Editor’s note: Ahead of the Sept. 20 federal election, OrilliaMatters contacted the five candidates in Simcoe North, asking each to answer, in 200 words or less, five key questions. We start today with a question about the economy. Check in tomorrow when the candidates will weigh in on the controversial topic of vaccine passports. For more information about the local election race, visit our CanadaVotes 2021 page.
Question 1: We are facing a massive deficit coupled with a need for a continued economic recovery effort in the wake of the pandemic. On top of that, there is a critical need for more employees in the service sectors. What will you and your party do to address the deficit, stimulate the economy and help address the shortage of workers?
Answer from Liberal candidate Cynthia Wesley-Esquimaux:
We will endeavour to create a comprehensive review of how monies are being expended, while ensuring services are not cut to those who need them the most, ensure fair taxation is addressed, ensure large corporations cannot use loopholes to lower their tax responsibilities, and ensure small business is supported.
There is an absolute need for training and retraining programs to be supported as the economy shifts and job availability changes. Technology and automation must be considered in the future for full economic recovery – if the pandemic has taught us anything it’s that we must be prepared for unexpected impacts and that includes the kind of work people will be expected to take up over the coming decade.
The Liberal party is committed to ensuring a living wage for those people working in service sector employment, this is a good step forward.
Answer from Conservative candidate Adam Chambers:
Our primary objectives are growing the economy by helping our constituents get back to work and supporting businesses that are struggling to find workers and having to navigate this global pandemic.
Government spending must be restrained so that taxes remain low for small businesses and families. We should also be promoting careers in the trades to our young people to ensure they acquire skills in demand in today’s economy.
Answer from NDP candidate Janet-Lynne Durnford:
The New Democratic Party is committed to creating new opportunities in every part of the country by investing in retraining for a low-carbon future. We will stimulate the economy by creating a million good jobs in new housing construction, retrofitting of existing buildings, child care, and the manufacturing of essential products, such as personal protective equipment, here in Canada. We will make it easier for Canadians to join unions.
I will advocate for federally-protected paid sick leave and fair pay for all workers in Simcoe North.
Answer from Green Party candidate Krystal Brooks:
In my opinion, this is an improperly framed question coming from a conservative viewpoint showing a bias in the media. There is no labour shortage, only a wage shortage.
If you want a just economic recovery the only solution that will work is a Universal Basic Income. A path that will ensure that those that have no money can not only pay their bills but also put money back into small business.
We are seeing the end result of predatory capitalism and conservative politics wherein the only ones with any expendable money are the 1%. And now they are wondering how they can make more money. The answer is to tax the 1% highway even at 2008 levels and provide a Universal Basic Income that allows everyone to have a floor that nobody falls below.
Answer from People’s Party of Canada candidate Stephen Makk:
Deficits, public debt, and quantitative easing (money-printing) are just taxes on future generations. The PPC would end COVID-related federal spending programs, and not allow any increase in overall spending in its first mandate.
We would eliminate the deficit within four years through fiscal prudence and spending cuts, including corporate welfare (~$10B), foreign aid (~$5B), cutting CBC and other media subsidies (~$2B), and curtailing flow-through funding to provinces/ municipalities.
We would simplify the tax system.
After the budget is balanced, we would stimulate growth by reducing income taxes and capital gains taxes as quickly as fiscal room allows. A PPC government would set the Bank of Canada’s inflation rate target at 0%. Inflation is already rising and if left unchecked will end up being yet another “tax on everything”, and a debasement of our currency. Inflation hurts the poor and those on fixed incomes the most.
A thriving economy needs LESS government intervention, and a thriving economy creates jobs in all sectors where there is demand.
Finally, the PPC would start a new ministry, that of Interprovincial Trade. We would eliminate all barriers to trade within Canada. Analysts say that this would be like a 6-7% increase in GDP right there.
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.”
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)
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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