President Trump speaks about protecting seniors, and the coronavirus, in the East Room of the White House Thursday.
Alex Brandon/AP
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Alex Brandon/AP
As April began and Americans were being told to fear COVID-19 and stay home, President Trump said there would not need to be a “massive recession.” As recently as Monday he said the economy would have “a tremendous third quarter.” By Wednesday, he was looking forward to “a fourth quarter that’s going to be fantastic” and then to “a tremendous 2021.”
The moving time frame for the hoped-for recovery reflected a shifting of the president’s rhetorical gears now that the recession has hit with hurricane force. The devastating numbers now emerging — including that 30 million have applied for unemployment in the past six weeks — have the White House eager to move from containing the virus to containing its damage to the economy.
The first shuttering of businesses and workplaces in March was enough to drag down economic growth for the whole first quarter by 4.8% (as an annualized rate), by the administration’s own numbers. And forecasters at the non-partisan Congressional Budget Office this week said the second quarter could see the economy shrink by 30% or more.
The receding date of arrival for Trump’s self-described “rocket ship” recovery is all the more notable given his tendency and talent for putting the best face on things. And the need for positive thinking could scarcely be greater than it is now.
The president and his team are arguing that the COVID-19 crisis has peaked and will subside as a threat to public health. But they know the economic fallout from the disease (and a worldwide oil price collapse) has only begun – and that may well be the greater threat to the president’s political health.
Scholars and political strategists generally agree there is nothing more important for a president’s re-election prospects than the state of the economy. Presidents with a robust economy routinely win a new term. Those without, as a rule, do not.
In an article published in mid-March by the University of Virginia, political scientist Alan Abramowitz said a recession in the second quarter would point to defeat for Trump, or any incumbent president — possibly a defeat of “landslide proportions.”
“The performance of the economy in the second quarter seems to shape opinions of the economy in the fall,” wrote Abramowitz, who teaches at Emory University in Atlanta. Abramowitz’s predictive model prominently features second-quarter economic performance among its elements, and it has correlated remarkably well with presidential outcomes since World War II.
We may have forgotten the significance of recessions in part because the last three presidents (Barack Obama, George W. Bush, Bill Clinton) all won a second term after avoiding a recession in the latter half of their first. That allowed each of them to point to improving economic conditions and to do so plausibly and persuasively.
In the most recent example, Obama could point to three years of growth out of the deep recession of 2008-2009, brought about by the mortgage-and-credit crisis and market collapse of 2008.
At the time of Obama’s re-election in 2012, it was often said that no president had been re-elected with unemployment as high as it (still) was in that year. Statistically, that was true, but the sense of upward trajectory, reflected in crucial consumer confidence numbers that fall, buoyed the incumbent.
There were signs this week that Trump is preparing to adopt a similar strategy. In this formulation, instead of downplaying the negative, the president would be cast as the leader most equipped and best positioned to turn things around.
The next best thing to good times may be a promise of good times ahead with the right hand on the tiller. But as a campaign theme, this one’s track record is mixed. “Prosperity is just around the corner” was a slogan for President Herbert Hoover in 1932 in the depths of the Great Depression, just before he was crushed by Franklin D. Roosevelt.
While Hoover’s predicament may have been uniquely hopeless, other incumbents have had also struggled when re-election campaigns had to coincide with weak or recessionary economies.
Much depends on when a recession begins or when it has ended. There needs to be time for the recovery to take hold, to move beyond technical measurements to a general sense of confidence. That is especially true in the current economy, 70% of which is consumer spending.
Feelings of confidence may have been the critical issue for the last U.S. president who was denied a second term, George H.W. Bush. A recession in late 1990 and early 1991 had long been over by Election Day, a fact the Bush team kept trying to drive home. But the downturn was worse and more persistent in some critical swing states, and its hangover (including relatively high unemployment into the second quarter of 1992) haunted the Bush campaign all year.
In one sense, the first president Bush should have known better. He had been the Republicans’ running mate in 1980 when Ronald Reagan won 44 states asking people “are you better off than you were four years ago?”
The target of that simple question had been President Jimmy Carter, who was looking at a worsening job picture with historically high interest rates that had been imposed in an effort to curtail historically high inflation.
Carter himself had reached the Oval Office four years earlier talking about the “misery index” of unemployment, high interest rates and inflation. That combination had been too much for the incumbent of that time, Republican Gerald Ford.
A few presidents have survived poor economic conditions that ended in time for them to recover (Calvin Coolidge in 1924) or began too late for the full force to be felt by Election Day (Harry Truman in 1948). William McKinley was re-elected in what was at least a weak economy in 1900.
But this is where historical arguments can begin. Did McKinley defy the economic imperative in 1900 or ride the popularity of the American victory in the Spanish-American War? Or was it the weakness of his Democratic opponent, William Jennings Bryan?
Was Coolidge spared in 1924 because the Democrats took weeks to choose a nominee against him? Did Truman win in 1948 because the recession had just begun or because people did not blame him for it or because Republican nominee Thomas E. Dewey scarcely campaigned?
These questions are not only of historical interest. All predictions regarding the effect of the COVID-19 economic collapse on Trump’s prospects must also consider other factors. In this case, will the Democrats’ perennial disunity and the lack of a traditional convention sap their voters’ enthusiasm? Will the virus be around and playing hob with turnout rates in November?
Even more worrisome for Trump’s opponents are the travails of Joe Biden’s campaign. A sexual assault accusation and attacks speculating about the 77-year-old’s health have clouded his campaign since he secured an apparent first-ballot nomination earlier this spring.
In the extraordinarily volatile environment of this pandemic-election year, even a nightmare economy may not be as fatal for the incumbent as it would have been in the past.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
