The Trump administration this week rolled out guidelines for states to follow starting May 1, as some governors gradually allow businesses to reopen and allow scaled-down social gatherings. The president also convened nearly a dozen advisory panels tasked with figuring out how to reboot every sector of the economy.
The widespread shutdown of businesses and social gatherings across the U.S. has been credited with slowing the spread of the deadly virus, but at the cost of millions of jobs and likely thousands of businesses. As Trump nudges Americans out of isolation, he’s expressed confidence that the economy can swiftly return to its pre-pandemic strength.
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“We really think with all of the stimulus and all of the pent-up demand, we’re going to have an economy that really comes back quickly,” Trump said at the White House this week. “What we had before was a miracle, and we think this is going to be even more than a miracle.”
With the presidential election just over six months away, Trump is eager for a return to the economy that was seen as his strongest argument for a second term. But economists warn that the recovery will be long, grueling, and far from anything close to normal.
“I don’t see the economy being back to full strength by the end of the year. It’s going to take us longer to get us back to where we want to be,” said John Williams, president of the Federal Reserve of New York, in a Friday interview with CNBC.
More than 20 million people have applied for unemployment benefits in the past four weeks, according to the Labor Department, nearly wiping out more than a decade of job gains after the 2007-09 recession. Millions more are believed to have lost their jobs, but have been unable to apply for or are disqualified from receiving unemployment insurance.
“The more unemployment, the more workers lose their jobs, the harder and slower the recovery is going to be,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth, a think tank.
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“That is an incredible amount of damage we have to unwind,” she said, adding that the real-time unemployment rate is likely above 20 percent.
Before the pandemic hit, the jobless rate consistently hovered around a 50-year low of 3.5 percent.
As recently as February, the stock market and consumer spending were outpacing other industrialized nations, many of which were teetering on the brink of recession.
The relative strength of the economy heading into the pandemic fueled hopes of a V-shaped recovery when the virus subsided: a sharp decline in economic activity and employment canceled out by a quick rebound that’s similar in size and speed.
But while trading partners like South Korea and Taiwan were able to avoid widespread closures by quickly identifying and isolating coronavirus cases, the severe lack of testing capacity in the U.S. forced Americans into quarantine to prevent an outbreak from spiraling out of control.
“What we did was the responsible thing to keep people from dying. But as soon as we went down that path,” Sahm said, “you took a V-shaped recovery off the table.”
The federal government has sought to cushion the blow of the pandemic and clear the path toward recovery with trillions in economic relief. Trump last month signed a historic $2.2 trillion rescue package, and the Federal Reserve has pumped trillions more in loans and securities purchases into the economy and financial markets.
The unprecedented levels of stimulus have likely saved the economy from a free fall and allowed for the possibility of a piecemeal recovery to begin when the virus subsides. Trump and some of his economic advisers are bullish that parts of the country can return to normal life within weeks, while raising concerns that waiting too long to loosen restrictions could lead to lasting damage.
Even so, the level of economic pain inflicted during social distancing means the U.S. will likely emerge from the pandemic with millions of debt-saddled workers chasing fewer and fewer jobs.
“We might see one brief shining moment of stronger economic activity as businesses reopen because we’re going to go from zero to something and that will feel good,” said Mark Zandi, chief economist at Moody’s Analytics. “But after that temporary burst of activity, people will see we’re still in the soup. It’s going to take a while to kind of work through all the problems created during the shutdowns.”
Experts also warn that the country is unlikely to repair the economic toll of the pandemic without a vaccine to quash the chance of another outbreak. Until then, businesses that depend on constant crowds and steady travel may continue to suffer.
“This is not going to turn on a dime,” said James Gorman, president and CEO of Morgan Stanley and a member of Trump’s reopening advisory panel of bankers, in an interview with CNBC.
“We’re not going to get to the point where everybody is on the subway in one day. To get consumers and small businesses back and to get everybody feeling like the world is stable again, that’s going to take months.”
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.
