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How bad will Canada's COVID-19 recession be? – CBC.ca

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The black swan has landed. 

The novel coronavirus pandemic is well underway worldwide, but it wasn’t until this month that Canadians started coming to grips with the economic pain it can bring, in addition to its heavy human toll.

Economists are struggling to come up with best guesses as to what might be coming. There’s still a lot that they — and we — don’t know. But the picture they’re painting for Canada’s financial future is already bleak.

GDP could significantly contract

At a minimum, the Conference Board of Canada is assuming that most industries across the country will be essentially shut down for at least six weeks.

If they take an optimistic view and assume that’s enough to contain the outbreak, even that short term pain will make a major dent in the country’s total output, a metric known as the Gross Domestic Product, or GDP.

Should this relatively mild scenario come to pass, Canada’s economy would eke out a tiny 0.3 per cent growth for 2020 as a whole as things ramp up in the latter half of the year. That’s far from booming — Canada’s economy grew by 1.6 per cent last year, for example — but it’s preferable to other alternatives.

Retail workers have been laid off in droves this month as lockdowns have caused a dramatic reduction in demand for the consumer goods they sell. (Matias Delacroix/The Associated Press)

Under a more pessimistic scenario, the board sees lockdowns and quarantines stretching for up to six months, until August. If that happens, the GDP hit would be massive — an annualized contraction rate of 9.6 per cent in the second quarter, which is worse than what we saw in the financial crisis of 2008 and 2009. The economy shrank at an annual pace of 8.7 per cent at its worst stage, in early 2009 before rebounding starting in the spring.

“Brace yourself for some horrible data in the near-term, as there’s little doubt that the second quarter will produce some painful and likely historic figures on … economic contraction,” the economics team at TD Bank said in a note to investors.

Joblessness fears escalate

Economists tend to focus on GDP in their modelling, but when you ask Canadian workers how they think the economy is doing, they tend to focus on whether they have jobs that pay the bills.

It already looks like the recession caused by COVID-19 will be one for the record books when it comes to joblessness.

In any given week, Canada gets about 45,000 claims for jobless benefits, according to the economics team at TD Bank.

But the numbers for March 16-22 came in at more than 20 times that, with 927,000 Canadians tossed out of work in a single week.

David MacDonald, an economist with Ottawa think-tank the Canadian Centre for Policy Alternatives, said those numbers are likely just the start.

“The situation is still moving rapidly: people who may have been employed and surveyed on Monday could easily have been laid off by Wednesday,” he said. “It’s likely not until the April data is collected and released at the start of May that we will see the full picture of what happened in the second half of March.”

By the time all is said and done, MacDonald thinks roughly two million Canadians will at least temporarily lose their jobs in the current panic. That would cause the jobless rate to spike to more than 13 per cent.

TD’s forecast is only slightly more positive, predicting the rate to rise to nearly 12 per cent before hopefully levelling off to about half that by the end of the year. 

But that’s only if the unprecedented steps being taken now do any good.

“If fiscal and monetary policies prove successful, and social distancing tactics gradually ease, the unemployment rate should level off after one to two months and quite possibly fall just as fast if workers are called back to work,” the bank said.

The extreme measures being deployed right now underline the fundamental economic paradox of COVID-19.

Catch-22 for the economy

The cure for the disease may be widespread shutdowns and social distancing efforts, but that underlines a fundamental paradox of the disease: the cure for the virus is precisely what makes the economy even sicker.

At least Canada’s jobless rate was close to a record low before all this started.

Even officials in Ottawa are willing to admit they’re expecting a record-setting flood of job losses to hit home, and soon.

“We have enormous job losses right now,” Finance Minister Bill Morneau told the Senate on Wednessday. “We hope and expect it will be temporary.”

The border between Canada and the U.S. has been shut to all but essential travel in an attempt to get the coronavirus that causes COVID-19 under control. (Alex Filipe/Reuters)

Not everyone is sure they will be.

The Canadian Federation Of Independent Business says its monthly measure of small business confidence fell to the lowest level in its 32-year history this week. Normally. a reading of 65 suggests an economy that’s basically operating close to its full potential. But the CFIB’s gauge fell to a record low of 30.8 in March. That’s lower than the 39 it hit in the depths of the 2009 financial crisis.

Roughly 50 per cent of small businesses say they expect to lose workers this year. Only five per cent are planning to expand, according to the CFIB’s small business barometer.

“March 2020 has turned out to be a month like no other in Canada’s economic history,” said Ted Mallett, CFIB’s chief economist.

The good news?

If there’s good news in these bleak numbers, it may be that the depth and breadth of the slowdown may be so sharp and sudden that it can’t help but spur a big rebound.

This recession is looking to be what economists described as “V-shaped” — meaning one that plunges quickly down and then quickly back up the other side. That differs from a “U-shaped,” which is slower and less dramatic in both directions, or even a dreaded “L-shaped” recession where the economy falls off a sudden cliff and never bounces back to its previous level.

New visitors to Canada, like this woman at Vancouver’s airport last week, are being asked to quarantine themselves for 14 days. (Jennifer Gauthier/Bloomberg)

Doug Porter at Bank of Montreal notes that numerous countries have been through economic shocks as bad as the Canadian economy’s current one. And they all emerged stronger on the other side.

Mexico’s peso crisis of 1995, Russia’s debt default in 1998 and South Korea the previous year during the Asian currency crisis all saw those economies shrink by more than 20 per cent. 

“In all three cases, activity bounced and forcefully within two quarters,” Porter says.

“All different conditions, true,” Porter said. “But very rapid rebounds from hard stops have and can be done.”

Stocks may have hit bottom

If a rebound is coming, it’s likely to be fast. And stock market investors are tentatively showing signs of believing that could be the case. Since falling to its lowest level in more than a decade on March 23, the TSX has quietly jumped back up almost 20 per cent since then, including its best day in more than 43 years on Tuesday

Stock markets tend to peak before recessions start but they also tend to bottom before they end, Manulife Investment Management said in a note to clients on Thursday. Which means anyone willing to buy in when things look this gloomy could be getting in on the buying opportunity of a lifetime.

“The economic data will get precipitously worse over the next month but don’t bother looking at that, it will only confirm what we already know,” the money manager said. “Rather, we believe now is the time to focus on the market fundamentals and start to take advantage of the valuation opportunities across asset classes as they present themselves.”

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Bad traffic, changed plans: Toronto braces for uncertainty of its Taylor Swift Era

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TORONTO – Will Taylor Swift bring chaos or do we all need to calm down?

It’s a question many Torontonians are asking this week as the city braces for the arrival of Swifties, the massive fan base of one of the world’s biggest pop stars.

Hundreds of thousands are expected to descend on the downtown core for the singer’s six concerts which kick off Thursday at the Rogers Centre and run until Nov. 23.

And while their arrival will be a boon to tourism dollars — the city estimates more than $282 million in economic impact — some worry it could worsen Toronto’s gridlock by clogging streets that already come to a standstill during rush hour.

Swift’s shows are set to collide with sports events at the nearby Scotiabank Arena, including a Raptors game on Friday and a Leafs game on Saturday.

Some residents and local businesses have already adjusted their plans to avoid the area and its planned road closures.

Aahil Dayani says he and some friends intended to throw a birthday bash for one of their pals until they realized it would overlap with the concerts.

“Something as simple as getting together and having dinner is now thrown out the window,” he said.

Dayani says the group rescheduled the gathering for after Swift leaves town. In the meantime, he plans to hunker down at his Toronto residence.

“Her coming into town has kind of changed up my social life,” he added.

“We’re pretty much just not doing anything.”

Max Sinclair, chief executive and founder of A.I. technology firm Ecomtent, suggested his employees avoid the company’s downtown offices on concert days, saying he doesn’t see the point in forcing people to endure potential traffic jams.

“It’s going to be less productive for us, and it’s going to be just a pain for everyone, so it’s easier to avoid it,” Sinclair said.

“We’re a hybrid company, so we can be flexible. It just makes sense.”

Swift’s concerts are the latest pop culture moment to draw attention to Toronto’s notoriously disastrous daily commute.

In June, One Direction singer Niall Horan uploaded a social media video of himself walking through traffic to reach the venue for his concert.

“Traffic’s too bad in Toronto, so we’re walking to the venue,” he wrote in the post.

Toronto Transit Commission spokesperson Stuart Green says the public agency has been working for more than a year on plans to ease the pressure of so many Swifties in one confined area.

“We are preparing for something that would be akin to maybe the Beatles coming in the ‘60s,” he said.

Dozens of buses and streetcars have been added to transit routes around the stadium, and the TTC has consulted the city on potential emergency scenarios.

Green will be part of a command centre operated by the City of Toronto and staffed by Toronto police leaders, emergency services and others who have handled massive gatherings including the Raptors’ NBA championship parade in 2019.

“There may be some who will say we’re over-preparing, and that’s fair,” Green said.

“But we know based on what’s happened in other places, better to be over-prepared than under-prepared.”

Metrolinx, the agency for Ontario’s GO Transit system, has also added extra trips and extended hours in some regions to accommodate fans looking to travel home.

A day before Swift’s first performance, the city began clearing out tents belonging to homeless people near the venue. The city said two people were offered space in a shelter.

“As the area around Rogers Centre is expected to receive a high volume of foot traffic in the coming days, this area has been prioritized for outreach work to ensure the safety of individuals in encampments, other residents, businesses and visitors — as is standard for large-scale events,” city spokesperson Russell Baker said in a statement.

Homeless advocate Diana Chan McNally questioned whether money and optics were behind the measure.

“People (in the area) are already in close proximity to concerts, sports games, and other events that generate massive amounts of traffic — that’s nothing new,” she said in a statement.

“If people were offered and willingly accepted a shelter space, free of coercion, I support that fully — that’s how it should happen.”

This report by The Canadian Press was first published Nov. 13, 2024.



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‘It’s literally incredible’: Swifties line up for merch ahead of Toronto concerts

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TORONTO – Hundreds of Taylor Swift fans lined up outside the gates of Toronto’s Rogers Centre Wednesday, with hopes of snagging some of the pop star’s merchandise on the eve of the first of her six sold-out shows in the city.

Swift is slated to perform at the venue from Thursday to Saturday, and the following week from Nov. 21 to Nov. 23, with concert merchandise available for sale on some non-show days.

Swifties were all smiles as they left the merch shop, their arms full of sweaters and posters bearing pictures of the star and her Eras Tour logo.

Among them was Zoe Haronitis, 22, who said she waited in line for about two hours to get $300 worth of merchandise, including some apparel for her friends.

Haronitis endured the autumn cold and the hefty price tag even though she hasn’t secured a concert ticket. She said she’s hunting down a resale ticket and plans to spend up to $600.

“I haven’t really budgeted anything,” Haronitis said. “I don’t care how much money I spent. That was kind of my mindset.”

The megastar’s merchandise costs up to $115 for a sweater, and $30 for tote bags and other accessories.

Rachel Renwick, 28, also waited a couple of hours in line for merchandise, but only spent about $70 after learning that a coveted blue sweater and a crewneck had been snatched up by other eager fans before she got to the shop. She had been prepared to spend much more, she said.

“The two prized items sold out. I think a lot more damage would have been done,” Renwick said, adding she’s still determined to buy a sweater at a later date.

Renwick estimated she’s spent about $500 in total on “all-things Eras Tour,” including her concert outfit and merchandise.

The long queue for Swift merch is just a snapshot of what the city will see in the coming days. It’s estimated that up to 500,000 visitors from outside Toronto will be in town during the concert period.

Tens of thousands more are also expected to attend Taylgate’24, an unofficial Swiftie fan event scheduled to be held at the nearby Metro Toronto Convention Centre.

Meanwhile, Destination Toronto has said it anticipates the economic impact of the Eras Tour could grow to $282 million as the money continues to circulate.

But for fans like Haronitis, the experience in Toronto comes down to the Swiftie community. Knowing that Swift is going to be in the city for six shows and seeing hundreds gather just for merchandise is “awesome,” she said.

Even though Haronitis hasn’t officially bought her ticket yet, she said she’s excited to see the megastar.

“It’s literally incredible.”

This report by The Canadian Press was first published Nov. 13, 2024.

The Canadian Press. All rights reserved.



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Via Rail seeks judicial review on CN’s speed restrictions

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OTTAWA – Via Rail is asking for a judicial review on the reasons why Canadian National Railway Co. has imposed speed restrictions on its new passenger trains.

The Crown corporation says it is seeking the review from the Federal Court after many attempts at dialogue with the company did not yield valid reasoning for the change.

It says the restrictions imposed last month are causing daily delays on Via Rail’s Québec City-Windsor corridor, affecting thousands of passengers and damaging Via Rail’s reputation with travellers.

CN says in a statement that it imposed the restrictions at rail crossings given the industry’s experience and known risks associated with similar trains.

The company says Via has asked the courts to weigh in even though Via has agreed to buy the equipment needed to permanently fix the issues.

Via said in October that no incidents at level crossings have been reported in the two years since it put 16 Siemens Venture trains into operation.

This report by The Canadian Press was first published Nov. 13, 2024.

Companies in this story: (TSX:CN)

The Canadian Press. All rights reserved.



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