With a pandemic, a minority government in Ottawa and a crumbling energy sector, the Canadian economy is already in a period of great uncertainty. This week’s election in the United States only makes things more fraught.
Besides the butterflies in the tummies of those who fear the victory of one side or the other, Canadians trying to make economic, investment or even government policy decisions will likely find that not knowing the final outcome as our neighbours vote has an inevitably paralyzing effect.
For Canada, U.S. elections are always a period of flux. This time around, what seems like an extraordinary gulf between the outlook of Republicans under President Donald Trump and Democrats under Joe Biden is only one of the things that makes this election stressful.
Polls that show a Biden lead have been undermined by contradictory analysis that insists many of those who intend to vote for Trump have been shy about admitting it. For those of us who have always been suspicious of the pollsters’ dark arts, Trump’s surprise win against Hillary Clinton four years ago did not add to our confidence.
Canada’s economic recovery tied to U.S.
That a close election could lead to Trump calling on gun-toting self-styled militias to get involved, no matter how unlikely that is, adds an additional layer of uneasiness. But some sort of descent into chaos is unnecessary to make many in the Great White North nervous.
While there is evidence most Canadians have grown sick of Trump, including his Canada-bashing on trade, reasonable people may differ on whether his low-tax, pro-fossil fuel and prioritization of the economy over COVID-19 policies are the best path to economic success.
“Two parties are fighting for a majority in the [U.S.] Senate right now,” Don Plett, the Conservative leader in Canada’s Senate, said last week. “We can all hope that the right side will win that, and we will all send President Trump our congratulations when they do.”
What is in little dispute is that no matter who runs the government south of the border, as our largest trading partner, the success of the U.S. economy is of crucial importance to Canada.
“The recovery in exports is going to depend on the recovering activity of the U.S.,” Bank of Canada governor Tiff Macklem reminded us in Wednesday’s Monetary Policy Report. “The U.S. has also rebounded strongly, but we expect the U.S. recovery is going to be considerably slower from here.”
The question is which party’s strategies will lead to success? Partisans are unlikely to be so open-minded, but in some ways, the difference between Biden and Trump might be seen as a contrast between seeking long-term or short-term solutions.
Delayed reckoning for energy?
In the case of energy, a Biden presidency will likely be unappealing to Canada’s oil- and gas-producing regions. Cheered by some in Canada, Trump disavowed the climate targets agreed to in Paris in 2015, and he rejects carbon pricing. But he may have been merely delaying the eventual reckoning for North American energy producers while impeding the competitiveness of green industries that are increasingly profitable.
While coal and oil may suffer from a change of administration in the U.S., many analysts see profits ahead for other Canadian minerals, including copper, aluminum and nickel — what Ed Crooks, vice-chair, Americas, at consultancy group Wood Mackenzie calls the “energy transition metals.”
For an oilpatch presiding over a long, painful decline despite Trump’s support, a Biden presidency might be like ripping off a bandage or cauterizing a weeping sore.
The U.S. response to COVID-19 may also be an example of long- versus short-term benefit. Repeatedly we’ve seen that haste to reopen the economy has led to worse shutdowns.
And when it comes to bridging the bad patch before economic recovery leads to an anticipated new round of job creation, a clear win by one side may lead to a support package, so far delayed by disputes in Congress. Even Trump’s appointed Federal Reserve Chair Jerome Powell has said such a plan is essential to prevent evictions and foreclosures, “things that will scar and damage the economy.”
As Macklem implied, preventing damage to the U.S. economy is good for Canada and its exports. But when it comes to trade, even without the Trump bombast that many Canadians disliked, it is not at all clear Canada will get a free ride from a Biden administration.
It is easy to forget that Republicans have been the traditional free-trade champions and that the original NAFTA was negotiated between a Progressive Conservative prime minister, Brian Mulroney, and a Republican president, Ronald Reagan.
‘America First’ could be sticking around
In a world where both sides in the U.S. Congress feel as though they are losing out on trade, don’t expect “America First” to disappear, whoever wins — although under Biden, there are likely to be fewer surprising outbursts.
Whatever the eventual outcome of this week’s vote, there is little question that a continued wide division in the country’s polarized electorate will persist as a burden on the U.S. economy.
Even after one or the other party takes control of the White House, it is never clear exactly how election promises will turn out. Change, even if good for the economy in the long run, is always disruptive at first. Optimistic intentions are transformed by the realpolitik of deal-making and economic necessity.
But for Canadians holding their collective breath for the final result of Tuesday’s election — no matter how long those results take to arrive — having one leader firmly ensconced in the Oval Office will restart the clock on economic and business plans that depend on U.S. policy.
Then we can go back to worrying about Alberta jobs, a soaring deficit, a COVID-19 crisis that won’t go away and a minority government that could at any moment tumble us into an election of our own.
Follow Don Pittis on Twitter: @don_pittis
What do you want to know about the U.S. election? Your questions help inform our coverage. Email us at Ask@cbc.ca
Remarks by President Trump on the Economy – Whitehouse.gov
James S. Brady Press Briefing Room
12:31 P.M. EST
THE PRESIDENT: Well, thank you very much. And I just want to congratulate everybody. The stock market, Dow Jones Industrial Average just hit 30,000, which is the highest in history. We’ve never broken 30,000. And that’s despite everything that’s taken place with the pandemic. I’m very thrilled with what’s happened on the vaccine front. That’s been absolutely incredible. It’s — nothing like that has ever happened medically. And I think people are acknowledging that, and it’s having a big effect.
But the stock market has just broken 30,000. Never been broken, that number. That’s a sacred number: 30,000. Nobody thought they’d ever see it. That’s the ninth time since the beginning of 2020, and it’s the 48th time that we’ve broken records in — during the Trump administration. And I just want to congratulate all the people within the administration that worked so hard. And most importantly, I want to congratulate the people of our country, because there are no people like you.
Thank you very much, everybody. Thank you.
12:32 P.M. EST
China’s Li Sees Economy Returning to ‘Proper’ Range Next Year – Yahoo Canada Finance
The Canadian Press
NEW YORK — Best Buy Co. reported fiscal third-quarter results that blew through analysts’ expectations as the nation’s largest consumer electronics retailer enjoyed surging demand for items like home theatre and appliances that help people learn, cook, work and connect in their homes during the pandemic.
The Richfield, Minnesota-based retailer, said that third-quarter profits rose 33% while sales were up 21%. Sales at stores opened at least a year rose 23%, while online sales in the U.S. surged 174%.
Still, shares fell 5% in Tuesday morning trading as Best Buy warned that sales could slow down during the current quarter as the number of virus cases surge.
“As we start the fourth quarter, the demand for the products and services we sell remains at elevated levels, but similar to last quarter, it continues to be difficult for us to predict how sustainable these trends will be,” Matthew Bilunas, Best Buy’s chief financial officer, told analysts during the call. “In fact, we are seeing COVID cases surge throughout the U.S. and Canada at a time of significant holiday volume through our stores, online and supply chain. “
Bilunas also noted other factors such as potential government stimulus, the risk of continued high employment and the availability of inventory like computers to match customer demand.
Best Buy joins big box stores like Walmart, Target, Home Depot and Lowe’s in reporting strong fiscal results. Unlike mall-based stores and other businesses that sell non-essentials, big box retailers were allowed to stay open during the lockdown in the spring and have all seen their dominance increase as consumers focus on necessities and home-related activities.
Before the pandemic, Best Buy had expanded its services to such options as at-home consulting and same-day delivery. It also sped up its online shipping. But the pandemic has forced Best Buy to adjust its operations and launch new shopping experiences that provide more convenience and safety for customers.
Early fall, Best Buy began using 250 of its stores as fast-shipping hubs for online orders. It’s now adding 90 more locations during the holiday period. It says its goal is to have all 340 stores ship more than 70% of its ship-from-store units during the holiday quarter. It’s also testing new store formats as it transforms locations to fulfilment hubs.
For example, in four Minneapolis locations, Best Buy reduced its square footage for shopping to 15,000 square feet from an average of 27,000. The product assortment on the sales floor will still include the primary categories these locations featured before the remodel, but instead the focus will be on the most popular items, the retailer said. The remodels will result in increased space for staging product for in-store pickup and to help ship-from-store transactions, as well as provide the ability to stage inventory for items that may not be on the sales floor.
Best Buy reported fiscal third-quarter profit of $391 million, or $1.48 per share, compared with $293 million, or $1.10 per share, in the year-ago period. Earnings, adjusted for restructuring costs and amortization costs, were $2.06 per share.
The results exceeded Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.76 per share.
The consumer electronics retailer posted revenue of $11.85 billion in the period, also beating Street forecasts. Eight analysts surveyed by Zacks expected $11.02 billion.
Shares fell $6.69 to $1150 in late morning trading. Shares have increased 39% since the beginning of the year, while the S&P 500 index has increased 11%. The stock has increased 69% in the last 12 months.
Elements of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on BBY at https://www.zacks.com/ap/BBY
Anne D’Innocenzio, The Associated Press
German economy grew by 8.5% in third quarter, but recession fears grow – The Guardian
BERLIN (Reuters) – Germany’s gross domestic product grew by a record 8.5% in the third quarter as Europe’s largest economy partly recovered from an unprecedented plunge caused by the first wave of the COVID-19 pandemic in spring, the statistics office said on Tuesday.
The stronger-than expected rebound was mainly driven by higher household spending and soaring exports, the office said.
“This enabled the German economy to make up for a large part of the massive decline in gross domestic product caused by the coronavirus pandemic in the second quarter of 2020,” it added.
The reading marked an upward revision to an earlier flash estimate of 8.2% growth, and followed a 9.8% plunge in the second quarter.
The outlook is clouded by a second wave of coronavirus infections and a partial lockdown to slow the spread of the disease. Restaurants, bars, hotels and entertainment venues have been closed since Nov. 2, but shops and schools remain open.
Chancellor Angela Merkel and regional state premiers are planning to extend the “lockdown-light” on Wednesday until Dec. 20, according to a draft prepared for their meeting.
A contraction in the service sector is expected to weigh heavily on gross domestic product in the fourth quarter, while lockdown measures in other countries are likely to hit export-oriented manufacturers as well.
DIW economist Claus Michelsen said a decline in economic output was therefore on the cards, with initial estimates indicating a GDP drop of around 1% in the final quarter.
“Germany and many important trading partners are likely to slide back into recession,” Michelsen said.
(Reporting by Michael Nienaber and Rene Wagner; Editing by Riham Alkousaa and EKevin Liffey)
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