BALTIMORE — Joe Biden will inherit a mangled U.S. economy — one that never fully healed from the coronavirus and could suffer again as new infections are climbing.
The once robust recovery has shown signs of gasping after federal aid lapsed. Ten million remain jobless and more layoffs are becoming permanent. The Federal Reserve says factory output dropped.
Parents cannot return to work as childcare centres have shuttered. Restaurants and local retailers are draining whatever cash reserves are left–with many owners wondering if the next week might be their last. One in six restaurants was already closed in September, according to an industry survey.
Biden will also be facing an American public with decidedly different views about their own financial well-being, with higher income families weathering the pandemic reasonably well and those earning far less in increasing economic peril.
It will in some ways be a reprise of when Biden became vice-president at the depths of the financial crisis in 2008-09, with possibly fewer tools and less political leverage to press an agenda to both corral the virus and stoke economic growth.
He is expected to somehow inject enough aid to sustain workers, businesses and state and local governments, without necessarily having enough congressional partners who share his concerns. All of this could be the difference between a successful presidency and a floundering one.
It’s unclear whether his victory was enough to tip the Senate to the Democrats — with two Senate seat runoffs in Georgia — and provide a clearer pathway for the money. This means that any efforts to secure another round of aid may depend on Republicans who were already voicing concerns about a rising budget deficit before the election.
Senate Majority Leader McConnell of Kentucky previously said a measure should be passed before year-end, but it’s unknown in the aftermath of the election what a compromise would look like or whether President Donald Trump would back it. The longer that aid gets delayed, the greater the threat for the economy.
“The risk is that the recovery goes into reverse,” said Gregory Daco, an economist for the consultancy Oxford Economics.
AP VoteCast, a survey of more than 110,000 voters, found that the recession’s harm has mostly struck lower-income households, though most people were shielded in large part by initial rounds of aid that nearly totalled $3 trillion.
Twenty-nine per cent of voters in households earning less than $50,000 annually said they’re falling behind financially. Their misfortune is a sharp contrast to what’s happening for those with incomes above $100,000. Not only are higher-earners less likely to be struggling, but 26% said their finances are improving.
Biden received more support than Trump from households earning less than $50,000. Voters in higher income households were more closely split between the two candidates.
Among Biden voters, 89% said it was more important to contain the pandemic than limit any ongoing damage to the economy. This is likely because they see no trade-off: the economy will never safely recover so long as the threat of the coronavirus exists.
“To get the economy under control, you need to get the virus under control,” said Amanda Fischer, policy director at the Washington Center for Equitable Growth, a liberal think-tank . “It’s the K-shaped recovery—we see a divide between the wealthiest and everyone else.”
The economy was objectively hurting as ballots were cast, even if it has improved since April. The unemployment rate was 6.9%, compared to 4.7% when Trump took office. Retail sales slipped 0.8% since the start of 2020, with a collapse at restaurants, clothiers and furniture stores.
“The labour market still has a long way to go to recover to where it was before the pandemic,” said Jed Kolko, chief economist at the job posting firm Indeed. “Employment is down in almost all industries, dramatically down in industries that depend on travel and large gatherings.”
The nation’s top public health officials are warning that the virus is likely escalating — record numbers of cases have been reported this week — and are beseeching Americans to wear masks, maintain social distance, and avoid large groups, especially indoors. The worsening disease could force more businesses to close.
Still, 43% of voters believed the economy was excellent or good. This includes about three-quarters of voters backing Trump, who campaigned on the idea that the economy was booming and would continue to do if he remained president. With Biden in the White House, these once-optimistic voters may suddenly switch and say the economy is troubled.
“That’s what we saw in 2016 — a reversal by party in economic confidence,” Kolko said. “It was dramatic and very quick after the election. I wouldn’t be surprised if we saw the same.”
Alec Phillips, an economist at Goldman Sachs, wrote in a note Wednesday that control of the Senate will determine how much additional aid gets approved. He anticipates Republican control means a stimulus package under $1 trillion, but a Senate Democratic majority with Biden in the White House would push that up to $2.5 trillion to $3 trillion.
Federal Reserve Chairman Jerome Powell said at a Thursday news conference that the pace of any recovery will depend on approving more aid, though he noted that the path of the economy will likely mirror the path of the disease.
“We’ll have a stronger recovery if we can just get at least some more fiscal support,” Powell said.
AP VoteCast indicates that there is little to no reservoir of bipartisanship for crafting policies to help the country. The vast majority of Trump voters, 85%, believe that corruption would be a “major problem” in a Biden presidency. Likewise, 92% of Biden voters say corruption would be a “major problem” if Trump secured a second term.
There is also a philosophical divide: Most Biden voters believe the government should do more to solve the nation’s problems, while most Trump voters say the government is already doing too much.
Brian Riedl, a senior fellow at the conservative Manhattan Institute for Policy Research, estimates that the Democrats and Republicans have about $500 billion worth of shared priorities for additional aid. That might leave House Speaker Nancy Pelosi with little choice but to accept that sum, if Republicans preserve their Senate majority.
“Republicans have little reason to budge,” he said. “So the question is whether Democrats will accept a $500 billion package and come back later for more, or continue the stalemate.”
Part of the challenge is not just the size of any aid package, but whether it helps state and local governments that are starving for tax revenue and whether it can be passed quickly enough to help the families most in need. Trump has already colored that debate by saying that Democrats want to bailout poorly managed states, a talking point echoed by some Republicans.
The problem for Biden is that the group he lifted up during the election — the poor and the working class — are the ones who will bear the most pain from any gridlock.
“The U.S. economy is operating at around 80% of total capacity to produce and consume,” said Joe Brusuelas, chief economist at RSM, a tax advisory and consultant.
“The U.S. can afford to wait on additional fiscal aid,” he said, but “the poor and working class are going to pay a terrible price.”
AP polling reporter Hannah Fingerhut contributed to this report from Washington.
Josh Boak, The Associated Press
Pandemic has devastated India's economy and left its children vulnerable to exploitation as cheap labour – CBC.ca
Ajay Tomar regularly scans the platforms of the New Delhi Railway Station, the busiest in India, running through a checklist in his head.
The social worker is trained to spot signs of children being trafficked into forced labour. One telltale sign is seeing one or two kids are surrounded by a group of adults, the children isolated. He always glances at their hands to check if they are worn, a clue the child has been working illegally.
Child labour is illegal in India for anyone under 14 except in special circumstances, such as working for a family business. But it’s a problem that has been exacerbated by the coronavirus pandemic, with indications pointing to a sharp increase in the number of children being exploited as cheap labourers.
India’s last census, in 2011, showed the country had nearly 8.2 million child labourers between the ages of five and 14, mainly in the country’s poor rural states, such as Bihar and Uttar Pradesh. Children’s rights groups say that number improved significantly this past decade but fear the pandemic will reverse much of that progress.
India’s swift and severe lockdown to stop the spread of COVID-19, imposed in March with mere hours’ notice, made a desperate situation worse and created “fertile ground” for traffickers, according to Sudarshan Suchi, CEO of Save the Children India.
It abruptly shut all of the country’s schools and forced migrant labourers out of work, Suchi said, and once the measures started to ease, industry turned to the cheapest labour available to make up the shortfall: children.
Schools in many parts of the country remain shut
The country has the second-highest number of COVID-19 cases after the U.S., at 9.6 million, and third-highest number of deaths, at almost 140,000.
Reopening orders vary from state to state, but schools across the country are still closed or operating at a much-reduced capacity, and children in some of India’s poorer communities are not in class because they don’t have access to online learning.
On the heels of its deadliest month from COVID-19 cases, Delhi’s Deputy Chief Minister Manish Sisodia said schools would remain shut until a vaccine is available.
In other states, such as Gujarat, classes were set to resume in late November before authorities, spooked by a rise in infections, decided to hold off.
As a result, Suchi said, his crews have seen a “marked increase” in child labour in urban and rural areas, where children are often pushed into working at garment factories, car repair shops or garbage dumps, where they pick out plastics to earn a few cents.
“The vulnerability is at its highest right now,” he said.
Suchi also worries the damage has already been done, since once children from poorer communities leave class for work, it’s much harder for them to return.
WATCH | In pandemic, children have become source of cheap labour in some parts of India:
Families complicit in child labour
Tomar, who works for the Delhi-based non-governmental organization Prayas, has been seeing more of that vulnerability, too, as families turn to children to help scrape together enough money to survive.
“We find kids here who have come to work … with their fathers and mothers,” Tomar said.
While he was speaking to CBC News, Tomar’s fellow social workers on the railway rescue team were interviewing a preteen boy who tried to run away from the two adults who had forced him into manual labour. One of them was his cousin; the other his brother.
The boy eventually told the social workers that his relatives forced him to work 14 days in a row at a bicycle-chain repair factory near the New Delhi train station until he got so tired he tried to travel back to his home state of Bihar, hundreds of kilometres away, to see his mother. His captors tailed him to the station, where Tomar’s team noticed the group and intervened.
Tomar said the fact the boy’s brother was involved in forcing him to work is all too common.
“We find out every day that families are almost all OK [with it],” said Tomar. “We can’t say anything to them. They are vulnerable, marginalized people.”
Economy contracted 24% during pandemic
Chaman Shagufta, who works as a counsellor with the same organization at a children’s shelter in one of Delhi’s poorest neighbourhoods, knows that all too well.
She often has to tease the stories out of the children and track inconsistencies before handing their files over to India’s child welfare authorities, who determine if a child should be allowed to return to their family or be sent to a shelter.
Shagufta’s rapid-fire questions, punctuated by terms of endearment, are effective in getting two young boys picked up at the New Delhi Railway Station on their way to Maharashtra from the poverty-plagued state of Bihar to tell part of their story.
“Before the lockdown, we were in school,” said one boy.
He insisted he was 15, but Shagufta was unconvinced, suspecting the boy was closer to 12.
“It’s very much a probability that they have come for work since schools are locked down and nobody is studying,” she said.
Many parents know children are being sent off to work, she said, and reason that they may as well “earn something” during the shutdown period.
It’s a sign of the dire straits families are in in an economy that has contracted 24 per cent between April and June of this year, according to government GDP figures.
Children are most at risk under those circumstances, said Amod Kanth, the former Delhi police officer who founded the NGO Prayas.
“I prefer to call them ‘nowhere children,’ he said. “They are not on the radar. They are not visible. They are not accounted for because they happen to be drifting, traveling, migrating.
“They suffer more compared to others in the pandemic.”
In another children’s home operated by Prayas, Poonam waits patiently for a quick visit in the hallway outside the large room where her three eldest children are getting an art lesson from social workers.
The 30-year old mother of four boys lives in one of Delhi’s poorest slums and told CBC News the eight months since the start of India’s lockdown order were the hardest she’s had to endure.
“It was tough,” she said. “My children were starving.”
Her husband, an addict, had already left her and she was also caring for her own mother, who has health problems.
Desperation pushed her to send three of her sons, ages 5, 7 and 11, to beg on the streets outside a local temple and at busy intersections while she ran her vegetable stand, making about 150 rupees (less than $3 Cdn) a day, she said.
Only, fewer people were out buying vegetables and the struggle to find enough money for the family to eat was crushing.
The boys were spotted begging a month ago and taken in by social workers, who alerted the authorities and started the child welfare committee process to determine whether the three can be sent home.
They are living temporarily at the Prayas shelter, and Poonam desperately wants to keep it that way.
“It’s too hard. They will die if they come back to me,” Poonam said, her voice breaking with emotion.
Kuwaitis go to polls as economy poses challenge for new emir – TheChronicleHerald.ca
By Ahmed Hagagy
KUWAIT (Reuters) – Kuwaitis voted in legislative polls on Saturday with the Gulf state mired in its worst economic crisis in decades, which poses a challenge for the government’s often stormy relationship with a parliament blamed for blocking reforms.
More than 300 candidates, including 29 women, are vying for 50 seats in the Gulf’s oldest and most outspoken assembly with legislative powers. Critics say it has stalled investment and economic and fiscal reform in the cradle-to-grave welfare state.
Campaigning, which took place mostly on social media and local TV channels due to COVID-19 restrictions, has focused on the economy, corruption and demographics in a country where foreigners make up the bulk of the workforce.
“Kuwait needs development. The streets are broken and there is no development and no economy … and coronavirus has affected everything in every way,” said Ibrahim, a government employee, after voting in Kuwait city.
Turnout is expected to be lower than in past elections due to concerns about COVID-19 which, along with low crude prices, has battered state finances in the wealthy oil-producing nation.
A low turnout could strengthen the hand of tribal, Islamist and other candidates who can rally supporters to head to polling centres, analysts said.
“Kuwaiti opposition who boycotted (previous) polls are moving to run and vote, and this could strengthen their presence,” said Kuwaiti political analyst Mohamad al-Dosayri.
Frequent clashes between the cabinet and the assembly have led to successive government reshuffles and dissolutions of parliament. Kuwait’s emir, who has the final say, picks a prime minister who selects a cabinet.
The current government is due to resign after the elections.
Sheikh Nawaf al-Ahmad al-Sabah took the reins as emir in September following the death of his brother.
FACE MASKS AND SANITIZER
Kuwait’s economy, which is worth nearly $140 billion, is facing a deficit of $46 billion this year. A government priority is to overcome legislative gridlock on a bill that would allow Kuwait to tap international debt markets.
Sheikh Nawaf has called for unity to face challenges at home and in a region experiencing heightened tension between Kuwait’s larger neighbours Saudi Arabia and Iran.
Late ruler Sheikh Sabah al-Ahmad broke the hold of opposition groups on parliament in 2012 by using executive powers to amend the voting system, sparking large protests.
Under the old electoral system, voters were allowed to cast ballots for up to four candidates, which the opposition says allowed alliances that partly made up for the absence of political parties, which are officially barred.
The system introduced in 2012 allows votes for only a single candidate, which the opposition says makes alliances difficult.
At al-Waha School in Jahra City, a polling station for men, voters in Arab robes protected themselves with face masks and hand sanitizers before putting their votes into the ballot box.
About 20 female observers watched a male judge checking the identity of women voters at the Bahsira school for girls before they cast their ballots.
Kuwaiti opposition figures have proposed electoral reforms and a pardon for dissidents, many in self-exile.
“There have been some reforms in the judiciary and the Emiri Diwan,” or court, said a Kuwaiti politician who asked not to be named. “We heard echoes of more reforms after elections.”
(Reporting by Ahmed Hagagy in Kuwait; Additional reporting by Stephanie McGehee; Writing by Aziz El Yaakoubi; Editing by William Mallard and David Clarke)
Confused by the economy during the COVID-19 pandemic? Don't worry, so are the economists – CBC.ca
The numbers can be so big, they’re hard to get your head around. The swings are so volatile, you can lose your footing.
And yet, with millions of Canadians struggling through the COVID-19 crisis, many of us want to understand what is going on with the economy.
“My head is spinning, too,” said Benjamin Tal, deputy chief economist at CIBC. “So I don’t blame people, because we’ve never seen anything like this.”
Every week, a flood of new data comes out. This week, we were inundated with the federal government’s fiscal update, GDP figures and job numbers. All trying to shape the story of the economy. Sometimes the numbers contradict each other. Sometimes they give a sort of head-fake and contradict themselves.
The fiscal update that came out on Monday had built all its projections on an average of the forecasts from the big banks. The next morning, Statistics Canada released quarterly GDP numbers that missed the forecast by a staggering seven points. By the end of the week, jobs data came out showing Canadian employers added three times as many jobs as expected.
Every economist is trying to figure out what those numbers are telling us. And they’re not always getting it right.
“Economists have never been more wrong about where the data would come through,” said Frances Donald, chief economist and head of macro strategy at Manulife Investment Management in Toronto.
Most of the time, she said, economists rely on data such as job growth and retail sales numbers to make sense of the situation. The problem is those statistics tell us what was happening months ago.
“This is a daily crisis that requires daily data points,” she said.
To combat that, economists have turned to higher frequency data such as google mobility trends, restaurant reservation tallies and public transit numbers.
But Donald said the bigger issue is the unique, unprecedented nature of this crisis.
“We don’t have a functional precedent for what is happening,” she said.
There may be other moments in the past that share some similarities, but nothing experts can use to model probable outcomes.
Change of perspective
Tal said he understands why more Canadians than usual seem to be following economic updates with bated breath. But he said the best option is to focus less on the details and think of the broader economic themes.
So, while the short term is bad, he said, the medium term looks better.
“We are buying time at this point,” he said, until the virus comes under control.
Yes, the world is headed into a long and dark winter, he said. Yes, COVID-19 cases are rising and government-imposed restrictions could spread. And, yes, households and businesses will need government support and record-low interest rates to provide them a bridge to the second half of next year, he said.
But if you zoom out and look at the longer-term forecasts, the second half of next year shows a lot of promise. Tal said the economic crisis is largely due to the fact that people aren’t spending as much as they normally would.
Some of that is because of government-mandated closures.
But some of it is also a question of confidence.
Even if the movie theatres were open, how many people would pay to sit in close contact with strangers for a two-hour film?
That spending issue is a large source of the hope for 2021. Tal calculates that Canadian households and businesses are sitting on $170 billion in savings. And once the virus comes under control, he predicts that money will spill back into the economy.
“I see this unleashing of potential demand in the economy,” he said. “Most of it will be in the services sector. And that will benefit employment for people that are struggling. It’s just a question of time.”
So, in the interim, he recommends not getting too caught up in the minutiae of the daily economic data.
That’s advice financial markets seem to be following. As COVID-19 case counts soar and government-imposed restrictions spread, the major stock market indexes are all climbing. Donald said markets seem to be looking past the short- and medium-term unknowns and banking on a solid return next year.
WATCH | The National’s report on the fall economic update:
She said the markets don’t seem to be too caught up in the daily barrage of economic information.
“The markets are thinking ahead to where we are going to be in 6, 12, 48 months,” she said. “Not where we are at this very moment.”
Besides, she said, one of the best indicators available is to just look around and see how people around you are acting. Are people nervous and scared? Are they staying home or are they out shopping? The data will catch up to our behaviour eventually.
“You don’t need a PhD in economics to look around at your friends and family and get a sense of what their behaviour is,” she said. “We don’t need numbers and releases, we just need to look out our front doors.”
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