BENGALURU (Reuters) – The coronavirus is a bigger risk to the U.S. economy than a prolonged dispute over the presidential election result, according to a Reuters poll that showed the near-term economic recovery was slowing more than previously thought.
With around 11 million COVID-19 cases, the United States is by far the hardest-hit country and while a potential vaccine provides some optimism the outlook remains uncertain, the Nov. 10-16 poll of over 100 economists found.
The recent progress toward COVID-19 vaccines pushed Wall Street shares to a record closing high last week, despite a surge in new cases and jitters over President Donald Trump’s refusal to concede the U.S. election to Joe Biden.
Over 90% of economists, or 53 of 57, said elevated coronavirus cases were the bigger risk to the economy for the remainder of this year rather than further uncertainty surrounding when the election results will be made official.
Asked if their forecasts were based on recent progress of a COVID-19 vaccine, 57 economists who responded to a separate question were almost evenly split, suggesting the tonic for Wall Street sentiment is not yet seen as a full public health and economic turning point. With no prospect for swift new spending support from Congress, the economy, now adrift, may weaken again.
“Fiscal support has largely dried up for now, leaving disposable income lower in the final months of the year. But the largest risk is that the third wave of the coronavirus is likely to worsen with colder temperatures,” said David Mericle, chief U.S. economist at Goldman Sachs.
“Renewed lockdowns in Europe are a reminder that the U.S. also faces significant downside risks this winter.”
It’s been whiplash for the economy this year, plunging into the deepest contraction in at least seven decades of 31.4% in the second quarter to the fastest-ever expected growth of 33.1% last quarter.
Gross domestic product (GDP) was forecast to grow an annualized 3.7% this quarter and 3.0% in Q1, a downgrade from 4.0% and 3.7%, respectively, predicted last month.
Those were the sixth and third consecutive monthly downgrades, respectively.
The range of forecasts, -5.6% to +7.4% for this and next quarter, highlights exceptional uncertainty despite these surveys’ solid track record for accuracy this year.
“We suspect manufacturing, construction and most retail will remain open, but restrictions on other sectors will still come at a huge economic cost with millions of jobs potentially at risk,” said James Knightley, chief international economist at ING.
“We fear the December-January period will be tough on both a human and an economic level with a probable negative GDP print for the first quarter.”
This year, the world’s largest economy was forecast to shrink 3.6%, according to the poll of 102 economists. In 2021 and 2022 the consensus was for growth of 3.8% and 2.9%, respectively.
In the interim, much will depend on public health through the coming winter months.
U.S. Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde both say the economy was still in for a tough time even if the development of a potential vaccine was reason for some optimism.
Asked what would happen to U.S.-China trade relations over the coming year, 38 of 56 said they would stay the same. Fifteen said they would improve and three said they would worsen.
“One of the biggest unknowns about the Biden administration is how it will approach China. It is possible tensions will ease, as the president-elect seeks to boost the economic recovery,” said Kevin Loane, senior economist at Fathom Consulting.
“However, it appears equally likely the Biden administration will be more effective in rallying U.S. partners to impose restrictions on their economic links with China, perhaps worsening U.S.-China trade relations as a result.”
(Reporting by Shrutee Sarkar; Additional reporting by Manjul Paul; Polling by Nagamani Lingappa; Editing by Ross Finley and Nick Zieminski)
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.
