by Ken Rogoff, former chief economist at the IMF. During the great financial crisis, Rogoff became famous in certain circles for warning that governments shouldn’t allow debt to reach, let alone exceed, 100 per cent of GDP. Such thinking lead to the subsequent decade of austerity. Conventional wisdom dictated that debt had to be stabilised and preferably reduced.

Rogoff recanted this week, Well, sort of. He admitted that his 100 per cent warning was, in reality, just a rule of thumb for normal times. Recognising just how abnormal current circumstances are, he suggested that today’s priority should be spending on pandemic relief and, I think, trying to grow your way out the problem.

Rule of thumb

Debt-to-GDP is a ratio. All we have are Rogoff-style rules of thumb about what is sustainable – or not. Economics provides zero precision about the right ratio. Austerity was about managing down the numerator: that focus on borrowing. The current crisis means that we should focus on the denominator: get growth up.

It’s a point of view not shared by Sunak. He presented a gloomy outlook for the UK economy and did nothing about that outlook: the pandemic will leave permanent scars. In the short term, he extended supports and reliefs until September. For the medium term all that awaits the UK are tax hikes and spending cuts. It was, said Simon Wren-Lewis, professor at Oxford, an austerity budget resonant of the Cameron-Osborne years.

Sunak laid claim “to levelling with the British people”. He didn’t. He should have said that we have little idea about where the economy will be in the years following the pandemic’s end and that he will act appropriately when we do know.

If anyone believes he means to raise taxes and slash spending in the run-up to the next general election, I have a bridge to sell them. He should have said that all the forecasts, slavishly followed by all of the media, will all be wrong.

Sunak said nothing about Brexit costs, the green economy or the social care crisis. There was no extra money for front line workers. He did nothing for the UK’s rate of economic growth. It was all about the numerator, not the denominator.

The Economist newspaper this week called for a post-pandemic rewrite of the social contract. Sunak’s response was a big raspberry.

If Paschal Donohue is looking for pointers about what to do in a post-crisis world he should not take any cues from the UK. Sunak got it wrong and revealed a mindset unmoved by the seismic changes wrought by the pandemic. A century ago Keynes wrote prophetically about the post-war fiscal settlement and the awful consequences of wrong-headed orthodoxy. He would marvel about how little has changed.

Pandemic relief is one thing, the next is growth. The US is where all of the new thinking – and action – is going on. The bet – not without risks – is that we have to focus on the denominator.

Bond markets may or may not in future be so quiescent but much power here lies in the hands of the ECB. Growing our economies – and that social contract rethink – are the mammoth tasks that await.

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