(Bloomberg) — Robust home sales and improving activity at manufacturers and service providers indicate a firmer foundation for a still-at-risk U.S. economic recovery. In Europe, progress has stalled a bit this month, while China continues to struggle with tepid retail demand.
Here are some of the charts that appeared on Bloomberg this week, offering insight into the latest developments in the global economy:
Sales of previously owned homes surged by the most on record in July as lower mortgage rates continued to power a residential real estate market that’s proving a key source of strength for the economic recovery.
Business activity expanded in August at the strongest pace since early last year as faster growth at manufacturers spilled over to service providers, indicating the recovery is starting to broaden.
Europe’s economies will probably post impressive growth in the third quarter, but nowhere near enough to make up the shortfall of the first half of the year, according to Bloomberg surveys of economists.
The euro-area economy unexpectedly lost momentum this month as renewed travel restrictions and concerns about the coronavirus took a toll on services. Meanwhile, the U.K. continued its recovery from a record slump, though the good news was clouded by mounting job losses and a growing government debt burden.
Japan posted a record economic contraction in the second quarter, with recovery prospects now hinging on how quickly an uptick in virus infections can be contained.
Chinese retail consumption unexpectedly fell in July, but the result would have been even worse without a strong rebound in car sales, which rose the fastest in more than a year. Unless the automobile recovery appears in other consumer sectors, China’s domestic economy will struggle to generate a sustained recovery.
India’s rural economy swung to growth in June after eight months of contraction, according to Bloomberg Economics’ tracker. The year-on-year expansion partly reflected a low base so it’s hard to say the recession is over, but the emerging strength in what amounts about 45% of gross domestic product still bodes well for the broader economic recovery.
Scoring 75 economies, Bloomberg Economics finds Asia is leading the rest in getting back to pre-crisis norms, while Latin America is struggling to contain the pandemic.
©2020 Bloomberg L.P.
Covid-19 Relief for Undocumented Would Boost the Economy for All – BNN
(Bloomberg Opinion) — Among the many policy failures of our national Covid-19 response, the exclusion of 18.1 million people, including 4.9 million U.S. citizens, from federal stimulus packages will go down as one of the most economically devastating self-inflicted wounds.
These are neighbors who shop at local stores, pay rent and fuel the economy through their workforce participation to the tune of a $1.6 trillion contribution to the nation’s gross domestic product. According to research conducted by the University of California, Los Angeles, leaving undocumented immigrants out of the $1,200 tax rebate approved by Congress in March resulted in a $10 billion loss in economic activity — which is almost $3.4 billion more than what it would have cost to include them. (One of us, Raul Hinojosa-Ojeda, is a co-author of the study.)
The important role that documented and undocumented immigrants play in the national economy has been shown repeatedly in studies by the National Immigration Forum, the Center on Budget and Policy Priorities, the Brookings Institution and others.
With Congress negotiating a new coronavirus stimulus package, relief for undocumented workers must be a priority.
In California, undocumented immigrants make up more than 9% of the workforce and fuel the world’s fifth-largest economy. It is both a moral and an economic imperative to be sure they survive the pandemic. In April, Governor Gavin Newsom announced an emergency $125 million financial assistance program that would extend benefits to undocumented Californians. Cities including Los Angeles and San Francisco also have public and private programs to provide a safety net for immigrants who otherwise have nowhere to turn. But without an infusion of federal support, many undocumented families will fall off a financial cliff and take their local economies with them.
There are many communities outside of California that have not stepped in to fill the federal void even when undocumented immigrants and their families are hurting. The national unemployment rate for undocumented workers reached 29% in May, much higher than the rate for any other demographic group. The overconcentration of undocumented residents in construction and service jobs that have seen drastic cuts amid Covid-19 has resulted in a 25% reduction in wages for those workers.
The UCLA report found that undocumented workers and families are key contributors to the U.S. economy: About 78% of undocumented workers are employed in essential sectors. Undocumented workers and their families earn lower wages compared with their U.S.-born counterparts. Even before Covid-19, immigrant families struggled to make ends meet, yet their contributions keep local economies running. The failure to address their needs will only deepen the pandemic’s economic recession.
The shortsightedness of the federal policy also hurts U.S. citizens of all races and backgrounds. The UCLA report found undocumented immigrants contribute more than $190 billion in taxes. The American-born children of undocumented immigrants are facing hunger, potential homelessness and financial stress. The Donald Trump administration even made a decision to deny the $1,200 stimulus check to families in which one parent was undocumented, even if the other was a U.S. citizen.
The pandemic has exposed not only health and social inequalities, but also how our local and federal responses can lead to greater economic decline and deeper racial inequality. This vicious cycle of systemic discriminatory policies can be reversed with new policy ideas in a future federal stimulus package. Despite facing high unemployment rates, undocumented workers and their families are critical to meeting consumer demand for the national, state and local economic recovery.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Lorena Gonzalez is an assembly member in the California Legislature for the 80th District.
Raul Hinojosa-Ojeda is a professor with the UCLA César E. Chávez Department of Chicana/o and Central American Studies and the UCLA Latino Policy and Politics Initiative.
©2020 Bloomberg L.P.
4 million more Americans turn to Medicaid as coronavirus roils the economy – CNN
Canada’s economy to take a hit from the second wave, economist says
The Canadian economy faces a long, slow recovery from COVID-19, and some industries are never bouncing back to where they were, according to a new forecast from a business think tank.
The prediction, from the Conference Board of Canada, says things won’t get back to anywhere close to normal until there’s a vaccine to battle COVID-19, likely sometime next June.
“Until we’re seeing COVID fully behind us, it’s going to be a rough ride. We won’t see a complete recovery until there’s a vaccine and this has been brought under control. The biggest risk is if a vaccine ultimately isn’t found,” said Conference Board chief economist Pedro Antunes in an interview.
The Conference Board’s argument was bolstered by a report from Statistics Canada on Wednesday showing the size of the Canadian economy is still six per cent smaller than in February, and that just a quarter of industries have hit their pre-pandemic size.
Statistics Canada showed Canadian Gross Domestic Product grew by three per cent in July, after having grown by 6.5 per cent in June. The StatsCan report also said data is expected to show that the economy grew by just one per cent in August.
While the economy started to bounce back in May and June as COVID-related restrictions eased up, the start of the second wave spells more trouble, said Antunes.
“Before, we were trying to flatten the curve of new COVID cases. Now, it’s a case of COVID flattening the recovery,” Antunes said.
Consumer spending picked up as restrictions started to loosen, Antunes said, partly because of pent-up demand, and partly because of government support programs including the Canada Emergency Response Benefit and the Canadian Emergency Wage Subsidy.
“It was consumers to the rescue with a lot of borrowed government money,” said Antunes, who predicted the CEWS will eventually be extended until next June.
Some sectors will struggle more than others as the second wave continues, Antunes said, singling out the hospitality, travel and cultural industries.
Other industries are seeing disruptions which are likely permanent, he added. Among the most heavily-affected sectors in the long term, Antunes predicted, will be bricks and mortar retailers, and commercial real estate, particularly office buildings. Simply put, companies are realizing that having employees doing their jobs from home works just fine.
“I think telecommuting will become permanent in a lot of cases. And that also means there will be a lot of office space on the market,” said Antunes.
For retailers, a gradual move to e-commerce turned into a tidal wave because of COVID-19, and many customers won’t be going back once COVID ends.
“I think a lot of those changes are permanent. We had more of an increase in e-commerce in a few months than we did in six years,” said Antunes.
That assessment is backed up by retail analyst Lisa Hutcheson.
“The longer people shop online, the less likely they are to go back,” said Hutcheson, managing director of retail consultancy J.C. Williams Group.
The speedy rise in e-commerce, which Hutcheson said was equivalent to a decade’s worth of increases, has already knocked some companies out of business entirely.
“The retailers who weren’t making these changes are likely the ones who’ve gone out of business,” said Hutcheson.
In a recent survey, J.C. Williams Group found that 39 per cent of Canadians say they’ll stick with their current shopping habits even once an effective treatment for COVID-19 is found, Hutcheson said.
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