Statistics Canada says the economy posted its steepest decline on record in the second quarter as the COVID-19 pandemic forced the closure of non-essential businesses and slowed the economy to a crawl.
The agency says real gross domestic product contracted at an annualized rate of 38.7 per cent for the three-month period, the worst showing since the start of 2009 at the height of the global financial crisis.
Economists had expected a contraction in the quarter at an annualized rate of 39.6 per cent, according to financial markets data firm Refinitiv.
Almost every single component of the economy used to calculate GDP was at its lowest point over April, May and June — driven largely by widespread lockdowns in April.
Economic output rebounded in May by 4.8 per cent, and the agency says June posted an increase of 6.5 per cent.
The agency’s preliminary estimate for July indicates a three-per-cent increase in real GDP.
The second quarter of 2020 was largely expected to be the worst three-month stretch for the economy this year before the country begins what is expected to be a long, bumpy road to a recovery.
Even with the gains in June, economic output is about nine per cent below pre-pandemic levels, Statistics Canada says.
On Thursday, Bank of Canada governor Tiff Macklem told an international gathering of central bankers that not all small and medium-sized businesses are going to be able to reopen even as restrictions to contain COVID-19 are rolled back.
That will be especially the case in sectors such as restaurants and hospitality, where people are in close proximity.
“We are seeing now some very impressive rebound numbers as the economy reopens,” Macklem said on a virtual panel hosted by the Federal Reserve Bank of Kansas City.
“That’s a really good thing, but not all parts of the economy are going to be able to reopen for some time, and so we expect that after this first phase, it’s going to be a pretty long, bumpy phase.”
The record decline in output over the last quarter, which was the worst posting for the economy over six decades of comparable data, was fuelled by record drops in spending as businesses stayed closed, Canadians ordered to stay home and millions out of work.
Household spending on goods was down by 8.4 per cent, and down 16.7 per cent for services.
Business investment fell 16.2 per cent, which Statistics Canada says is a result of plant closures, low oil prices and heightened economic uncertainty.
Employee compensation fell by 8.9 per cent, the steepest drop ever recorded, as workers were laid off, furloughed, or had their hours slashed.
Federal emergency aid, particularly through the Canada Emergency Response Benefit, more than offset that drop, the agency says, noting a 10.8 per cent increase in household disposable income.
The Liberals are now proposing a $37 billion income-support package of benefits and changes to employment insurance when the CERB winds down starting next month, which will add to the $343 billion record deficit.
On Thursday, credit rating agency Fitch Ratings said the pandemic has taken “a permanent toll” on economic growth potential in Canada, and dropped growth expectations to around one per cent.
The agency said government spending will remain high while economic activity takes years to recover, and warned it may have to further downgrade the country’s credit rating if deficits and debts weren’t brought under control.
This report by The Canadian Press was first published Aug. 28, 2020
We can build a more inclusive government and economy out of the pandemic — this blueprint shows us how – The Conversation AU
When the COVID-19 pandemic transformed our lives earlier this year, our political leaders joined hands and said we were all in this together — and for a while we saw glimpses of a different kind of politics.
But as things got tougher, the cohesive National Cabinet became more fractious. The blame game and “politics-as-usual” took over and distracted from finding new solutions to tough problems.
With the country facing an uncertain economic future, the University of Sydney’s Policy Lab has brought together community and climate groups, unions and business groups to identify strategies for creating a different way of making policy and building a new economy coming out of the crisis.
The product is our “Real Deal” report released this week.
The Real Deal isn’t a typical policy document that outlines a magic bullet to the problems the pandemic has created.
We tried to break with the old battlegrounds and ideologies that have failed us over the last century. Instead of calling for unfettered free markets or big welfare states, or simple solutions like budget surpluses or endless stimulus packages, we are calling for a new relationship between the markets, government and civil society.
At the centre of this, we are arguing for a more collaborative approach and for mass community participation to be valued in public life.
So how would we do that?
Collaboration works when different groups have the authority and ability to negotiate solutions.
We saw this during the second wave of the pandemic in Victoria when United Workers Union members at a Coles distribution warehouse were able to quickly push to make their workplace more COVID-safe by using the Occupational and Safety Act. While initially reluctant, management introduced a series of changes, including a deep clean of machinery and temperature checks upon entrance.
Compared to hot spots like the Cedar Meats warehouse, these workers minimised the transmission of the virus, securing a better deal for themselves and kept food on supermarket shelves.
Novel solutions emerge when unusual partners collaborate. In Queensland, for instance, a diverse coalition of religious organisations, unions and community organisations called the Queensland Community Alliance has worked with researchers and state and federal governments to create a strategy to combat loneliness.
Their solution wasn’t about spending a lot of money, but reshaping how people use the state health system. They created a new health department role called a “link worker” that could help people navigate the maze of services available to them, saving time and money.
Policy is also better when it involves the full participation of everyday people.
In the Hunter Valley, Australia’s largest coal-mining region, local unions, environmental groups, community members and businesses have formed an unusual alliance to find solutions for the regional economy, which is threatened by the closure of mines due to climate change concerns.
Participatory policy-making like this is easier when the government treats people as co-producers of solutions, not distant observers or barriers to change. It works best when it is built from the lived experiences of people who will be affected by these policies.
This was a weakness during the pandemic when policymakers often overlooked how their policy responses would affect different groups, such as
those with mental illness,the residents of public housing towers in Melbourne or temporary migrants.
The lesson is that effective policy-making puts affected people at the centre of these discussions — much in the way the disability sector has long advocated a “nothing about us without us” approach.
Five benchmarks for the solutions we need
In building the “Real Deal” report, we put these ideas into practice. We began our research not with books, but with the lived experience of leaders in civil society — listening to their stories and responding to the challenges their members were facing.
We took this research to a panel of Australian and international economists and academics, then began a slow process of writing a new framework together. We sought case studies — real solutions — tested in the field by our collaborators, like the ones outlined above.
The process took months, but that time enabled genuine collaboration and participation.
The report offers five benchmarks for measuring whether policy-making is contributing to the solutions we need. These include:
an awareness that reshaping how the state serves the people is even more vital than big stimulus packages
a focus on addressing pre-existing inequalities and injustices laid bare by the pandemic
a bold vision that matches the scale of our economic and climate crises
the active participation of people in decisions that affect them
a deeply collaborative process.
Central to a real deal is that people make a difference. We are the ones who can make the deals for regional economic development in the face of climate change or create a new health system based on people’s needs.
There is a growing lament in Australia that politicians let us down. But the lesson from the pandemic is we have the power to change our economy and politics, and if we do, we might emerge from these crises stronger.
Hiring marginalized workers could jumpstart economy, boost incomes by $5K: Deloitte – Preeceville Progress
TORONTO — A new report by Deloitte Canada says that Canada’s economy was headed for slowing growth in the next decade, even if COVID-19 had never hit.
The consulting and audit firm says that boosting the number of hours worked in the economy would reverse Canada’s economic slowdown and lift the pace of yearly economic growth by 50 per cent, adding $4,900 to Canadians’ average annual income by 2030 without raising tax rates.
To do that, Deloitte says Canada needs to be more inclusive of groups that are underemployed in the economy, otherwise the number of workers will shrink over the next decade.
The report, which looks at more than 1,000 variables, says Canada has a low fertility rate, and the share of Canadians over age 65 is expected to nearly double.
That means retirees must be replaced in the workforce by underrepresented groups such as women, immigrants, people with disabilities and Indigenous Canadians.
Deloitte suggests that for the economy to grow faster, companies need better disability accommodations, workplace inclusion policies, and childcare benefit packages — while regulators need to expand apprenticeship options and degree equivalencies for immigrants.
This report by The Canadian Press was first published Sept. 29, 2020.
Healthy US economy failed to narrow racial gaps in 2019
WASHINGTON — The solid growth that the United States enjoyed before the viral pandemic paralyzed the economy this spring failed to reduce racial disparities in Americans’ income and wealth from 2016 through 2019, according to a Federal Reserve report Monday.
Though Black and Hispanic households reported sharper gains in wealth than white households did, those increases weren’t enough to noticeably narrow the racial gaps. The typical white family possessed eight times the wealth of Black families and five times the wealth of Hispanic families in 2019, the Fed said.
The Fed’s Survey of Consumer Finances, released every three years, analyzed incomes and wealth in 2019. The survey found that income for the typical U.S. family rose 5%, adjusted for inflation, from 2016 to 2019 to $58,600. That was weaker than the 9% income gain the typical family received from 2013 through 2016.
The survey provides a trove of information on family finances in the United States, from the percentage of households that own stock (53%) to the proportion that have a retirement account (50%).
While the report shows increases in income and wealth for lower-income and Black families, many economists worry that the pandemic has reversed those gains. Job losses this year have been concentrated among lower-income workers in the restaurant, hotel, retail and travel industries. Those workers are disproportionately non-white.
Some measures did show a narrowing of income disparities. Average income among the wealthiest one-tenth of American families fell 6%, largely because of a steep fall among the richest 1%, Federal Reserve economists said. By contrast, average incomes among the bottom 60% of families rose.
Yet average figures can be skewed by huge incomes at the very top. The Fed report noted, for example, that while average incomes for all families fell 3% from 2016 through 2019, excluding the richest 1%, average incomes rose 3.1%. Income for the richest Americans can fluctuate more sharply year to year than income for lower-income earners, Fed economists said, and likely fell because of smaller gains from stock, bond and property sales.
Economists typically look at median incomes, which reflect the midpoint of all earners, as a way to filter out the extremes. Median income among the poorest one-fifth of Americans rose 3%, while median income for the richest one-tenth increased 6%, the Fed said.
The median family income for whites grew 6%. For Black households, it was slightly better at 7%. For Hispanic families, incomes fell 1%. Median income for white families last year was $69,000, compared with $40,300 for Black families and $40,700 for Hispanics.
Poorer Americans and Black and Hispanic households did gain wealth from 2016 through 2019, mostly from an increase in home ownership and home values. But those increases came from such low levels that they didn’t much narrow overall income disparities, the Fed said.
Black households, for example, reported a 33% gain in net worth and Hispanic families 65%. Wealth in white households increased just 3%. While encouraging, median wealth for white families in 2019 was still much higher, at $188,200, compared with $24,100 for Black families and $36,200 for Hispanics.
Economic research has found that differences in inheritances are a major factor behind the racial wealth gap. A separate Fed note released Monday found that 30% of white families report receiving an inheritance — three times the corresponding proportion of Black families and four times that of Hispanic families.
The richest 1% of Americans owned one-third of the nation’s wealth in 2019, down slightly from nearly four-fifths in 2016. But wealth grew for the next-richest 9% of the population, the Fed said in another research note. So that the richest one-tenth of families owned 71% of wealth, unchanged from 2016.
Christopher Rugaber, The Associated Press
Source: – NEWS 1130 – News 1130
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