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I'm tired of Quebec prioritizing the economy over our health and well-being – CBC.ca

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What forms of contact can be tolerated in Quebec, according to Premier François Legault?

Beauty care — hairstyling, esthetics and makeup can be tolerated. Shopping — retail stores and malls — can be tolerated. Museums can be tolerated.

High transmission zones such as schools, construction sites and factories can continue to be tolerated.

Still, the curfew and a ban on “private gatherings,” a term used to describe seeing friends and family, persists.

When the change was first announced earlier this month, my roommate summarized, “Keep buying stuff but don’t hug your mother! What’s so hard to understand?”

Two weeks later, the sentiment still resonates with me. With the provincewide restrictions in place, I couldn’t hand my dad a gift on his birthday last week, but I could go shopping at the mall to buy it.

To address this inconsistency, Legault has said outright that malls will be supervised to curb the risk of people gathering there. He is aware that socially isolated people have reached such a level of desperation that they are willing to risk illness or fines to congregate in a well-ventilated space deemed safe enough by the government.

This contradiction makes me angry. I’m angry because I see the sacrifices so many of us make to our mental health with no end in sight. I’m angry and worried that human life and human connection are being factored into the economic equation as “externalities” — sidelined casualties, rather than core priorities.

I’m angry because, 11 months into the pandemic, I badly want the government to create a plan, educate the public about that plan, and then execute it. If we can afford to pay people to supervise malls, we can afford to move beyond constant reactivity and communicate more detailed safety measures than simply wear a mask and keep your distance.

The clarity I’m describing creates accountability.

Pay people to stay home

We’ve been told that making sacrifices to preserve the economy is an investment in our future well-being once the pandemic passes. But the consequences of keeping high-transmission spots like schools and workplaces open have led the World Health Organization to classify COVID-19 as endemic: a disease we will have to live with long-term.

Legault’s legislative distinction between consumption-based contact and personal contact clarifies a question that has become increasingly urgent to me as our physical, psychological and economic conditions continue to worsen: What does our government really prioritize?

We face an imminent economic recession on the back-burner, a health crisis at a rolling boil, and a mental health frittata in the frying pan.

I am of the generation that will inherit the debts acquired during this crisis. Still, there is no situation wherein the economy can take precedence over human wellbeing and life.

I’m asking that Legault’s government create a plan that prioritizes the public’s basic needs. We face a health crisis first, and an economic crisis second.

When the government hands out $1,550 tickets over private gatherings and simultaneously reopens private shopping malls, I become alert with a feeling of senseless personal sacrifice.

We need to truly shut down businesses and gathering places that needlessly endanger workers, including construction sites, factories and non-essential retail.

We need to pay people to stay home, not ticket them. We need to give essential workers hazard pay. We need meaningful consequences for unsafe work environments. We need creative childcare solutions that consider the actual needs of families rather than our hazardous but familiar education system.

We need to invest in public education about virus transmission, risk assessment and scientific literacy. We need to encourage and advocate for transparent, proactive conversations about exposure and teach the public about social bubbles so that we can support one another as safely as possible.

Structurally isolating people before shutting down high transmission zones tells the public that their interests come second to the interests of private industry. This is unacceptable.

I’m genuinely hopeful for the future, but I feel we need to start thinking about responsible contact in a world where COVID-19 will persist long past September. Demanding that people continue to sacrifice their basic psychological needs indefinitely will only exacerbate the crisis.

The CAQ government has a responsibility to equip us with clear instructions on how to have low-risk contact with our loved ones such as openly communicating the risk level and previous contacts, planning ahead for visits and self-isolating before and afterward.

This long-term problem will not be fixed with external force, but internal accountability. The government needs to play a larger role in education, so that we can both ensure our health and safety, and still see dad on his birthday.

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There's good economic news on the horizon, and that's rattling markets. Wait, what? – CBC.ca

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The first signs that the world is winning the battle with COVID-19 has sparked great news for the global economy as the number vaccinated grows and the death rate falls.

Once shops and factories reopen, once people trapped working from home are finally set free to spend on restaurant meals and travel, sharing the savings they couldn’t spend during lockdown, that recirculation of money is the very thing that will make economies strong.

So it is fair to ask why stock markets tumbled on Thursday — the Dow and the Toronto market were down again Friday — if the economy is recovering.

As Jim Reid, research strategist at Deutsche Bank told the Financial Times last week it “proved to be nothing short of a rout in global markets, with the sell-off in sovereign bonds accelerating as investors looked forward to the prospect of a strengthening economy over the coming months.”

A global rout in markets, a sell-off in bonds, all due to the prospect of a strengthening economy? The explanation involves the uncertainty of where interest rates go from here if a post-COVID-19 economy gets cooking. 

The market not the economy

But the first step in understanding the paradox is remembering that “The stock market isn’t the economy,” as now-U.S. Treasury Secretary Janet Yellen once said.

Over the long haul, there is no question that a strong and growing economy adds to the value of the companies that operate within it. A study of 17 advanced economies by researchers at the University of Bonn showed that over the long term, total stock market values climb with gross domestic product.

U.S. Treasury Secretary Janet Yellen departs the White House. The stock market is not the economy, she once said. (Tom Brenner/Reuters)

But as we clearly saw last year when the U.S. stock markets hit record highs even as GDP shrank more than it had in 70 years, that relationship is not perfectly in sync.

In both Canada and the U.S., central banks have expressed confidence that the economy will grow strongly this year and next. Not only that, but to help put people back to work, both Bank of Canada governor Tiff Macklem and Fed Chair Jerome Powell have promised to keep interest rates low until there are clear signs the employment and business activity have recovered.

So everyone seems to agree the economy will grow stronger. But while central banks try to hold rates down, there are increasing signs that the private investors in the bond market are anticipating rates will rise, making existing bonds worth less.

Interest rates rising?

Bonds are not generally the subject of supper table conversation in Canadian households, but the interest rates set in bond markets affect Canadians in many ways, including the rate you pay for your mortgage. According to mortgages brokers Rate Spy there are early signs that mortgage prices may be following bond yields up.

The key point to understand the role of bonds in the rising economy is one of the things people often find most confusing about them: existing bonds fall in value as interest rates rise. (For more explanation of how that works and why bonds matter, this previous column serves as a primer.)

As Reuters reported on Friday, “from the United States to Germany and Australia, government borrowing costs on Friday were set to end February with their biggest monthly rises in years as expectations for a post-pandemic ignition of inflation gained a life of their own.”

Bank of Canada Governor Tiff Macklem says he expects any rise in inflation to be temporary, but bond traders seem to disagree. (Blair Gable/Reuters)

Economists are divided over whether low interest rates set by central banks and large injections of cash into the economy announced by governments will lead to inflation. Macklem has offered a pretty firm “no” but it appears that last week, the mass of global bond traders appeared to disagree with the Bank of Canada governor and voted with their money. On Friday some suggested the shift in bonds was actually due to technical factors.

Confusingly, the bond market’s anticipation of inflation — if that’s what it is — is a vote of confidence in the future, because traders think consumers and businesses will want to buy more goods and services, driving up their prices.

Speculation vs. fundamentals

As to why stocks fell in response, there are a number of possible reasons, especially in a market where some fear a growing stock bubble. One is that higher bond prices increase the cost of borrowing for companies that raise money in the bond market. Another is that companies must compete with bonds in the money they pay out in dividends. Both cut into profits.

But perhaps most interesting is the idea that stock markets are going through a transition from speculative casino-style investing, where people buy more because they see prices go up (and vice versa) to one based on actual return.

“Markets are increasingly dominated by price action. The more price falls, the more they sell,” James Athey, an investment manager with Aberdeen Standard Investments told the Wall Street Journal last week. “The problem is that not every investor is a fundamental investor.”

In a market where traders have been making bets on bitcoin with no earnings at all or companies that have so far failed to cover their costs, a switch to “fundamental” investing where valuations are based on what a company is likely to earn in a surging economy could lead to greater market stability in the longer term. But there may be a rough patch first.

Follow Don Pittis on Twitter @don_pittis

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One year into pandemic, sky begins to clear over U.S. economy – TheChronicleHerald.ca

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By Ann Saphir and Howard Schneider

SAN FRANCISCO/WASHINGTON (Reuters) – Despite the U.S. economy’s near miss with a depression last year and an ongoing coronavirus pandemic that has brought travel to a virtual halt, Jeff Hurst, the chief executive of vacation rental firm VRBO, sees a boom on the horizon.

“Every house is going to be taken this summer,” Hurst said, as the expected protection from vaccines arrives in step with warmer weather, unleashing a cooped-up population with record savings stashed away. “There’s so much built-up demand for it.”

That sort of bullish sentiment has increasingly taken root among executives, analysts and consumers who see the past year of comparative hibernation – from the government-ordered business closings last spring to continued risk avoidance by the public – giving way to a cautious re-emergence and green shoots in the economy.

Graphic: Retail in real time – https://graphics.reuters.com/USA-ECONOMY/REOPEN/yxmvjxkdjvr/chart.png

Data from AirDNA, a short-term rental analytics firm, showed vacation bookings https://tmsnrt.rs/3uxQ1Wi for the end of March, which traditionally coincides with college spring breaks, are just 2% below their pre-pandemic level. Employment openings on job site Indeed are 4% above a pre-pandemic baseline. Data on retail foot traffic, air travel and seated diners at restaurants have all edged up.

And economists’ forecasts have risen en masse, with firms like Oxford Economics seeing a “juiced-up” economy hitting 7% growth this year, more typical of a developing country.

Graphic: A historic lifeline – https://graphics.reuters.com/USA-ECONOMY/FORECASTS/azgpoezwbpd/chart.png

In a symbolic milestone, Major League Baseball teams took to the field on Sunday, as scheduled, for the first games of the spring training season. Crowds were required to observe social distancing rules and limited to around 20% of capacity, but MLB has a full schedule penciled in following a truncated 2020 season that did not begin until July and saw teams playing in empty stadiums.

Graphic: Oxford Economics Recovery Index – https://graphics.reuters.com/USA-ECONOMY/OXFORDINDEX/yzdvxqzmkpx/chart.png

DEPRESSION DODGED

As of Feb. 25, about 46 million people in the United States had received at least their first dose of a COVID-19 vaccine – still less than 15% of the population and not enough to dampen the spread of a virus that has killed more than half a million people in the country, according to the U.S. Centers for Disease Control and Prevention.

The emergence of coronavirus variants poses risks, and a return to normal life before immunity is widespread could give the virus a fresh foothold.

Nor is optimism global. The European short-term rental market, for example, is suffering, with tens of thousands of Airbnb offerings pulled. Up to one-fifth of the supply has disappeared in cities like Lisbon and Berlin, as owners and managers adjust to a choppy vaccine rollout and doubts about the resumption of cross-border travel.

In the United States, the vaccine rollout and a sharp decline in new cases has produced an economic outlook unthinkable a year ago when the Federal Reserve opened its emergency playbook in a terse promise of action and Congress approved the first of several rescue efforts.

Graphic: The third wave breaks – https://graphics.reuters.com/USA-ECONOMY/REBOUND/xklpyojjepg/chart.png

The fear then was years of stunted output similar to the Great Depression of the 1930s, while some projections foresaw millions of deaths and an extended national quarantine. Instead, the first vaccines were distributed before the end of 2020, and a record fiscal and monetary intervention led to a rise in personal incomes, something unheard of in a recession.

“We are not living the downside case we were so concerned about the first half of the year,” Fed Chair Jerome Powell told lawmakers on Wednesday. “We have a prospect of getting back to a much better place in the second half of this year.”

‘ROCK ON’

U.S. gross domestic product, the broadest measure of economic output, may top its pre-pandemic level this summer, approaching the “V-shaped” rebound that seemed unrealistic a few weeks ago.

That would still mean more than a year of lost growth, but nevertheless represents a recovery twice as fast as the rebound from the 2007-2009 recession.

Jobs have not followed as fast. The economy remains about 10 million positions short of where it was in February 2020, and that hole remains a pressing problem for policymakers alongside getting schools and public services fully reopened.

It took six years after the last recession to reach the prior employment peak, a glacial process officials desperately want to shorten.

While recent months have seen little progress, the outlook may be improving. Treasury Secretary Janet Yellen said in mid-February the country had a fighting chance to reach full employment next year.

It may take more than vaccines, however. Officials are debating how fully and permanently to rewrite the rules of crisis response – and specifically how much and what elements of the Biden administration’s proposed $1.9 trillion rescue plan to approve.

Fiscal leaders last year cast aside many old totems, including fear of public debt and a preoccupation with “moral hazard” – the bad incentives that generous public benefits or corporate bailouts can create. For Republicans, that meant approving initial unemployment insurance benefits that often exceeded a laid-off worker’s salary; for Democrats, it meant aiding airlines and temporarily relaxing banking regulations.

It worked, and so well that an odd consortium of doubters has emerged to question how much more is necessary: Republicans arguing help should be aimed only at those in need, and some Democrats worrying that so much more government spending in an economy primed to accelerate may spark inflation or problems in financial markets.

If the outlook is improving, however, it’s in anticipation that government support will continue at levels adequate to finish the job.

“Rock on,” Bank of America analysts wrote in a Feb. 22 note boosting their full-year GDP growth forecast to 6.5%, an outcome premised on approval of $1.7 trillion in additional government relief, “unambiguously positive” health news, and stronger consumer data. Given all that, “we expect the economy to accelerate further in the spring and really come to life in the summer.”

And the view back at VRBO? In most prime vacation spots, Hurst said, “You won’t be able to find a home.”

Graphic: Business sales outlook improves – https://graphics.reuters.com/USA-ECONOMY/REBOUND/xklvyoonnvg/chart.png

(Reporting by Howard Schneider; Editing by Dan Burns and Paul Simao)

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Turkey emerges from COVID-19-hit 2020 with 1.8% economic growth – TheChronicleHerald.ca

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By Ali Kucukgocmen

ISTANBUL (Reuters) – Turkey’s economy grew 5.9% in the fourth quarter https://tmsnrt.rs/3dVombP and 1.8% in 2020 as a whole, annual data showed on Monday, emerging as one of only a few globally to avoid a contraction due to the coronavirus pandemic.

Propelled by a burst of credit in mid-2020, fourth-quarter GDP grew 1.7% from the previous quarter on a seasonally and calendar-adjusted basis, the Turkish Statistical Institute said.

A surge in gross domestic product (GDP) growth in the second half of the year that surpassed Turkey’s potential rate was driven by a near doubling of lending by state banks to face down the initial wave of the virus.

While outperforming all emerging market (EM) and G20 peers except China, Turkey’s growth came at a price: The cheap lending accelerated a record drop in the lira, drew down the country’s foreign currency reserves and helped push inflation to 15%. Also, few jobs were created.

Graphic: Turkey grew in 2020 despite pandemic – https://graphics.reuters.com/TURKEY-ECONOMY/GDP-ANNUAL/oakperrkbvr/chart.png

The recovery was “unbalanced and ultimately exacerbated some of the country’s external vulnerabilities,” said Jason Tuvey, senior EM economist at Capital Economics.

Financial sector activity surged more than 21% last year, driving overall growth, the data showed. Tourism and other services activity dropped by 4.3% and the construction sector, an engine of growth in years past, shrank 3.5%.

The lira firmed to 7.351 against the dollar after the GDP data and was 1% stronger on the day.

The volatile currency tumbled last week after a rally that began in early November when Turkish President Tayyip Erdogan promised a new market-friendly economic era. A new central bank chief has since hiked interest rates, cutting credit dramatically.

Finance Minister Lutfi Elvan, appointed in November, said on Twitter Monday that Turkey would prioritise price stability this year. Analysts say the economy should expand by roughly 5% in 2021 despite tight monetary policy.

In a Reuters poll, GDP was forecast to have expanded 7.1% year-on-year in the fourth quarter of 2020, despite new curfews and curbs on the service sector to address a second COVID-19 wave, and 2.3% for the whole year.

Graphic: Turkey’s economy kept up hot growth in Q4 – https://graphics.reuters.com/TURKEY-ECONOMY/GROWTH/qmyvmwwzjvr/chart.png

World economies mostly contracted and tumbled into recessions last year, with emerging and developing nations shrinking by some 2.4% according to the International Monetary Fund.

The major EM economy has cooled in recent years https://tmsnrt.rs/3r40BSx from an average 5% growth rate in the last two decades. The rate plunged by 10.3% annually in the second quarter as the pandemic bit, but rebounded sharply by 6.3% in the third.

Ankara is considering lifting some of the latest virus restrictions as of this month.

Tuvey of Capital Economics said the shift in November to more orthodox policies helped Turkey avoid “a full-blown balance of payments crisis”, and he predicted a sustained recovery may not come until the second half of this year.

(Reporting by Ali Kucukgocmen; Editing by Jonathan Spicer, Daren Butler and Hugh Lawson)

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