Is the US economy improving? Days before the midterms
As the United States prepares for pivotal midterm elections, a raft of conflicting headlines — layoffs at Big Tech, volatile stock markets, a central bank hell-bent on bringing the pain to tackle inflation — are muddying the answer to a simple question: Is the economy improving?
Maybe. Maybe not. If you’re frustrated by that, you’re not alone.
Job market just won’t budge
On the jobs front, there’s great news for anyone looking for work. The US economy added 261,000 jobs in October, about 60,000 more than economists had expected. Unemployment remains at a historically low 3.7%, and there are nearly two open jobs for every one person looking.
But that tightness in the labor market is bad news for the Federal Reserve, which worries that the easier it is for workers to press for higher wages, the harder it will be to tamp down prices that have remained stubbornly high for more than a year. By aggressively hiking interest rates, the Fed has sought to introduce some slack into a tight labor market. Slack, meaning less job growth, less wage growth or even layoffs.
“The Fed is likely frustrated,” wrote Rucha Vankudre, a senior economist for Lightcast.
It’s like when you put money in a vending machine only to have it eat your change and withhold your snack, Vankudre says. “You put money in, and the food moved a little bit but it didn’t fall. And then you kicked it and put more money in, and it still didn’t fall. It kind of feels like what the Fed is doing.”
Rather than getting what it wants — a slowdown in inflation — the Fed’s rate hikes are, for now, just making things harder on cash-strapped Americans. Inflation remains high, but now it’s also far more expensive to take out loans or pay off credit cards. And the Fed’s actions are wreaking havoc on economies overseas by strengthening the value of the US dollar, the cornerstone of international commerce.
US mortgage rates, which are indirectly influenced by the federal funds rate, soared to 7% last week for the first time in 20 years. (The average on the 30-year fixed rate fell slightly this week, to 6.95%. That’s still more than double where it was a year ago.)
Combined with low inventory, that’s turned the housing market into a nightmare both for buyers and sellers.
Prospective buyers are finding few homes they can afford. Sellers are unmotivated to list, in part because even if they find a buyer, they’d face historically high prices and low inventory when they go to look for a new place to live.
That’s been especially hard on younger first-time buyers who don’t have the equity or savings to shell out on a home. The result is they are renting for longer, and that’s helping push rental prices up.
Layoffs hit Big Tech
A painful round of layoffs and hiring freezes are hitting workers at some of Silicon Valley’s premier companies, a worrying sign that a recession may be on the horizon. Elon Musk began laying off employees across Twitter on Thursday; Lyft announced it was cutting 13% of its staff; and Microsoft and Amazon are freezing corporate hires.
Of course, tech companies are not indicative of the broader labor market, economists warn. Many of them grew rapidly in the pandemic era, and are now scaling back as advertisers rethink spending and demand cools.
“There’s no question there are high-profile Silicon Valley layoffs, but overall the tech sector is still healthy and adding jobs,” wrote Bledi Taska, chief economist for Lightcast. “The narrative doesn’t always match the numbers.”
The economic pain we’re living with now is rooted in the pandemic’s uniquely devastating impact. In 2020, the virus forced an abrupt shutdown that, even two and a half years on, is still rippling through the global economy.
Demand for goods shot up at the same time supply chains were buckling. That caused a cascade of shortages on everything from toilet paper to computer chips. Prices went up. Consumers stuck inside their homes used their government stimulus checks to buy up more stuff, feeding inflationary pressures. Then Russia invaded Ukraine, bringing supply chains to their breaking point yet again and exacerbating global food shortages.
The Fed, meanwhile, kept interest rates near zero and invested heavily in bonds to keep financial markets from imploding. Throughout 2021, Fed officials played down rising inflation as a “transitory” effect that would, eventually, work itself out.
It didn’t. And now the Fed is playing an aggressive game of catch-up to prevent price surges from becoming entrenched in a vicious cycle.
Despite some tentative signs of cooling — the Consumer Price Index hit 9.1% June and has since dropped to 8.2% (still wildly higher than the Fed’s 2% goal) — prices are unlikely to come down overnight.
So what does it all mean?
All of this points to a difficult puzzle for Democrats trying to hold on to power in next week’s midterms.
Even though the US economy is not, technically, in a recession, nearly 75% of likely voters in a recent CNN poll said they feel as though it is.
Wages are up, but not enough to take the sting off high prices of necessities like food, fuel and shelter.
For those invested in stocks, it’s not been a great year, either, and that’s especially hard on retirees who are living off their investments.
Economists will get fresh insight into the state of inflation next week with the October CPI reading on Thursday. But if there’s good news in that report, it will have come two days too late to sway voters one way or another.
Quebec proposes making French mandatory for all economic immigration programs – Canada Immigration News
Quebec Premier Francois Legault has proposed major changes to Quebec’s economic immigration criteria.
Speaking on May 25 with the Minister of Immigration, Francisation and Integration, Christine Frechette and the Minister of the French Language, Jean-François Roberge, Legault says the changes will ensure that nearly 100% of new economic immigrants to Quebec will know French before they arrive in the province by 2026. This is meant to promote Francophone economic immigration in Quebec.
“As we have seen for several years, French is in decline in Quebec,” said Legault. “Since 2018, our government has acted to protect our language, more than other successive governments since the adoption of Bill 101 under the Lévesque government. But if we want to reverse the trend, we must go further. By 2026, our goal is to have almost entirely Francophone economic immigration. We all have a duty, as Quebecers, to speak French, to transmit our culture on a daily basis, and to be proud of it.”
Discover if You Are Eligible for Canadian Immigration
Knowledge of oral French will be required for adults. This is meant to ensure that those who wish to settle in Quebec will be able to communicate in French throughout day-to-day interactions at work and in their communities.
The changes are part of a new permanent immigration program for skilled workers in Quebec. The province says the Skilled Worker Selection Program will “take into account the diverse needs of Quebec.”
Candidates in the program will be evaluated in four categories that have not yet been made clear, but the province says that three of the categories will require that the principal applicant and their accompanying spouse have knowledge of French.
There will also be revisions to existing programs. For example, the work experience requirement will be removed from the Quebec Experience Program for graduate students from a French-language study program.
Family reunification measures include making it mandatory for the guarantor to submit a plan for reception and integration that will support the learning of French for the person they are hosting.
Immigration is a shared responsibility between the federal and provincial governments. Quebec’s agreement is unique from other provinces in that it can select all its economic immigrants. Quebec does not have the authority to select family class sponsorship applicants or those who arrive in Canada as refugees or other humanitarian classes.
For 2023, Quebec has targeted that 65% of newcomers admitted to the province will be economic class.
Increasing immigration numbers in Quebec
The province is also considering raising the number of permanent selection admissions from 50,000 to 60,000 per year by 2027. This is in stark contrast to Legault’s recent comments that there was “no question” of Quebec accepting any rise in the number of newcomers and publicly rejecting the federal Immigration Levels Plan, which has a target of 500,000 permanent residents admitted to Canada each year by the end of 2025.
These changes also follow Quebec’s Immigration Levels Plan for 2023, where it was announced that the province would move away from plans that forecast only the coming year and begin introducing multi-year plans for immigration by 2024.
Why the changes?
Quebec is unique in Canada as it is the only province where French is the official language. The province is fiercely protective of its language, saying it is vital to protecting Quebec’s unique culture and status.
Legault is the leader of the Coalition Avenir Québec (CAQ) and is currently in his second term as Quebec’s premier, having been reelected last October. One of the main pillars of the CAQ party is to protect the French language in Quebec.
Immigration was one of the key issues in the recent election. Throughout his campaign, Legault said that Quebec would allow only 50,000 immigrants per year into the province as it would be difficult to accommodate and integrate more than that into Quebec society. He said that accepting more than that would be “a bit suicidal.”
Regardless, Quebec, like the rest of Canada, is experiencing a labour shortage as the population ages and the birth rate remains low. A report released last March by the Canadian Federation of Independent Business shows that the province could face an annual shortfall of up to nearly 18,000 immigrants, who would be able to fill Quebec’s labour needs.
Discover if You Are Eligible for Canadian Immigration
Lira hits record low, but stocks rise after Erdogan win in Turkey
The Turkish leader won the presidency for a third time after a run-off vote on Sunday.
The Turkish lira has plunged to record lows after the re-election of President Recep Tayyip Erdogan, a sign that currency markets are not confident in the country’s economic future after the longtime leader’s re-election.
The Turkish currency weakened to 20.01 to the dollar on Monday after the high-stakes run-off a day earlier.
But Turkish stocks, on the other hand, rose as Erdogan entered a third decade in power with the benchmark BIST-100 index up 3.5 percent and the banking index rising more than 1 percent.
The lira fell to a record low as the country battles a cost of living crisis and depleted foreign reserves.
On the campaign trail, Erdogan pledged to slash inflation to single digits and boost economic growth, a message he reiterated in his victory speech late on Sunday. But analysts said his economic policies are unorthodox and predicted they will lead to more pain for Turks.
“In our view, Erdogan’s biggest challenge is Turkey’s economy,” Roger Mark, an analyst at the Ninety One investment management firm told the Reuters news agency. “His victory comes against a backdrop of perilous economic imbalances with his heterodox economic model proving increasingly unsustainable”.
Hasnain Malik, head of equity research at Tellimer, an emerging markets research firm, told the agency: “An Erdogan win offers no comfort for any foreign investor.”
“Only the most optimistic would hope that Erdogan now feels sufficiently secure politically to revert to orthodox economic policy,” he said.
Interest rate cuts sought by Erdogan sparked a devaluation of the Turkish lira in late 2021 and sent inflation to a 24-year peak of 85.5 percent last year. The president had argued that higher interest rates cause inflation while central banks around the world were raising rates to reduce price rises.
Turkey’s struggling economy, also reeling after the country’s devastating double earthquakes in February, was a major thorn in Erdogan’s prospect for re-election.
The leader has defended his economic policies, reassuring Turks that investment, production, exports and an eventual current account surplus will drive up Turkey’s gross domestic product.
U.S. economy and new incentives put Canada at disadvantage in Stellantis negotiations, professor says
Two weeks of negotiations between the federal and provincial governments and Stellantis have failed to produce a new deal for the NextStar EV battery plant in Windsor, Ont. Ian Lee, an associate professor at Carleton University’s Sprott School of Business, says the economic might of the U.S., coupled with the incentives offered in recent legislation, make it extremely challenging for Canada to compete.
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