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Democrats and Republicans have traded places in their views of the economy’s direction – Washington Post



Paul De Santis and Jodie Helms both say the economy looks different than it did just a few weeks ago.

De Santis, 47, a Democrat in Freeland, Md., who called the economy “poor” this fall, is now upbeat, while Helms, 40, a Republican in Ballinger, Tex., fears the end of what she recently saw as “excellent” conditions.

The economy, which continues its slow healing from the pandemic recession, actually isn’t all that different than it was in the fall. But there has been a change in what increasingly determines opinions about the economic landscape: the identity of the party controlling the White House.

“The outlook with the Biden administration coming in to replace the Trump administration is what will improve things,” De Santis said.

“I’m 100 percent sure if Biden ends up in the White House, it won’t be good for my family,” said Helms, who retains hope that President Trump will overturn the election outcome.

The views of De Santis and Helms symbolize a striking partisan divide that emerged in the Trump era — when Republicans began routinely viewing the economy in a better light than Democrats — and now may be hardening into permanence.

Over the past five months — and especially since the presidential election — the parties have switched places. Democrats became notably more buoyant, while Republicans just as quickly turned gloomy. The nature of economic policy debates during a strikingly unequal recovery is likely to cement such divergent views, according to Richard Curtin, chief economist for the University of Michigan’s consumer sentiment index.

“A rise in inequality caused a growing share of the population to think the only way to get a fair distribution of income and wealth was through public policy,” Curtin said. “Politics and policy now have a greater impact on people’s expectations about how the economy will perform in the years ahead. That’s why it’s not going away.”

The clash between Republicans’ emphasis on efficiency, expressed through low taxes and light regulation, and Democrats’ insistence upon equity has intensified amid two economic crises in a dozen years. Under the incoming administration of President-elect Joe Biden, fights over policies that would redistribute income from top earners to less affluent households — such as health care and student loan forgiveness — are likely to reinforce the parties’ contrasting economic assessments, Curtin said.

Consumer confidence is sliding amid the pandemic’s winter surge, according to surveys this week from the University of Michigan, Morning Consult and the Conference Board. On Wednesday, the University of Michigan said its consumer sentiment index dipped in late December, though it remained above last month’s reading.

December’s 80.7 figure was up nearly 5 percent from November “due to a large and rapid partisan shift, with Democrats becoming much more positive and Republicans much more negative,” Curtin said.

The change is evident in views of current conditions and the outlook, but it is particularly acute regarding the years ahead. Compared with three months ago, twice as many Democrats (54 percent vs. 27 percent) now expect a “continuous expansion over the next five years,” while that expectation was cut nearly in half among Republicans (down to 32 percent from 60 percent), Curtin said.

Democrats are more optimistic about the economy’s prospects than at any time since Trump defeated Hillary Clinton in 2016. Last month, for the first time in four years, Democratic expectations became rosier than those of Republicans, according to the University of Michigan data.

Democrats’ increasingly positive views defy numerous economic woes, including nearly 4 million workers who have been unemployed for more than six months and rising numbers facing hunger.

Republicans have a much rosier view of today’s economy, but are downright despondent about the future. Not since October 2016 have Republicans been more glum.

It wasn’t always this way. In 1980, when Ronald Reagan first won the presidency, just four points on the Michigan index separated Democrats from Republicans.

By February 2017, following Trump’s inauguration, the gap was more than 38 points, nearly 10 times as wide.

De Santis is an environmental attorney who favors a transition to a “green” economy, while Helms worries such policies will hurt her husband, an oil field worker. Like millions of other Americans, the two inhabit entirely distinct realities.

For De Santis, a lack of presidential leadership allowed the pandemic to put the economy into a “stranglehold.”

He said a newly elected “moderate” will focus on curbing the virus by rolling out new vaccines before focusing on the move away from fossil fuels needed to ensure long-term prosperity.

“The Biden administration will be better for the economy than the Trump administration — but that’s not what the Trump voters would say,” De Santis said.

Indeed, they wouldn’t.

In Central Texas, Helms mourns what she fears is the end of four straight years of solid economic gains. Thanks to Trump, the family prospered, buying a house, outfitting their kids with new clothes and trading their 13-year-old vehicle for a late-model Dodge Ram mega-cab.

“The economy in our part of the state has improved so much,” she said.

Helms said Trump understands the need to balance economic considerations with the pandemic fight. She doesn’t trust Biden or the news media that calls him the president-elect.

“I’m holding out hope for Trump. It will be a really bright future for us if he stays in office,” she said. “If he doesn’t, I’m fearful.”

The partisan divide after Trump’s election was much sharper than in the aftermath of previous elections in which a newly elected president replaced a member of the other party. Following Reagan’s 1980 victory over President Jimmy Carter, just 16.5 points separated Democrats from Republicans on the Michigan scale. After Barack Obama’s 2008 win, the gap was 17.2 points.

But after Trump dispatched Clinton, opposing partisans were nearly 75 points apart.

“This pattern has just undermined the credibility of the confidence indicators to some extent,” said economist Jim O’Sullivan, chief U.S. macro strategist for TD Securities.

The Trump years have taken a toll on other economic surveys. The National Federation of Independent Business optimism index jumped on his 2016 win and — except for the worst months of the pandemic’s initial wave — stuck well above its 25-year average no matter what was happening in the real economy. The small-business survey’s persistent upbeat tilt reduced its predictive value, O’Sullivan said.

Such sentiment indicators are most useful in signaling oncoming recessions, according to Mark Zandi, chief economist of Moody’s Analytics. When confidence plummets, it generally means a broader downturn is a few months away, he said.

The Michigan sentiment reading plunged in December 2000, three months before the 2001 recession officially began. Likewise, the indicator headed south in August 2007, four months before the housing bubble imploded and took the economy with it.

“Consumer confidence is neither here nor there in typical times,” Zandi said. “It reflects the economy. It doesn’t drive the economy.”

Partisanship also has its limits. Unmistakable booms and busts register with members of both parties and drive major swings in sentiment readings.

When this year began, Republicans were more impressed with what the president often called “the greatest economy in the history of our country.”

With the 3.5 percent unemployment rate near a half-century low, Republicans’ view of the economy registered 133.1 on the University of Michigan scale while Democrats were at 100.9.

Even as Helms celebrated good times, De Santis said he harbored doubts about the long-term consequences of what he saw as Trump’s excessive deregulation.

But as the pandemic took hold, members of both parties suffered virtually identical mood swings. Between February and April, Democrats’ view of current conditions plunged by almost 36 points, while Republicans’ reading sagged by about 43 points.

“Partisanship is a big influence, but reality is sort of a constraint on it,” said Jeff Jones, a senior editor with Gallup. “People are responsive to what’s going on. It’s not just partisanship.”

Indeed, for many Americans, partisan leanings can’t obscure economic reality. In Amsterdam, N.Y., Milagros Burgos, 53, was happy to see Biden elected. But she’s no Pollyanna about the economy.

“Things are real bad,” she said.

Burgos’s daily existence remains difficult. A former hair salon operator, who has custody of her two granddaughters, ages 6 and 7, she makes due with less than $20,000 in annual disability payments.

What does she want from the new president? “Help. Help,” she said, beginning to cry. “We’re struggling real bad.”

Asked if the election results had made her more optimistic, she said: “Everything’s political. Let’s see.”

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Toronto stock exchange tsx gains on energy boost, upbeat economic data



Toronto stock exchange index rose on Friday, as energy stocks gained on higher crude prices and upbeat economic data bolstered optimism over an economic rebound.

* The energy sector climbed 0.8% as U.S. crude prices were up 0.2% a barrel, while Brent crude was unchanged. [O/R]

* At 09:36 a.m. ET (13:36 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 39.12 points, or 0.2%, at 20,088.59.

* Statistics Canada said the country’s industries ran at 81.7% of capacity in the first quarter of 2021, up from a upwardly revised 79.7% in the fourth quarter of 2020, while the nation’s net worth jumped by a record 7.7% in the first quarter to C$15.0 trillion ($12.40 trillion).

* The financials sector gained 0.1%. The industrials sector rose 0.4%.

* The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.2% as gold futures fell 0.5% to $1,885.4 an ounce [GOL/]

* On the TSX, 114 issues were higher, while 102 issues declined for a 1.12-to-1 ratio favouring gainers, with 9.72 million shares traded.

* The largest percentage gainers on the TSX were miners Hudbay Minerals Inc, up 3.8%, and First Quantum Minerals Ltd, up 3.7%.

* Enghouse Systems Limited fell 7.6%, the most on the TSX, after the software provider missed second-quarter estimates and the second biggest decliner was real estate investment trust NorthWest Healthcare Properties, down 1.3%.

* The most heavily traded shares by volume were those of Hut 8 Mining Corp, Canadian Natural Resources Limited, and NorthWest Healthcare Properties.

* The TSX posted 16 new 52-week highs and one new low.

* Across all Canadian issues there were 76 new 52-week highs and 2 new lows, with total volume of 22.41 million shares.


(Reporting by Amal S in Bengaluru; Editing by Shailesh Kuber)

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Canadian dollar hits 2-week low as greenback broadly rallies



Canadian dollar

The Canadian dollar weakened against its U.S. counterpart on Friday, extending a weekly decline, as the greenback broadly rose and domestic data showed industries operating at a greater share of their capacity in the first quarter.

The loonie was trading 0.3% lower at 1.2135 to the greenback, or 82.41 U.S. cents, after touching its weakest intraday level since May 27 at 1.2140. For the week, it was on track to fall 0.5%.

The U.S. dollar rallied against a basket of major currencies as U.S. Treasury yields stabilized. Yields fell on Thursday as the market deemed a spike in inflation to be transitory.

Canadian industries ran at 81.7% of capacity in the first quarter of 2021, up from an upwardly revised 79.7% in the fourth quarter of 2020, Statistics Canada said.

“The report tracks the impact of the boom in the housing and resource extraction industries as the economy reflates,” said Ryan Brecht, a senior economist at Action Economics.

On Wednesday, the Bank of Canada said there remains considerable excess capacity in the Canadian economy.

Still, the BoC’s more hawkish stance since April and soaring commodity prices have helped boost the Canadian dollar, with the currency up nearly 5% against the U.S. dollar since the start of the year.

A stronger loonie is usually seen hurting exporters, but the nature of the global economic recovery could help companies pass on their higher costs from the currency to customers, leaving exporters in less pain than in previous cycles.

Oil, one of Canada‘s major exports, rose on Friday to a fresh multi-year high at $70.80 a barrel.

Canadian government bond yields were mixed across the curve, with the 10-year up 1.2 basis points at 1.383%. Earlier in the day, it touched its lowest since March 3 at 1.368%.


(Reporting by Fergal Smith; editing by Jonathan Oatis)

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How to Buy a home in Canada




Homeownership can be very exciting, but it isn’t always the best thing for everyone. Before you decide to buy a home, make sure you carefully consider the costs.

According to Canada Mortgage and Housing Corporation (CMHC), your monthly housing costs should not be more than about 35% of your gross monthly income. This includes costs such as mortgage payments and utilities.

Your entire monthly debt load should not be more than 42% of your gross monthly income. This includes your mortgage payments and all your other debts.

Use CMHC’s step-by-step guide to help you decide if homeownership is right for you.

Saving for your home

To buy a home, you need a down payment. You also need money to pay for the upfront costs.

Make saving part of your monthly budget. Most employers deposit your pay directly into your chequing or savings account. Increase your chances of reaching your savings goals by setting up automatic transfers to a savings account each pay cheque.

Use the Financial Goal Calculator to help you determine how long it will take you to reach your savings goals.

Saving with a Tax-Free Savings Account (TFSA)

TFSA is an account that lets you save or invest your money tax-free. You won’t pay tax on money you withdraw from your TFSA. You can also use your TFSA to help you buy a home.

Find out about TFSAs.

Saving with a Registered Retirement Savings Plan (RRSP)

An RRSP is an account that allows you to save money for your retirement. You don’t pay taxes on your savings until you withdraw money from the RRSP.

Find out about RRSPs.

The Home Buyers’ Plan (HBP)

If you’re a first-time homebuyer, the HBP allows you to withdraw up to $35,000 from your RRSPs tax-free to put toward buying your first home.

Learn more on how to participate in the Home Buyers’ Plan.

The First-Time Home Buyer Incentive

This incentive offers 5% or 10% of your home’s purchase price to put towards a down payment.

Learn more about the First-Time Home Buyer Incentive.

Using savings and investment

If you plan to buy a home in the near future, focus on building your savings. You’ll want to keep your money protected and easily accessible.

Short-term savings and investment options may include:

  • savings accounts
  • short-term guaranteed investment certificates (GIC)
  • low-risk mutual funds

Ask your financial institution or advisor about the short-term investments they offer and how they work.

Learn more about setting savings and investments goals.

Paying for your home

Most people need to borrow money to buy a home. You also need to put some of your own money into the purchase.

Down payment

When you buy a home, you must put a certain amount of money toward the purchase upfront. This is called a down payment. Your mortgage loan will cover the rest of the price.

Find out how much of a down payment you need to purchase a home.

Mortgage process

A mortgage is likely the biggest loan you get in your lifetime. It’s important that you understand the process.

Check your credit report before you apply for a mortgage

A potential lender considers your credit history before they decide whether or not to approve your mortgage application.

Before you start shopping around for a mortgage:

Shop around for a mortgage

Lenders may have different interest rates and conditions for similar mortgages. Talk to several lenders to find the best mortgage for your needs.

You can get a mortgage from:

Mortgage lenders – These institutions lend money directly to you. Explore the different types of lenders that are available, including banks and credit unions.

Mortgage brokers – They don’t lend money directly to you. Mortgage brokers arrange transactions by finding a lender for you. Since brokers have access to many lenders, they may give you a wider range of mortgages to choose from. The lender pays a commission to the mortgage brokers, so there’s no cost to you.

Find a local certified mortgage broker with Mortgage Professionals Canada.

Find out about getting pre-approved and qualified for a mortgage.

Get the mortgage that meets your needs

Mortgages have different features to meet different needs. It’s important that you understand the options and features.

Questions you should ask yourself include:

  • do you want a mortgage with a fixed interest rate or one that can rise or fall
  • how long of a term do you want
  • how often would you like to make payments toward your mortgage

Find a mortgage that is right for you.

Mortgage loan insurance

If your down payment is less than 20% of your home’s price, you need to purchase mortgage loan insurance. In some cases, you may need to get mortgage loan insurance even if you have a 20% down payment.

Mortgage loan insurance protects the mortgage lender in case you’re not able to make your mortgage payments. It does not protect you. Mortgage loan insurance is also sometimes called mortgage default insurance.

Optional mortgage life, critical illness, disability and employment insurance

Your lender may ask whether you would like to purchase life, critical illness, disability and employment insurance.

These products that can help make mortgage payments, or can help pay off the remainder owing on your mortgage, if you:

  • lose your job
  • become injured or disabled
  • become critically ill
  • die

There are important exemptions for each of these insurance products. An exemption is something not covered by your insurance policy. Read the insurance certificate before you apply to understand what this insurance covers.

These insurance products are optional. You don’t need to purchase this insurance coverage for your mortgage to be approved. You must clearly agree to sign up for this insurance before the lender charges you for it.

Learn more about optional mortgage insurance products.

Tax credits for homebuyers

The Government of Canada offers two tax credits for specific types of homebuyers. Your provincial or territorial government may also offer other home-buying incentives.

The Home buyers’ amount

You get access to this tax credit when you purchase your first home and submit a tax return. It’s an effective means of offsetting some of the upfront costs associated with buying a home. Eligible homebuyers may receive a tax credit of up to $750.

Find out if you’re eligible for the Home buyers’amount.

GST/HST housing rebates

Generally speaking, sales of new homes are subject to the GST/HST. You may qualify for a rebate for some of the tax you paid.

Learn more about the GST/HST housing rebates that may be available to you.

Moving expenses

You may move into a new home to work or run a business in a new location. You can deduct eligible moving expenses from the employment or self-employment income that you earn in the new location.

Find out if you’re eligible to claim moving expenses.

Home buying costs

When you buy a home, you have to pay for upfront costs in addition to your mortgage. These are called closing costs. You can expect to spend between 1.5% and 4% of the home’s purchase price on closing costs. You usually pay these costs by the time the sale is completed or “closes”.

Legal costs

You have to pay legal fees on your closing day. This is the day that your home purchase is complete. These fees are usually range between $400 to $2,500 but will vary depending on your lawyer’s or notary’s rates.

A lawyer or notary can help protect your legal interests. They make sure that the home you want to buy does not have a lien against it. A lien is a legal claim over another person’s property that someone files to ensure a debt gets paid.

A lawyer or notary reviews all contracts before you sign them. They also review your offer or agreement to purchase.

Home insurance

You must have home insurance in place as a condition of getting a mortgage.

Home insurance can help protect your home and its contents. It typically covers the inside and outside of your home in case of theft, loss or damage.

Learn more about how home insurance works and the different types that are available.

Land registration

Before the sale closes, you’re required to pay to register your property’s title under your name. This may be called a land transfer tax, a deed registration fee, a tariff, or a property transfer tax.

The cost is a percentage of the home’s purchase price. For example, if your land transfer tax is 1.5% and your home cost $300,000, you pay $4,500.

Adjustment costs

The seller of the home you’re buying may be entitled to adjustments. For example, the seller may have already paid the property tax on the home past the purchase closing date. If that’s the case, the seller receives a credit on the closing date. You must then pay this credit amount to cover the money already paid by the seller.

New build GST/HST

Generally, if you buy a new build home, you pay GST or HST. Some builders include the HST in their sale price while others don’t. Make sure to check. Otherwise, you have to pay this cost upfront on closing day.

Other closing costs

Other closing costs may include:

  • interest adjustments (period between your purchase date and your first mortgage payment)
  • Certificate of Location cost
  • estoppel certificate (for condominium units)
  • township or municipal levies (may apply to new homes in subdivisions)
  • mortgage default insurance premium (if paying premium up front instead of adding it to mortgage loan)
  • provincial sales tax on premiums for mortgage default insurance (applicable in some provinces)

Other home-buying costs

Other costs you may need to budget for include:

Home appraisal

Mortgage lenders may ask you to have an appraisal done as part of the mortgage approval process.

An appraiser provides a professional opinion about the market value of the home you want to buy. An appraisal fee is generally between $350 and $500.

For more information on the appraisal process, read the guide from the Appraisal Institute of Canada.

Home inspection

An inspector provides a comprehensive visual inspection of a home’s overall structure, major systems and components such as:

  • electrical and plumbing systems
  • the foundation
  • the roof

CMHC recommends that you include a home inspection as a condition when you make an offer.

Use tips from the Office of Consumer Affairs to find an inspector and learn about home inspections.

Moving costs

Before moving in, you may also have to pay for:

  • moving costs
  • storage costs
  • real estate costs for selling your home (if applicable)
  • redirecting mail

Find out what to consider when choosing a moving company, and how to plan for moving day costs.

Once you move in, you may immediately face other costs, including:

  • utility hook-up fees
  • basic furniture and appliances
  • painting and cleaning
  • water tests
  • septic tank tests (if applicable)

Use this home purchase cost estimate form to estimate your home-buying costs.

Working with a real estate agent

Using a realtor is optional. A realtor typically searches for homes, negotiates a purchase price, fills out and file paperwork, and more.

The seller pays the realtor’s fees when you buy a home.

Learn more about a realtor’s involvement in the home-buying process.

Home buying and newcomers to Canada

CMHC has a guide with comprehensive information on housing for newcomers.

Consult Buying Your First Home in Canada: What newcomers need to know.

Buying a condominium

Condominiums, or condos, are shared properties that contain individual housing units. Each unit has its own owner. Owners share the common areas outside of the unit such as the lobby and parking lot.

There are pros and cons to owning a condo. For example, if you buy a condo, you pay monthly condo fees. However, you may like the idea of sharing the building maintenance costs with the other unit owners.

Learn about condo fees and other ongoing costs of maintaining a home.

Use this Condominium Buyers Guide for tips on what to consider before buying.

Buying to rent

You can buy a property with the intention of renting it out. Keep in mind that you have to declare your rental income at tax time each year.

Find out how to calculate your rental income and which expenses you can deduct.



Source: Financial Consumer Agency of Canada

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