The U.S. economy can’t reach its potential unless the country addresses gaps in economic opportunity, said Federal Reserve Bank of Cleveland President Loretta Mester.
“Unfortunately, today, the U.S. economy does not offer the same opportunities to all,” Mester said in a speech Monday at an online event hosted by the African American Chamber of Commerce of Western Pennsylvania. The adverse impacts of the coronavirus pandemic is disproportionately affecting vulnerable communities including low-income, and Black and Hispanic workers, Mester said.
“Unless actions are taken to promote an inclusive economy — one in which people have the chance to move themselves and their families out of poverty, one in which systemic racism does not limit opportunities and one in which all people can fully participate — the U.S. economy will not be able to live up to its full potential and the country will suffer,” she said.
Mester said the U.S. can make progress by prioritizing investment at the neighborhood level while increasing access for poorer areas to broad-band Internet services, high-quality education and financial services.
Responding to questions after her speech, Mester said a patchy economic recovery from the impact of the coronavirus pandemic is likely to continue “for some time,” with some sectors doing well while others, like retail and commercial real estate, continuing to suffer.
Mester also appealed again for help from Congress, but conceded the probability of another aid package was fading even as some businesses struggle to survive.
“We really need some more fiscal support,” Mester said. “A lot more may close if we don’t have support from the fiscal authorities, and that’s getting less likely.”
Canada’s economy beat expectations in August but likely slowed in September – Global News
Statistics Canada says the pace of economic growth slowed in August as real gross domestic product grew 1.2 per cent, compared with a 3.1 per cent rise in July.
The August figure was stronger than the average forecast of 0.9 per cent for August provided by economists polled by financial data firm Refinitiv.
But in a preliminary estimate, Statistics Canada says growth for September slowed to about 0.7 per cent.
The agency says overall economic activity was still about five per cent below the pre-pandemic level in February.
© 2020 The Canadian Press
Losses mount for oil majors as pandemic grips global economy – CTV News
Exxon Mobil reported its third consecutive quarter of losses as the global pandemic curtails travel and cripples global economic activity.
The energy giant on Friday posted a $680 million third-quarter loss and revenue tumbled to $46.2 billion, down from $65.05 billion during the same quarter last year.
The string of losses and what could be a money-losing year is new territory for Exxon Mobil.
“This is a business that’s made a billion dollars a quarter on average from 2011 to 2018 and it’s had a rough go,” said Peter McNally, global sector lead for industrials, materials and energy at Third Bridge, a research firm.
Already struggling with weak prices from oversupply, the pandemic is taking a heavy toll on oil and gas companies. The price of U.S. benchmark crude has fallen 40% since the start of the year. The cost for a barrel of oil tumbled 10% just this week as coronavirus infections surged in the U.S. and abroad.
“We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend,” said Darren Woods, CEO in a prepared statement. “We are on pace to achieve our 2020 cost-reduction targets and are progressing additional savings next year as we manage through this unprecedented down cycle.”
The The Irving, Texas, company produced 3.7 million barrels of oil per day in the third quarter, up 1% from the second quarter. But production was down compared to the third quarter of 2019, when Exxon pumped 3.9 million barrels of oil per day.
Also on Friday, Chevron reported losses of $207 million after turning in a profit of $2.9 billion last year. It brought in $24 billion in revenues, down from $35 billion during the same period last year.
“It’s not going well,” McNally said. “You have to squint at some of the things to find things that are good.”
And the third quarter was an improvement compared with the last, when oil futures crashed below zero. Exxon and Chevron lost a combined $9 billion.
Oil prices appeared to stabilize this quarter, however, and better conditions enabled Exxon to recover some of its production curtailments, the company said.
Demand for refined products also improved, and chemical sales volumes rose as demand for packaging increased and automotive and construction markets recovered, Exxon said.
On Thursday Exxon announced 1,900 job cuts in its U.S. workforce and Chevron, after closing on its acquisition of Noble Energy earlier this month, said it would cut a quarter of that company’s jobs.
Oil demand is expected to fall 8% globally this year, according to the International Energy Agency. While some demand has recovered since oil fell below $0 a barrel in April, countries are again locking down as the coronavirus surges anew across Europe and the U.S.
Canada's economy moves into 'recuperation phase' as second-wave impact looms – The Globe and Mail
Canada’s economic recovery continued to moderate as summer wound down, leaving activity still well short of pre-pandemic levels before the second wave of the COVID-19 virus hit, new data from Statistics Canada show.
The agency reported Friday that real gross domestic product (GDP) rose 1.2 per cent in August from July, slightly more than its preliminary estimate of 1 per cent. It was the fourth straight month of growth, as the economy continued its rapid rebound from the lockdowns in the spring aimed at containing the virus, although the pace of the recovery has been slowing after the dramatic effects of the re-openings in May and June.
Statscan also published an advance estimate for September of 0.7-per-cent growth – which, if accurate, would mean the economy expanded by about 10 per cent in the third quarter, consistent with Bank of Canada and private-sector estimates. But that still leaves the economy about 4 per cent below its pre-COVID levels.
With October’s sharp increase in the spread of the virus, both in Canada and abroad, renewed virus-containment restrictions threaten to put the brakes on the recovery.
“The economy is now moving into the recuperation phase, where additional gains in economic activity are harder to come by. With pandemic-related uncertainty weighing on business and consumer confidence, most industries are struggling to return to pre-pandemic levels of output,” Toronto-Dominion Bank senior economist Sri Thanabalasingam said in a research note.
The August GDP gains were led by a continued strong recovery in the service sectors of the economy (up 1.5 per cent), which were more deeply affected by the spring lockdowns and subsequent re-openings, while goods-producing sectors grew a more modest 0.5 per cent. Economists noted that the segments that drove much of August’s gains – services such as arts, entertainment and recreation (up 13.7 per cent) and accommodation and restaurants (up 7.3 per cent) – stand to be the hardest hit in the second-wave containment measures, as authorities focus on reducing contact through indoor gatherings.
“The way forward has been deeply clouded by the second wave and renewed restrictions, so growth will cool considerably in the fourth quarter,” Bank of Montreal chief economist Doug Porter said in a research report.
Earlier this week, the Bank of Canada issued new forecasts predicting fourth-quarter growth of only 0.2 per cent quarter over quarter – or 1 per cent annualized – in light of the second wave of the pandemic and the return of some government-mandated closures and business restrictions. Ontario and Quebec have already shut down indoor restaurants and bars in large urban centres where COVID-19 cases are highest, while other provinces are clamping down on indoor gatherings and debating whether additional measures are warranted.
Some economists think the central bank’s forecast is overly pessimistic.
“We suspect that with ongoing massive fiscal support, less restrictions than earlier, and, simply, that consumers and businesses have learned to operate in this new environment, the late-year setback should be relatively mild,” said Mr. Porter, who forecast that quarterly growth would top 2 per cent annualized.
“We think there is still scope for continued rebounds in those sectors not directly affected by the restrictions, so we are pencilling in a much larger fourth-quarter gain of 5 per cent annualized,” said Stephen Brown, senior Canada economist at Capital Economics, in a research note.
But the COVID-19 virus remains a massive wild card in any economic forecast, as a growing number of countries face the prospect of renewed restrictions – while at the same time eagerly looking forward to the growing possibility of a viable vaccine in early 2021.
“We are now in a phase of the recovery that could see strong winds and dangerous tides. Navigating through the turbulence will not be easy, as much will depend on the course of the virus,” TD’s Mr. Thanabalasingam said. “Getting the spread under control could right the ship, but seas will remain choppy without a vaccine or effective treatment.”
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