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China's economy grew 4.9% in the third quarter of 2020 – CNN

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The world’s second largest economy expanded 4.9% in the July-to-September quarter compared to a year ago, according to government statistics released Monday.
The number was somewhat weaker than expected. Analysts polled by Refinitiv predicted that China would post 5.2% growth.
— This is a developing story and will be updated.

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Why the US economy won't gain any traction until 2021 – CNN

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The economy’s travails are evident in the Back-to-Normal index (BNI) developed by Moody’s Analytics and CNN Business. The index is a compilation of a wide range of economic statistics available from the government and third-party sources. The BNI measures how the economy is performing compared to its pre-pandemic normal. Currently, the index is sitting at just over 80%. In other words, the economy is operating 20% below where it was when the pandemic hit back in March. That is a long way from normal, and only about halfway back from where the economy was at its April low.
The BNI also indicates the economic recovery has more or less stalled since the summer. The index isn’t much higher today than it was back in June when it was closer to 75%. The re-intensification of the pandemic has been a major cause of this painfully slow recovery. There is a clear relationship between the health care crisis created by the pandemic and the economic crisis: More infections result in a weaker economy.
Based on our analysis tying confirmed Covid-19 infections with unemployment rates across states and since the pandemic began, rising infections result in fewer jobs and higher unemployment one month later. This relationship is not materially different between states like New York that have aggressively shut down businesses and states like Florida that have kept businesses largely open. We also found that it isn’t true that the recession caused by the pandemic was our own doing because we shut businesses down. There would have been a recession regardless, as worried households and businesses would have pulled back on their activities whether or not businesses were shut down.
It is thus not surprising that as infections have significantly increased across Europe over the past several weeks, the European economy is faltering again. Europe had meaningfully brought down infections with its stringent lockdowns early on in the pandemic, and its economy had begun a strong comeback in the summer, but that recovery looks to be flagging with the re-intensifying pandemic. The same dynamic also appears to have begun here at home. As people start to move indoors with the colder weather, infections in recent weeks are up in much of the country. This doesn’t bode well for our economic recovery.
The impending presidential election could also weigh on our economy. The process of electing a president has historically been neither here nor there when it comes to the economy. Even the highly contentious George W. Bush vs. Al Gore election in 2000 had no meaningful impact, save perhaps for a few bad days in the stock market, which was already struggling with the dot-com stock bust. This time may be different. The nation feels like it could boil over if we have a close election and one side or the other believes that the election is being stolen.
This would be much less of a concern if the winner wins handily, making it indefensible to question the outcome. Current polling suggests this may happen. However, our election model of the state Electoral College, which takes into account a range of political factors, including previous state voting patterns and the President’s approval rating, and a range of economic factors, such as unemployment, housing and stock prices, suggests the results will be much closer. Assuming that turnout by Republicans and Democrats isn’t lopsided, then our modeling shows Biden winning the Electoral College with 279 votes. Of course, 270 votes are needed to win. If the election is this close, it seems certain to be contested, which could make the next couple of months difficult as the mess gets sorted out. There is nothing but downside to the economy in such a disquieting scenario.
But perhaps the most serious blow to the economy as this monumental year ends will be the failure of President Trump and Congress to come to terms on providing more help to those hit hardest by the pandemic. It makes economic sense for lawmakers to agree on legislation providing substantial additional fiscal support, including more aid to the unemployed, small businesses, the airlines, state and local governments and a long list of others. Without these additional funds, the already fragile recovery threatens to come undone. It also makes political sense given the approaching election and the need for lawmakers to demonstrate that they have voters’ backs. Yet a deal has not come to fruition and it appears we will have to wait until the next president and Congress take office before any real help is put in place.
Until then, much could wrong, driving the economy off the proverbial rails. It would be prudent to buckle in.

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Fed's Brainard calls for more fiscal aid for economy – TheChronicleHerald.ca

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By Dan Burns and Ann Saphir

(Reuters) – Despite a “heartening” bounceback from the initial hit to the U.S. economy delivered by the COVID-19 pandemic, the recovery is uneven and uncertain and will require continued support to ensure it becomes broadbased and sustainable, Federal Reserve Governor Lael Brainard said on Wednesday.

The economy’s overall improvement, however, masks big disparities among sectors and among Americans that could hold back the recovery.

The Fed, she told an online conference of the Society of Professional Economists, is committed to providing “sustained accommodation” to the economy for as long as needed, and won’t raise rates if inflation rises temporarily above 2%.

That could happen as early as next spring, she said, as data registers year-over-year gains from the nadir of the coronavirus crisis.

At the same time, the biggest risk to her outlook for recovery is that fiscal support from the federal government will be withdrawn too soon. It’s a view widely shared by her Fed colleagues. Talks on a new pandemic relief package are ongoing, but prospects remain dim for the Republican-controlled Senate to approve any aid before the Nov. 3 election.

“This strong support from monetary policy – if combined with additional targeted fiscal support – can turn a K-shaped recovery into a broad-based and inclusive recovery that delivers better outcomes overall,” Brainard said.

Brainard’s reference to a “K-shaped” recovery nods to an increasingly popular description of the rebound from the spring’s low point in activity, under which many households and small businesses have seen little improvement.

“Premature withdrawal of fiscal support would risk allowing recessionary dynamics to become entrenched, holding back employment and spending, increasing scarring from extended unemployment spells, leading more businesses to shutter, and ultimately harming productive capacity,” Brainard said.

Among the more troubling developments from the recession caused by the pandemic, she said, are that job losses have occurred disproportionately among minority populations and, more recently, that prime-age working women have left the labor force.

“If not soon reversed, the decline in the participation rate for prime-age women could have longer-term implications for household incomes and potential growth,” she said.

Brainard signaled that the Fed will not only keep rates at their current near-zero level for years, but will, even after liftoff, raise them only gradually to keep rates at levels designed to stimulate economic growth.

That approach, laid out in a newly adopted framework that Brainard repeatedly called “powerful” on Wednesday, ensures the Fed will not tighten policy too soon.

Brainard said it will take time to see a sustainable rise in inflation, which she expects to linger below the 2% target for the next few years.

The central bank will also “have the opportunity” in the months ahead to clarify how the Fed’s asset purchase program could best work in combination with forward guidance on rates, she said.

Asked about the risk of a potentially contested U.S. presidential election, Brainard sidestepped a direct response but said the Fed is in a “good place” to maintain financial stability through its extensive monitoring and its existing backstop facilities.

(Reporting by Ann Saphir and Dan Burns; Editing by Andrea Ricci)

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Varcoe: Facing historic 10 per cent hit to economy, it's time for Calgary to play more offence – Calgary Herald

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Article content continued

She also pointed to a CED study last year that found companies across the province will spend $18.4 billion on digital transformation initiatives across various industrial sectors by 2022.

CED expects the number of local technology companies to at least double by 2030, while the sector creates almost 50,000 new jobs in Calgary over the next decade.

“The offence strategy is about diversification, but it’s also about digital transformation,” Moran said in an interview.

Economic growth in 2021 will also come from areas such as agriculture, health care and clean energy technology, said ATB chief economist Todd Hirsch.

“We need to embrace the fact that the world has changed,” Hirsch said after the event.

“We need to stop trying to get back on track. What we need to do is forge a brand new track.”

ATB vice president and chief economist Todd Hirsch at the Calgary Economic Development’s Outlook for 2021 virtual event on Tuesday, Oct. 20, 2020. Photo by Video frame grab

The track has to make sure unemployed Calgarians aren’t left behind. Thousands of people need a steady paycheque. Access to education, retraining and economic supports will be critical.

Mayor Naheed Nenshi said even if the city’s GDP increases next year, he’s concerned it will bring a jobless recovery along with it.

“The work we do in Calgary needs to be singularly focused on good, decent jobs,” he said in an interview.

Finally, here’s a positive economic note, even with fierce headwinds rocking the city.

“We do see 2021 as the start of a consistent recovery period,” said Goucher.

“We see conditions essentially improving on all fronts and it should lead to a stable recovery in Calgary from 2021 and on.”

After a gruelling 2020, the recovery can’t get here soon enough.

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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