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Domestic Help Seeks Help: New Economy Daily – Bloomberg



Hello. Today we look at an segment of the American workforce which is lagging the recovery, the literal tiger economy, and the potential fallout from trillions of dollars in government spending. 

Struggling to Keep Up

One category of worker is struggling to keep up with the recovering American labor market: domestic helpers.

U.S. hiring has been picking up quickly in recent months thanks to vaccinations and reopening of the economy — at least, before the current rise in worries about the delta variant.

But the group with a large immigrant representation and predominantly women of color still has a long way to go.

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Based on recent surveys, more than a quarter of the 2.2 million cleaners, nannies and other caregivers who work in private homes may still be out of work, Augusta Saraiva reports.

More than one in three domestic workers are immigrants, hundreds of thousands of whom are undocumented. 

Foreign-born domestic employees are estimated to make almost $2 less per hour than their American counterparts.

Now the coronavirus crisis has left many with even lower income, if at all.

For the undocumented, the situation is worse, because they typically have no access to government aid when they lose their job. 

To help protect them, Democrats in the Senate re-introduced last month the National Domestic Workers Bill of Rights.

First presented by then-Senator Kamala Harris in 2019, the bill would ensure paid sick leave as well as meal and rest breaks for homecare employees, on top of extending civil-rights protections to this category. Ten states, including New York, already have bills of rights for domestic workers.

Chris Anstey

The Economic Scene

India’s Project Tiger aims to boost the population in the wild to as much as 4,000 in the next decade.

Among Indian Prime Minister Narendra Modi’s myriad options to help revive his economy from a rare contraction brought on by the Covid-19 pandemic, “Project Tiger” is definitely among the most unlikely. 

The country intends to grow the wild tiger population by 35% to as many as 4,000 in the next decade, which would protect forests while also boosting economic gains from conservation.

One rupee invested in tiger reserves provides 243- to 7,488-times worth of benefits to the country in a year, said Madhu Verma, New Delhi-based chief economist at the World Resources Institute.

A study she authored in 2019 showed monetary value of direct and indirect benefits from 10 tiger reserves ranged from 51 billion rupees ($687 million) to 162 billion rupees in a year.

Today’s Must Reads

  • Tax questions | Wealthy Americans wondering how much more taxes they’ll owe after Democrats pass their sweeping social-spending package may have to wait until deep into the fall, or later, to find out.
  • State aid | The spread of the delta variant could force even states that cut off extra unemployment benefits early, like Florida, to offer additional support, President Joe Biden’s U.S. labor chief told Bloomberg.
  • Harris to Asia | U.S. Vice President Kamala Harris will look to bolster economic cooperation in China’s backyard as she visits Singapore and Vietnam in the Biden administration’s most high-profile trip yet to Asia.
  • Going backward | Japan’s inflation dropped for a 12th month in July, extended the longest losing streak in a decade after data revisions showed weakness during the pandemic was worse than previously reported.
  • Still home | The worst of the coronavirus pandemic may be receding into the rear-view mirror, but office workers are little closer to returning to their desks full-time.
  • Longer lockdowns | Sydney’s two-month long lockdown will be extended until at least the end of September and masks will need to be worn outside as the Covid-19 delta variant outbreak in Australia’s most populous city worsens — and ensnares New Zealand.

Need-to-Know Research

A blowout in government borrowing since the pandemic began will ultimately require spending cuts and higher taxes to get public finances back on track.

That’s a lesson from economic history highlighted by James McCormack, Fitch’s global head of sovereign ratings, who said that even if austerity is not on the agenda right now, the bill to pay for the pandemic will come due.

Governments around the world have rolled out about $16 trillion worth of fiscal measures to prevent economic collapse during the pandemic, according to the International Monetary Fund, helping to drive the recovery but also leaving war-time era levels of debt.  

On #EconTwitter

The inflation debate is heating up again…

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The fourth annual Bloomberg New Economy Forum will convene the world’s most influential leaders in Singapore on Nov. 16-19 to mobilize behind the effort to build a sustainable and inclusive global economy. Learn more here.

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    Slow pace of vaccinations is largest drag on the economy in survey of business leaders – NBC News



    Corporate leaders are far less bullish about the economic recovery than they were back in the spring — and they fear that vaccination holdouts could stall or even reverse the progress that has been made.

    A new survey by the National Association for Business Economics, or NABE, found a marked pullback in expectations for economic growth and output, especially in the near term. Survey respondents expect real growth in gross domestic product for this year to come in at 5.6 percent at the median — a significant drop from the median 6.7 percent growth expected in May, when the survey was last conducted.

    “The erosion of forecasts and confidence has really mirrored what our economists have been saying, because we brought down our Q3 GDP forecast from 7.0 to 5.6 percent,” said Sam Stovall, chief investment strategist at CFRA Research. “We just feel that things don’t look as rosy as they did before.”

    Nearly 2 in 5 NABE survey respondents said downside economic risk outweighs upside risk for the year, and just 16 percent said conditions are weighted toward the upside. The figures were reversed in May, when 56 percent ranked upside risk as a higher probability and just 15 percent said saw greater downside risk to the outlook.

    The key difference, and the factor that is weighing on hopes for the recovery, is the resurgence of Covid-19 fueled by the highly contagious delta variant of the coronavirus. Everybody who was banking on the pandemic’s receding over the summer has had to modify their expectations in the face of a public health crisis that shows no sign of abating.

    “We all believed we were through the pandemic five months ago, and I believe that the variant has caught many people by surprise,” said Joseph Heider, president of Cirrus Wealth Management. “As this lingers on, executives are becoming more concerned and asking, ‘Are we going to have this under control?'”

    NABE survey chair Holly Wade, executive director of the NFIB Research Center, said in the survey outlook report, “Panelists point to a variant of the coronavirus, against which the vaccines may be ineffective as the main downside risk.” Nearly two-thirds of respondents identified that as the greatest downside risk to the economy, and 9 percent more cited slowing vaccine uptake as the most worrisome hurdle. A plurality of 44 percent said a faster vaccine rollout is the best chance for higher-than-expected economic gain.

    Heider said: “Vaccine resistance is, I think, larger than many people anticipated. I think it’s creating real concerns as to our ability to reach herd immunity. And when we don’t have herd immunity, the unvaccinated are human petri dishes for the virus to mutate.”

    Although the virus represents the biggest threat to near-term business recovery, analysts said it is far from the only headwind corporations face. “There’s just many more variables and unknowns than there were six months ago,” said Dick Pfister, CEO of AlphaCore Wealth Advisory.

    In addition to the threat of Covid and potential variants, Pfister said, companies and investors are monitoring other unfolding circumstances. The Federal Reserve is edging closer to ending its bond buying, and more policymakers have expressed openness to raising interest rates sooner. The financial peril faced by the heavily indebted Chinese real estate giant Evergrande is making investors nervous, he said, as they try to gauge whether the company’s teetering on the brink of collapse was an isolated incident.

    “There’s probably more than just one, and there are some fears from economists that this could be more systematic inside of China,” he said.

    A globally connected economy poses other sorts of risks, as well: A cascading series of bottlenecks in the global supply chain affecting semiconductors to energy has triggered much of the growing worry about rapidly increasing prices. The NABE survey found that 17 percent of respondents said supply chain disruptions were having a “significant impact” on business, while 27 percent more cited mild or moderate impacts.

    “Inflation expectations have moved up significantly from those in the May 2021 survey,” Wade said. On average, NABE respondents expect inflation to rise by 5.1 percent in the fourth quarter year over year, a jump from an expected 2.8 percent increase in the May survey.

    David Wagner, portfolio manager at Aptus Capital Advisors, said the duration and the breadth of global supply disruption have triggered a re-evaluation in corner offices in the U.S. and around the world. In the spring, “it seemed like the supply chain problem was transitory,” but the assumptions were dashed as the summer went on, he said, adding: “Supply chain problems are persisting for much longer than originally expected.

    “Now that you’re starting to see some kind of tangible supply chain backlog, I think that’s got more people pessimistic. It caught people by surprise,” Wagner said.

    Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said, “Supply concerns are weighing on the mind of the market and economists because it has limited the amount of output we can get from certain industries.”

    Along with the supply shortages that are hindering production and driving up costs, the unbalanced labor market continues to constrain growth, as well — but there also are glimpses within those distortions of potential normalization. Although about one-third of survey respondents said they were facing a surfeit of workers, a larger proportion, 44 percent, said they were not experiencing a labor shortage. Respondents predict wage growth of 4 percent for the year, followed by a 3.5 percent increase next year — rates broadly in line with what many economists consider to be indicative of a well-functioning labor market.

    “The labor market is not fully recovered — we’re seeing that across other surveys, as well, and even the Fed’s own Beige Book indicates that hiring has been challenging,” Haworth said. “There’s a lot of room for improvement, but it’s really slow going.”

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    Toronto market rises as energy shares reach 3-month high



    Canada‘s main stock index rose on Monday as a rally in oil prices lifted the energy sector to the highest level in nearly three months, while financials gained ground as bond yields rose.

    The Toronto Stock Exchange‘s S&P/TSX composite index ended up 60.76 points, or 0.3%, at 20,463.42.

    “Energy has rallied pretty nicely” on the jump in oil prices, said Kevin Headland, senior investment strategist at Manulife Investment Management.

    The energy sector rose 3.1% to notch its highest closing level since July 5, while crude oil futures settled nearly 2% higher at $75.45 a barrel as investors fretted about tighter supplies.

    The heavily weighted financial services sector ended 0.5% higher but information technology lost 1.2%.

    The move lower in technology was “a carryover from the U.S., given the jump in 10-year yields today,” Headland said.

    The U.S. 10-year yield rose above 1.5% for the first time since June 29 before easing, bolstered by solid economic data and signals the Federal Reserve is shifting toward a more hawkish policy.

    Higher yields tend to hurt the shares of companies with high growth prospects because they reduce the value of future cash flows.

    The S&P 500, which has a higher technology weighting than the Toronto market, ended lower.

    “In the Canadian stock market… we’re playing a little bit of catch-up to U.S. stocks as they outperformed Canadian stocks in the last five sessions,” said Michael White, portfolio manager at Picton Mahoney Asset Management.

    The healthcare sector, which includes cannabis producers, ended 2.4% higher. The materials group gained 0.5%.


    (Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Dan Grebler)

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    Fund Managers See Stocks Outperforming Bonds Despite Economy – Bloomberg



    Gently, but steadily, economic expectations are coming down. It may be an overreaction to the wave of Covid-19 caused by the delta variant, or it may be a response to incoming data, or it could reflect dampening hopes for an expansive new fiscal policy in the U.S. as the standing of President Biden also dampens. But for whatever reason, hopes for a big new “reflation” or even a post-Covid “reopening” have dwindled.

    One thing remains unchanged by this, however. The great majority of investors are still convinced that there is no alternative to stocks. Even with drabber economic growth in prospect, which should help fixed-income more than equities, the overwhelming consensus still calls for stocks to outperform bonds.

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