While the economy won’t be “roaring back,” as promised early in the COVID-19 pandemic by the federal finance minister, suspending the federal vaccination mandates on Monday will help it on its way, an economics professor at Queen’s University said.
“The faster we can get back to a more fluid economic system, in particular allowing people to get back into the workforce, and increasing the fluidity of trade across borders and the flow of people, that’s going help with getting the economy back to speed so that then we can counteract those rising prices,” Huw Lloyd-Ellis said.
“We’re basically having to make up for (total hours lost) now and this is in every sector. Not just in terms of producing manufactured goods, although that’s a big part of it, but also tourism (and) all those sectors where there was a big loss in the last two years that work, which you know we were having to catch up for, otherwise prices get pushed up.”
As of Monday, vaccination requirements will be suspended for federal government workers, federally regulated transportation sector workers, as well as for domestic and outbound travel.
Attracting more tourists to the region is something Kingston businesses, especially downtown, are relying on.
“A lot of these mandates being lifted have to do with people travelling internationally out of Canada, but, of course, people who are coming to Canada have to go back, so it affects them to the extent that they will be more likely to come to Canada as a result of this relaxation. It’s going to help local businesses,” Lloyd-Ellis said.
Karen Cross, CEO of the Greater Kingston Chamber of Commerce, said on Thursday that the lifting of restrictions comes at a perfect time.
“Our tourist season is just ramping up — it’s great timing,” Cross said. “We’ll be able to see more travellers now with mandates lifted, so that’s great news. I think there’s going to be some hesitance with the ArriveCAN App, so we’re still working through our government channels to try to get that eliminated as well, to take away that one more barrier to the folks visiting us here.”
Those who wish to enter Canada must have the free ArriveCAN app downloaded to their phone to declare their vaccination status. Numerous border cities are protesting the app, noting it is inconsistent with this week’s announcement.
“Looking at the ArriveCAN app, we know that from a border city perspective, it is a barrier to cross the border,” Windsor Mayor Drew Dilkens told the Windsor Star. “It may seem like a real simple thing. I find it really easy to do, but I know that it’s a barrier for people who are trying to go to the casino, the wineries.
“It’s a barrier for those just looking to come across for dinner and get back to normal.”
Despite the ArriveCAN app, Cross said walking around downtown over the past weekend, she saw numerous licence plates from the United States, including Florida, Texas and California.
“There’s still a lot of motor coaches coming into town, too, so that’s another indication that those things are going to ramp up even more of our tourism industry as we come into the (tourist) season,” Cross said.
The Conference Board of Canada published an economic outlook for the Kingston metropolitan area in March of this year. It predicts the city is going to continue to take positive strides into recovery, “with real GDP forecast to expand by 4.3 per cent this year and 1.5 per cent in 2023.”
Almost exactly two years earlier, the board highlighted Kingston and four other cities’ economies that were at risk due to COVID-19’s impact on the accommodation and food services sector. This was because the cities’ employment in those fields made up more than 8.4 per cent of the total employment.
Aside from the tourism and hospitality industries, lifting the restrictions should also help the flow of goods and services, which should help with inflation.
“A lot of the rising prices, at the moment, are sort of driven by these constraints, and as we relax these constraints, hopefully that will reduce the impact that it has on overall inflation,” Lloyd-Ellis said. “This is not just a Kingston level, but a broader economic level.
“To the extent that inflation is not putting as much pressure on the economy, that will ease the requirement for the Bank of Canada to raise interest rates, which, again, has positive knock-on effects for the positive for the economy — the housing markets in particular.”
There is little economists can compare the pandemic to in terms of impact, but Lloyd-Ellis said many refer back to the 1970s when prices were increasing so rapidly due to the increased price of oil. Back then, it also took time for the economy to level out.
Considering 2020, when the global economy was shut down, Lloyd-Ellis said the country lost roughly seven per cent of output, and then a little less in 2021. He said the economy is now facing the consequences of depleting our supply inventories and the loss of goods and services that weren’t available during the height of the pandemic.
Minneapolis (CNN Business)The US economy shrank at a slightly faster rate than previously estimated during the first quarter, the Bureau of Economic Analysis said Wednesday.
With one quarter of negative economic growth in the books, the data adds to fears that a recession may be looming.
Real gross domestic product declined at an annualized rate of 1.6% from January to March, according to the BEA’s third and final revisions for the quarter.
Previously, the advance estimate released in April showed a contraction of 1.4%. Last month, that was revised to a decrease of 1.5%.
The first quarter GDP performance, which the BEA noted includes some unquantified effects from the pandemic and the Omicron variant surge, stood in contrast to the fourth quarter of 2021, when the economy grew at a rate of 6.9% from the prior quarter.
The first quarter of 2022, however, marked the start of Russia’s invasion of Ukraine, which sent economic shockwaves throughout the global supply chain, as well as the food, finance and energy markets.
Domestically, US inflation has soared to levels not seen in decades amid ongoing supply chain challenges, rising costs for commodities and labor and spiking oil prices.
The BEA attributed the latest decline of 0.1 percentage point to slower-than-expected growth in consumer spending, although that was partially offset by gains in private inventory investment.
The shift in estimates on consumer spending puts additional emphasis on the latest Personal Consumption Expenditures price index data, one of the Federal Reserve’s preferred gauges of inflation, said Shannon Seery, a Wells Fargo economist. The latest report is set for release on Thursday.
Wells Fargo expects a mild recession to occur in the second quarter of 2023, though strong household finances and solid consumer and business balance sheets should keep such a downturn, if it occurs, fairly tame, Seery said.
While a recession is commonly defined as two consecutive quarters of GDP declines, that’s not a hard-and-fast rule, especially for the folks who make the official determination. The National Bureau of Economic Research, the arbiter of US recessions, considers a range of indicators in addition to GDP performance and defines a recession as a “significant decline in economic activity that is spread across the economy and lasts more than a few months.”
The advance estimate for second-quarter GDP performance is scheduled for release on July 28.
(CNN)It’s not yet clear if the US economy will ever return to its pre-pandemic status, Federal Reserve Chairman Jerome Powell said Wednesday at a central banker forum in Portugal.
“The economy is being driven by very different forces. What we don’t know is whether we’ll be going back to something that looks like, or a little bit like, what we had before,” Powell told a panel that included European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey.
The central bank heads, who collectively hold around $20 trillion on their balance sheets, discussed how “new forces” have changed inflationary dynamics and the global economic landscape — perhaps forever.
“I don’t think we’re going back to that [pre-Covid] period of low inflation,” Lagarde said, noting that Russia’s invasion of Ukraine will “change the picture and the landscape within which we operate.”
All three central bankers are battling surging inflation in their economies. The Fed embarked on a course earlier this year to hike interest rates and combat the worst US inflation since the 1980s. Earlier this month, Fed officials voted to implement an interest rate hike of three-quarters of a point, the first time since 1994 that it has approved an increase of that size.
While a growing pool of analysts and economists fear such aggressive moves could push the economy into a recession within the next 12 months, Powell said he believes the US economy is robust enough to withstand a moderation in growth, since households and businesses are both in very strong financial shape.
But the Fed Chair warned that entrenched or persistent inflation would be a worse outcome than an economic downturn.
“Is there a risk that we would go too far [with rate hikes]? Certainly there’s a risk,” Powell said. “But I wouldn’t agree that that is the biggest risk to the economy. The bigger mistake to make would be to fail to restore price stability.”
(Bloomberg) — China’s economy showed further signs of improvement in June with a strong pickup in services spending as Covid outbreaks and restrictions were gradually eased.
The official manufacturing purchasing managers index rose to 50.2 from 49.6 in May, the National Bureau of Statistics said Thursday, slightly below the median estimate of 50.5 in a Bloomberg survey of economists. It was the first time since February that the index was above 50, indicating expansion in output compared with May.
The non-manufacturing gauge, which measures activity in the construction and services sectors, climbed to 54.7, the highest in more than a year and well above the consensus forecast of 50.5.
China’s CSI 300 Index rose as much as 0.9% while major stock gauges in Asia broadly fell.
Government restrictions to contain Covid outbreaks have gradually eased over the last month. The financial hub Shanghai lifted its two-month lockdown at the start of June by allowing more shops to reopen, more factories to resume production, and for port operation to pick up.
The data suggests “the pace of recovery accelerated as the Covid situation stabilized,” said Peiqian Liu, chief China economist at NatWest Group Plc. There was a “broad based but still soft recovery in both production and new orders,” and the figures show the rebound is still milder compared with the recovery from the Wuhan lockdown in 2020, she said.
Some 19 of the 21 sectors in the service sectors tracked in the survey returned to expansion last month, up from just six in the previous month, according to the NBS. Gauges of sectors previously hit badly by the outbreaks all improved, such as railway transport, air transport, accommodation, catering and entertainment.
The recovery remains fragile though as the country sticks to its Covid Zero strategy, meaning restrictions could be tightened if outbreaks of the highly transmissible omicron variant flare up again. Chinese President Xi Jinping reaffirmed his Covid Zero policy this week, saying it was the most “economic and effective” for the country.
Economists, meanwhile, are holding firm on their gross domestic product growth forecasts for this year. The median projection in a Bloomberg survey for 2022 growth is 4.1%, well below Beijing’s annual target of around 5.5%. Bloomberg’s aggregate index of eight early indicators showed some improvement in June, though the recovery remains muted.
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