<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The coronavirus outbreak, or COVID-19, has pushed the U.S. economy to break yet another record, with 6.648 million people applying for unemployment claims for the week ending March 28.” data-reactid=”16″>The coronavirus outbreak, or COVID-19, has pushed the U.S. economy to break yet another record, with 6.648 million people applying for unemployment claims for the week ending March 28.
This number is a sign of the times to come, one economist wrote.
“Net, net, job layoffs are soaring faster than any time in recorded history,” Chris Rupkey, MUFG managing director and chief financial economist, wrote in a note on Thursday morning. “This looks bad and it is bad. The worst jobless claims in U.S. history means the economy has fallen into the abyss. Stay tuned. Story developing.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The unemployment numbers for the week ending March 21 had already been shocking enough, where 3.307 million claims were filed. This week’s claims doubled that. And prior to the coronavirus-induced economic shock, the previous record was 695,000 claims filed the week that ended October 2, 1982. ” data-reactid=”19″>The unemployment numbers for the week ending March 21 had already been shocking enough, where 3.307 million claims were filed. This week’s claims doubled that. And prior to the coronavirus-induced economic shock, the previous record was 695,000 claims filed the week that ended October 2, 1982.
(Graphic: David Foster/Yahoo Finance)
<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="‘American workers have nowhere to hide’” data-reactid=”40″>‘American workers have nowhere to hide’
The jobless claims number is likely to increase further in the coming weeks, according to Rupkey.
“We knew that massive job losses were coming because of reports that many workers were unable to file a claim for benefits even after waiting on line for hours,” he wrote.
This is perhaps an indication that U.S. economy has “skipped recession and has already moved deep into the depression zone,” he added. “American workers have nowhere to hide as the job layoffs are going to go global as world trade collapses.”
Economists, though not fully prepared for the extent of the unemployment claims figures as evidenced by all major consensus estimates being lower than the latest jobless claims, were at least mentally prepared for whatever is in store in the upcoming weeks and months.
Coronavirus cases are still on the rise. (Graphic: David Foster/Yahoo Finance)
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Economic data in the near future will be not just bad, but unrecognizable,” Credit Suisse economists led by James Sweeney wrote last week. “Anomalies will be ubiquitous and old statistical relationships within economic data or between market and macro data might not always hold… There is no blueprint for the current shock, and uncertainty about the extent of contagion and the economic consequences is overwhelming.”” data-reactid=”65″>“Economic data in the near future will be not just bad, but unrecognizable,” Credit Suisse economists led by James Sweeney wrote last week. “Anomalies will be ubiquitous and old statistical relationships within economic data or between market and macro data might not always hold… There is no blueprint for the current shock, and uncertainty about the extent of contagion and the economic consequences is overwhelming.”
Economists at Goldman Sachs warned that U.S. GDP would collapse 34% in Q2, which would be more than triple the record 10% drop seen in 1958.
In their latest note, Goldman analysts explained that “the anecdotal evidence and the sky-high jobless claims numbers show an even bigger output and (especially) labor market collapse than we had anticipated. This not only means deeper negatives in the very near term but also raises the specter of more adverse second-round effects on income and spending a bit further down the road.”
Kayaking off a cliff. (Getty Images)
<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Millions of Americans are at risk” data-reactid=”92″>Millions of Americans are at risk
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="While the virus continues to spread, experts warn that the desire to rush a re-opening of the economy is incredibly ill-advised.” data-reactid=”93″>While the virus continues to spread, experts warn that the desire to rush a re-opening of the economy is incredibly ill-advised.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“With a further spread of the virus and repeated lock-downs, we also see more scarring from this scenario, with growth returning to only slightly positive in Q4 and only slowly normalizes in 2021,” Deutsche Bank analysts wrote in a note. “For the year, the economy contracts 7.8% in 2020 under this profile (-10.9% Q4/ Q4), and the rebound is more subdued in 2021, with activity rising only 2.0% (6.4% Q4/Q4).”” data-reactid=”94″>“With a further spread of the virus and repeated lock-downs, we also see more scarring from this scenario, with growth returning to only slightly positive in Q4 and only slowly normalizes in 2021,” Deutsche Bank analysts wrote in a note. “For the year, the economy contracts 7.8% in 2020 under this profile (-10.9% Q4/ Q4), and the rebound is more subdued in 2021, with activity rising only 2.0% (6.4% Q4/Q4).”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Overall, more than 66 million jobs across sales, production, and food preparation services are at “high risk” of layoffs, according to a St. Louis Federal Reserve economist earlier this month.” data-reactid=”95″>Overall, more than 66 million jobs across sales, production, and food preparation services are at “high risk” of layoffs, according to a St. Louis Federal Reserve economist earlier this month.
(Graphic: David Foster)
Using 2018 occupational data from the Bureau of Labor Statistics (BLS) detailing 808 occupations, the St. Louis Fed’s Charles Gascon found that 66.8 million people — 46% of working Americans — are employed in these occupations that are at “high risk” of layoffs.
These included people involved in food preparation and serving-related occupations as well as those in sales, production, installation, maintenance, and repair jobs.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The Economic Policy Institute estimates that nearly 20 million workers will be laid off or furloughed by July.” data-reactid=”118″>The Economic Policy Institute estimates that nearly 20 million workers will be laid off or furloughed by July.
Rupkey did note a silver lining among the depressed consumer spending outlook.
“The trade deficit in February is narrowing and that’s a good thing as it will add to GDP growth and right now there is limited growth ahead so any sector of the economy that can lend a hand is welcome,” he stated. “Americans buy less imported goods in a recession, that’s a fact, an ironic fact that reduced imports add to GDP growth.”
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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Aarthi is a reporter for Yahoo Finance. Follow her on Twitter @aarthiswami.” data-reactid=”143″>Aarthi is a reporter for Yahoo Finance. Follow her on Twitter @aarthiswami.
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.
