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Fed survey says economy has picked up but outlook cloudy – CKPGToday.ca

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The information in the report will provide guidance for Fed officials at their next meeting on July 28-29. Economists expect the central bank to keep its benchmark interest rate at a record low as it tries to cushion the economy from the pandemic downturn.

The Beige Book found only modest signs of improvement in most areas, noting that consumer spending had picked up as many nonessential businesses were allowed to reopen, helping to boost retail sales in all 12 Fed districts but construction remained subdued.

Manufacturing activity moved up, the report said, ’but from a very low level.”

The economy entered a recession in February, ending a nearly 11-year long economic expansion, the longest in U.S. history. Millions of people were thrown out of work and while 7.3 million jobs were created in May and June that represented only about one-third of the jobs lost in March and April.

And now, in recent weeks with virus cases surging in many states, there are concerns that the fledgling recovery could be in danger of stalling out.

The Beige Book reported that employment had increased in almost all districts in the latest survey, which was based on responses received by July 6, but layoffs had continued as well.

“Contacts in nearly every district noted difficulty in bringing back workers because of health and safety concerns, child care needs and generous unemployment insurance benefits,” the Fed said.

The report said that many businesses who had been able to retain workers because of the government’s Paycheck Protection Program said they might still be forced to lay off staff if their businesses do not see a pickup in demand.

The Fed in March cut its benchmark interest rate to a record low of 0 to 0.25% and purchased billions of dollars of Treasury and mortgage-backed bonds to stabilize financial markets.

But Fed officials have recently expressed concerns that a resurgence of the virus in many states may require more support from the central bank and from Congress.

Fed board member Lael Brainard said in a speech Tuesday that the economy was likely to “face headwinds for some time” and that continued support from the government will remain “vital.”

The Trump administration has said it plans to negotiate another support package once Congress returns from recess next week. Republicans and Democrats remain far apart on what should be in the new package with Democrats pushing for a package of around $3 trillion while GOP lawmakers have called for smaller support of around $1 trillion.

Congress will only have two weeks to reach a compromise before two of the most popular programs providing paycheque protection for workers and expanded unemployment benefits expire. The unemployment support provided an extra $600 per week but many Republicans say that amount was too high and kept some people from returning to work

Martin Crutsinger, The Associated Press

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Canadian economy surges in third quarter but set to cool amid new COVID-19 restrictions – The Globe and Mail

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A chef cooks Chinese food on a rainy fall day at a restaurant open for curbside pickup in Toronto on Nov. 30, 2020.

Nathan Denette/The Canadian Press

Canada’s quarterly gross domestic product report has confirmed that the economy roared back to life over the summer months, but economists are now more concerned that the resurgence of the COVID-19 virus could stall a recovery that’s still far from complete.

Statistics Canada reported Tuesday that real GDP surged 8.9 per cent quarter-over-quarter (or 40.5 per cent in annualized terms) in the period ended Sept. 30, reversing much of the 11.3-per-cent slump in the previous quarter, as the economy reopened following the widespread lockdowns of the spring. But the economy ended September still running about 5 per cent below pre-pandemic levels, as the global health crisis kept some segments of the economy closed.

Statscan said GDP rose a strong 0.8 per cent in September, about in line with its preliminary estimate of a month ago and the fifth consecutive month-to-month increase. However, it estimated that growth slowed to about 0.2 per cent in October – by far the slowest since the post-lockdown recovery began – as the gains from reopenings faded and the second wave of the pandemic began to weigh on business and consumer activity.

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With the growing pace of COVID-19 infections throughout November forcing many regions to tighten containment measures and reimpose closures of high-contact businesses, economists say the October slowdown marks the start of a much slower final quarter, with little if any growth.

“The next several months are not going to be pretty,” Toronto-Dominion Bank senior economist Sri Thanabalasingam said in a research report.

“There is a good chance that the economic recovery doesn’t just stall but shifts into reverse this winter.”

Third-quarter growth was actually a bit smaller than the roughly 10 per cent economists had anticipated, both in the private sector and at the Bank of Canada. This was due mainly to a major set of revisions of Statscan’s GDP data going back to the start of 2016, which resulted in a lowering of growth for both July (to 2.5 per cent from the previously reported 3.1 per cent) and August (to 0.9 per cent from 1.2 per cent). But the revisions also reduced the estimated GDP declines in the first two quarters.

Economists said the economy remains on track for a 5.5-per-cent contraction for 2020 as a whole – the worst year since the Great Depression of the 1930s.

The third-quarter data spoke to the uneven nature of the recovery, as some sectors roared back while others remained handcuffed by health restrictions.

Household consumption of goods rose 17 per cent, including a 38-per-cent surge in durable-goods purchases, fuelled by the rapid rebound in employment and by the federal government’s substantial emergency income-support programs. The gains lifted goods consumption to well above pre-crisis levels. Housing investment jumped 30 per cent, putting it 10 per cent higher than at the end of 2019.

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But consumption of services, which remains seriously impeded by virus-containment measures, saw a much more modest 10-per-cent gain and remained more than 12 per cent below end-of-2019 levels. And non-residential business investment, despite bouncing back 7 per cent, was still down 11 per cent from the end of last year.

Economists have mixed views on how severely the second-wave containment measures will impede growth in the fourth quarter and into the new year, with some predicting small gains but others worrying the economy may dip slightly into negative territory again – though nowhere near the deep slump of last spring’s lockdowns. The Bank of Canada’s latest economic outlook, issued at the end of October, projected growth of just 0.2 per cent in the fourth quarter.

Still, economists noted that continuing government supports will help households weather the slowdowns and will provide stimulus to expedite a recovery next year, when eagerly awaited vaccines look likely to bring the pandemic under control. On Monday, the federal government presented an economic update that pledged to continue financial supports for workers and businesses affected by the pandemic and unveiled a commitment to spend as much as $100-billion in additional stimulus over three years to aid the recovery once the pandemic subsides.

Economists also noted that the high rate of savings among Canadian households during the pandemic – almost 15 per cent in the third quarter, up from 2 per cent at the end of 2019 – provides considerable fuel to keep domestic consumption rolling through the second-wave slowdown and to kick-start the economy once pandemic conditions improve.

In new global economic forecasts Tuesday, the Organisation for Economic Co-operation and Development estimated that Canada’s economy will have shrunk 5.4 per cent in 2020 but predicted it will grow 3.5 per cent next year. Canada’s private-sector economists are more optimistic about 2021, with projections ranging from about 4 per cent to 5.5 per cent.

“Some of the growth rates seen in [the third quarter] could be a taste of what could lie ahead later in 2021,” Bank of Montreal chief economist Doug Porter said.

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Finance Minister Chrystia Freeland says the Liberals plan a stimulus program of up to $100-billion once the COVID-19 pandemic is on the run, but until then attacking the virus and helping those who need support is their top priority. The Canadian Press

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Five priorities for a sustainable ocean economy – Nature.com

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Ocean ecosystems are under threat. They also hold solutions. Climate change is increasing sea levels and making the ocean warmer, more acidic and depleted in oxygen. The ocean has absorbed around 90% of the excess heat trapped by greenhouse-gas emissions and one-third of the carbon dioxide emitted by human activities since the 1980s1.

Excessive and destructive fishing threaten ocean habitats and biodiversity, from coastal margins to open waters and the deep sea2. Unsustainable development along coastlines is destroying coral reefs, seagrass beds, saltmarshes and mangrove forests. These house biodiversity, sequester carbon, provide nurseries for fish and buffer coasts against storm surges (go.nature.com/3m4trjd). Plastics and nutrients washed from the land are also killing wildlife (go.nature.com/3t4ffpa). All of these threats erode the capacity of the ocean to provide nutritious food, jobs, medicines and pharmaceuticals as well as regulate the climate. Women, poor people, Indigenous communities and young people are most affected.

For much too long, the ocean has been out of sight, out of mind and out of luck. Attention has been scant — from governments, funding agencies, financial institutions, food-security organizations and the climate-mitigation community. Nations usually manage their waters sector by sector, or issue by issue. The resulting hodgepodge of policies fails to consider collective impacts.

Countries are agreed on what needs to happen — use marine resources responsibly and equitably and manage them sustainably, avoiding overfishing, pollution and habitat destruction. Our knowledge about the ocean is deep. But political action to deliver a healthy ocean has been lacking. Until now.

In September 2018, 14 nations, led by Norway and Palau, commissioned a major science-based review of ocean threats and opportunities as a baseline for resetting policies. Today, this High Level Panel for a Sustainable Ocean Economy (the Ocean Panel) publishes its conclusions3 and commitments4.

The reports highlight what stands to be gained by 2050 by taking a holistic approach to the ocean, by asking what it can deliver, and for whom. They find that a healthy ocean could, with 30% of it protected effectively, deliver the following: 20% of the carbon emission reductions needed to achieve the Paris climate agreement’s warming limit of 1.5 °C above pre-industrial levels; 40 times more renewable energy than was generated in 2018 (see go.nature.com/3767y3b); 6 times more sustainable seafood5; 12 million jobs; and US$15.5 trillion in net economic benefits (go.nature.com/366fnf2). These outcomes are not guaranteed. They require new policies, practices and collaborations.

As co-chairs of the expert group of scientists convened by the Ocean Panel, here we highlight five priority areas for policy action.

Hidden crisis

The Ocean Panel is an ad hoc group focused on the seas that is made up of serving world leaders with direct authority to trigger, amplify and accelerate action worldwide. Co-chaired by Norway and Palau, the panel comprises Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia and Portugal, with support from the United Nations Secretary-General’s Special Envoy for the Ocean. Collectively, these leaders manage nearly 40% of the world’s coastlines and nearly 30% of its exclusive economic zones, 20% of the world’s fisheries and 20% of the world’s shipping fleets.

At the panel’s invitation, we chaired an expert group (go.nature.com/2vdsutz) of more than 75 scientists chosen for their knowledge, experience and diversity of perspectives. We also worked with a larger group of scientists and policy or legal experts, totalling more than 250 people from 48 countries or regions, to produce syntheses of knowledge and options for action on topics identified by the Ocean Panel (go.nature.com/3nnowty and go.nature.com/2j8c51b). The 19 syntheses ranged from food5, energy and mineral production (go.nature.com/3m9jdod), genetic resources6 and conservation6 (go.nature.com/376dapp) to climate change (go.nature.com/3m52poz), technology7, equity (go.nature.com/378hjjy), illegal fishing8, crime9 and ocean accounting10 (go.nature.com/39gpims).

A parallel group of more than 135 organizations, called the Advisory Network (go.nature.com/39dsz8v), included representatives from industry, financial institutions and civil society. Participants coalesced as Action Coalitions around areas of shared interest — for example, renewable ocean energy, sustainable seafood or ocean accounting.

Underwater view of colourful coral and marine life, with a set of four lights approaching from a distance

A reef in the Maldives displays a wealth of biodiversity.Credit: Giordano Cipriani/Getty

Five priorities

Investing in the following five areas, the reports found, would address global challenges, create jobs and boost economies, while protecting people and the planet.

Manage seafood production sustainably. Currently, fish, crustaceans and molluscs provide only 17% of edible meat5. More protein and essential nutrients will be needed to feed the world’s rising population, expected to reach almost 10 billion by 2050.

Land-based agriculture is hard to expand, because doing so would exacerbate climate change, biodiversity loss and water scarcity. Sustainable fisheries and mariculture together, however, might deliver 36–74% higher yields by 2050, meeting 12–25% of the extra meat needed5.

Aquaculture has greatest potential for expansion, notably un-fed seafoods such as molluscs, including oysters, clams and mussels, which obtain their food by filter feeding. Currently, most mariculture (around 75%) requires feed, typically fishmeal and fish oil. Such production of fed bony fish could be increased somewhat5. But there are ecological limits to how much fish and feed could be caught without depleting stocks.

Policy reforms are needed11. And Ocean Panel leaders commit to restoring wild fish stocks, catching them at sustainable levels and expanding sustainable mariculture by 2030. They pledge to eliminate illegal, unreported and unregulated fishing and prohibit harmful fisheries subsidies. They will implement science-based plans to rebuild depleted stocks, develop climate-ready fisheries (go.nature.com/3m52poz) and strengthen international Regional Fisheries Management Organizations. Policies to minimize environmental impacts and accelerate sustainable practices will be introduced for mariculture. Seafood businesses in the Advisory Network are highly supportive.

Mitigate climate change. Around the world, climate change is wreaking havoc on weather patterns, producing more powerful hurricanes, floods and storm surges. Warmer waters are eating away at the bases of Antarctic glaciers and killing coral reefs1. Greenhouse-gas emissions need to be reduced sharply. But most mitigation options focus on the land — clean wind and solar energy, for example, or increasing the efficiency of transportation, buildings and appliances. More consideration needs to be given to the ocean.

The panel’s reports suggest that ocean-based options might deliver as much as one-fifth of the total emissions reductions needed to limit warming to the Paris goal of 1.5°C by 2050 (11.8 gigatonnes of CO2 equivalents (GtCO2e) annually). The numbers are tentative and based on maximum contributions from five sectors: renewable energy (5.4 GtCO2e), transport (1.8 GtCO2e), coastal and marine ecosystems (1.4 GtCO2e), food (1.2 GtCO2e) and carbon storage in the seabed (2 GtCO2e) (go.nature.com/3767y3b; see also ref. 12). Although carbon storage needs further study, three other opportunities warrant immediate action.

Ocean-based renewables offer varied options for power generation — wind, wave, tidal, current, thermal and solar — suitable for different places. Ocean Panel leaders pledge to invest in research, development and demonstration projects to make these technologies cost-competitive, accessible to all and environmentally sustainable. They will work with industry to address environmental impacts and market impediments to deployment.

Decarbonizing shipping is sorely needed. More than 90% of global goods move across the seas. But ships use heavy fuel oils that release soot and sulfur as well as CO2 — amounting to 18% of some air pollutants and 3% of greenhouse-gas emissions. Panel leaders agree to set national targets and strategies to decarbonize vessels and develop and adopt technologies for producing and storing new zero-emission fuels. They will incentivize low-carbon ports to support clean shipping, and strengthen regulations within the International Maritime Organization. These include minimizing the transfer of aquatic invasive species by ships, reducing engine noise and banning the use of heavy fuel oil in the Arctic.

Aerial view of a bulk carrier that has run aground and split into two sections, spilling oil into the surrounding ocean

A cargo ship ran aground near Mauritius in late July, spilling oil as it broke up near the Blue Bay Marine Park in August.Credit: AFP/Getty

‘Blue carbon’ ecosystems of mangroves, seagrass beds and salt marshes store carbon at up to ten times the rate of terrestrial ecosystems. Much of that ends up in the atmosphere if these ecosystems are damaged or destroyed. Although they cover only 1.5% of the area of land forests, degraded blue-carbon ecosystems release 8% of the total emissions from these and terrestrial deforestation combined. Between 20% and 50% of these ecosystems have already been lost. Ocean Panel leaders pledge to halt that decline and improve the extent and condition of these ecosystems. Successful restoration of 3,000 hectares of seagrass beds in Virginia lagoons along the US eastern seaboard has resulted in sequestration of about 3,000 tonnes of carbon per year, for example13.

Stem biodiversity loss. The diversity of plants, animals and microbes that inhabit ocean ecosystems, from the deep sea to estuaries and from the tropics to the poles, is the main reason the ocean delivers so many benefits. That biodiversity is being lost. In 2019, an international assessment of biodiversity2 identified overharvesting as the biggest single threat.

Effective marine protected areas (MPAs) are the most powerful tool to stop this loss. Fishing and other damaging activities are banned within them (go.nature.com/3ma76rf). But they take time to implement. They require planning, design, funding, compliance and enforcement. Only 2.6% of the global ocean is in fully or highly protected classes of MPAs (https://mpatlas.org). Many scientific analyses have concluded that at least 30% of the ocean globally should be covered to protect biodiversity (see, for example, ref. 14). The Ocean Panel supports that goal by 2030.

Seize opportunity for economic recovery. Ocean workers and sectors have been largely absent from economic stimulus packages in response to the COVID-19 pandemic. Yet a ‘blue recovery’ effort holds great potential for jump-starting economies.

The Ocean Panel highlights five opportune areas for economic investment (go.nature.com/3otqsdp). First, restore coastal and marine ecosystems to create jobs and enhance tourism, fisheries and carbon sequestration. After the 2008–09 crisis, for instance, every $1 million invested in coastal restoration in the United States created an average of 17 jobs, or more than twice those created per dollar spent on road construction and fossil-fuel exploration and extraction combined15.

Second, extend sewage and wastewater infrastructure to create jobs and improve health, tourism and water quality. Over the past 30 years, wastewater and sewage run-off has cost the global economy $200 billion to $800 billion per year (go.nature.com/2kjdthr).

Third, invest in sustainable, community-led, non-fed mariculture such as shellfish, especially in developing and emerging economies. This would enhance local livelihoods and diversify economies while producing food and other products.

Fourth, catalyse incentives to encourage zero-emission marine transport. This would create jobs, accelerate a transition to lower carbon emissions, promote efficiency gains and help to minimize stranded assets in the maritime shipping sector, such as existing ships that burn dirty fuels. Decarbonizing shipping could yield a benefit of between $1 trillion and $9 trillion over 30 years16.

Fifth, investing in ocean-based renewable energy could deliver climate benefits, reduce local and global pollution, and build energy security. Projections suggest that this could be a $1-trillion industry that has the potential to deliver up to one million full-time jobs by 2050 (go.nature.com/3otqsdp).

Manage the ocean holistically. Patchy management cuts across all areas mentioned. For example, plans for a new port or tidal energy project might not consider the destruction of blue-carbon ecosystems or the impacts of shipping on fish.

Tools for ecosystem-based management and integrated ocean management exist17. These consider a suite of current or anticipated activities, how they might coexist successfully and what combination can operate without serious harm. It is a major undertaking: all stakeholders must be involved (go.nature.com/378hjjy), data and maps must be assembled, probable impacts identified and interactions considered. Success requires clear goals, funding and an inclusive process.

Achieving the three main goals of the Ocean Panel — to protect effectively, produce sustainably and prosper equitably — will require being smarter about ocean uses, seeking greater efficiencies, using leapfrogging technologies7 and seeking ongoing scientific guidance (https://en.unesco.org/ocean-decade). It also requires heeding lessons from other transitions18, acting with precaution (for example, in deep-sea mining19) and paying closer attention to the welfare of all people (go.nature.com/3nukkzf) and to the health of ecosystems.

Ultimately, the High Level Panel for a Sustainable Ocean Economy commits member nations to manage all of their ocean area sustainably by 2025. Other coastal and ocean states should join this effort, so that by 2030, all waters under national jurisdiction are sustainably managed. If guided by science and mindful of equity, sustainable management of national waters could be a boon for people, nature and the economy20.

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Australia's economy rebounds sharply in third-quarter from COVID-19 recession – TheChronicleHerald.ca

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By Swati Pandey

SYDNEY (Reuters) – Australia’s economy rebounded sharply in the third quarter from a coronavirus-induced recession as consumer spending surged though the country’s top central banker signalled monetary policy will stay accommodative for a while.

Data out earlier showed the A$2 trillion ($1.5 trillion) economy expanded by a bigger than expected 3.3% in the September quarter, following a 7% contraction in June, as the country largely got COVID-19 under control.

The rebound was led by household spending, which rose 7.9%, driven by massive fiscal and monetary stimulus since March.

The Australian dollar briefly hit a day’s high of $0.7389.

Economic growth is expected to be “solidly positive” in the December quarter as well, Reserve Bank of Australia (RBA) Governor Philip Lowe said, underscoring the country’s success in curbing the pandemic.

The optimism is underlined by card spending data by the country’s biggest banks which showed consumers splurged in the last week of November during Black Friday and Cyber Monday sales.

Top lender Commonwealth Bank reported a 12% jump in spending on cards for the week-ending Nov. 23 from last year while ANZ saw a 28% surge.

Australia is not yet out of the woods, as escalating tensions with top trading partner China hang heavily on the outlook.

Australian Treasurer Josh Frydenberg said on Wednesday the deteriorating trade relationship with China was a “very serious” matter though domestic consumption was key to Australia’s post-pandemic recovery.

China has so far curtailed Australia’s exports of lobsters, beef, timber, coal and wine though the broader economic hit is expected to be minimal as long as iron ore is spared, analysts said.

Agriculture exports account for just 0.02% of Australia’s annual output, while iron ore exports account for 7.5% of GDP.

“We expect some softening in tensions, especially given China’s multi-decade need to source key bulk commodities and metals from Australia,” said Paul Xiradis, chief investment officer at Ausbil.

RECESSION OVER?

Despite the brisk pace of quarterly growth, economic output is still down 3.8% over the year after Australia entered its first recession in three decades in the first half of 2020 due to coronavirus-driven lockdowns.

Lowe said the third-quarter GDP result was “good” but warned an economic recovery from the pandemic will likely be “bumpy and uneven” going forward.

“There is still a high degree of uncertainty about the outlook,” Lowe told lawmakers.

“We are prepared to do more, if that is required. Having said that, we are still of the view that a negative policy interest rate in Australia is extraordinarily unlikely.”

On Tuesday, the bank left its cash rate at a record low 0.1% and maintained its A$100 billion quantitative easing programme.

Despite the measures, unemployment is still hovering above 7%, from around 5% before the pandemic, while inflation and wage pressure are weak.

“Make no mistake, Australia is still functionally in a recession,” said Callam Pickering, economist at global job site Indeed.

“Both fiscal and monetary support measures will need to remain in place throughout 2021 and beyond to ensure that the recovery remains on track.”

(Reporting by Swati Pandey; Editing by Ana Nicolaci da Costa)

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