Economy

COVID Has Broken the Economy – The Atlantic

Published

3 years ago

December 10, 2021

Since March 2020, the state of the economy has been tied inexorably to the state of the pandemic. And although many people in this country are leading their lives without regard to case numbers, that absolutely remains the reality. Specifically, the pandemic is contributing to the rising inflation rates that are causing the Biden administration such heartache.

The consumer price index rose 6.2 percent from October 2020 to October 2021, the most rapid 12-month increase in prices in more than 30 years. The possibility that the pandemic is to blame for this phenomenon may seem counterintuitive, because the initial COVID-19 wave had the opposite effect. The price of oil in April 2020 was briefly negative, and the CPI rose just 0.1 percent from May 2020 to May 2021.

But remember that inflation rates tend to rise, quite simply, when households want more goods and services than firms can easily supply. And note that both fear and COVID-related restrictions have shifted demand from services to goods. Some people still fear seeing a movie in a theater; others may dislike wearing a mask while seeing a movie. Both factors push consumers to buy home-entertainment equipment. Fear of public transportation increases demand for cars and bikes, and fear of eating in restaurants increases demand for kitchen renovations and equipment. Accordingly, from the fourth quarter of 2019 to the third quarter of 2021, inflation-adjusted household spending on services fell 2 percent, and spending on durable goods rose 20 percent. This shift in demand has contributed to overall inflation.

The pandemic also disrupts the supply of imported goods, raising their price. This happens directly, as infections and lockdowns abroad hamper production; a lockdown in Vietnam in August, for instance, disrupted the computer-chip supply. COVID-related border restrictions may also make coordinating production across countries more difficult.

Finally, COVID reduces the supply of workers in the United States, which means fewer goods and services produced and thus higher prices. Start with the direct effect of the disease itself. As I write this, roughly 95,000 people are testing positive for COVID every day in the U.S. Suppose 50,000 of these are employed individuals (the current employment-to-population ratio is 59 percent), and that on average each person who tests positive misses, conservatively, three days of work. (The CDC recommends isolation for 10 days after symptoms begin, but many people may not follow this recommendation, and some workers can work remotely while infected.) Add in other employees who must quarantine because they have had close contact with a positive case or who miss work to care for a sick relative, and it seems likely that at least 300,000–500,000 employees are absent from work every day as the direct result of COVID infections. That is 0.2–0.3 percent of all employees. But the effect is much worse than a simple 0.3 percent decline in employment, because it comes with uncertainty; these 300,000–500,000 daily absences are unplanned, so employers need to spend money to overstaff or otherwise prepare for worker absences.

Separate from the day-to-day toll of ongoing infections, COVID shrank the labor force, which was more than 2 million smaller in November than it was in February 2020. Some of this decline comes from workers who are (reasonably) afraid of catching COVID on the job and who therefore temporarily left the labor force or retired. As of the third quarter of 2021, 50.3 percent of the U.S. population age 55 and over was retired, a large increase from 48.1 percent two years earlier.

Women have also dropped out: The number of women ages 25–44 in the labor force fell 341,000 (1 percent) compared with just 6,000 men of the same age. This disparity may reflect the hardships of pandemic parenting—an ongoing problem. Although public schools are now open in-person across the country, school and day care are far from the 2019 status quo. Some districts continue to cancel classes because of staff shortages and demands for extensive cleaning. Detroit, for instance, has no in-person school on Fridays in December. CDC guidance says that any infant or toddler who is a close contact of a COVID case (meaning contact of more than 15 minutes, indoors or outdoors) must quarantine for seven to 14 days. CDC guidance also says that children with a wide range of (typically mild) symptoms must stay home, at least until they receive a negative test result.

If the Biden administration wants to get inflation under control, then, it can go beyond the usual Fed-driven remedy of raising interest rates. Better policy to manage COVID, meaning both better policy to control the disease and better policy to limit the economic effect of the disease, could increase the economy’s capacity to produce goods and services. Better policy most obviously means more vaccination, at home and abroad. It also means widely available and cheap rapid tests; testing allows infected individuals to isolate themselves, and it allows workplaces to do more to reassure workers that they are safe. In this regard, the administration’s recent announcement that the purchase of a rapid test would be reimbursed by insurance was disappointing. The country needs cheap, easily obtainable tests, not a cumbersome reimbursement process.

The administration should also discard policies that do much to disrupt society but little to control the disease. For instance, quarantines of asymptomatic children who repeatedly test negative don’t contribute much to public health. And such quarantines do disrupt the labor market, as parents miss work or leave the labor force.

Maybe the pace of inflation will diminish without the need for anything more than a small interest-rate increase, one consistent with continuing employment gains and high asset prices. But I doubt it. The Omicron variant—and the international response to its discovery—leads me to believe that COVID-related disruptions to the economy may well last for years, not months. This is still a pandemic economy, and it will be for quite a while.

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Business

A timeline of events in the bread price-fixing scandal

Published

16 hours ago

September 19, 2024

Anne Joseph

Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

16 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

1 day ago

September 18, 2024

Anne Joseph

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

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