WASHINGTON (AP) — Can the U.S. economy achieve a much-hyped “soft landing”? Friday’s jobs report for November will provide some signs of whether that elusive scenario is coming into view.
Many of the most recent economic figures have been encouraging. Companies are advertising fewer job openings, and Americans are switching jobs less often than they did a year ago, trends that typically slow wage growth and inflation pressures. Hiring is cooling, and price increases have moderated significantly.
All of which means the Federal Reserve may stand an increasingly good chance of bringing inflation down to its 2% annual target without causing a deep recession — the common definition of a soft landing.
Yet that effort isn’t without risks. The economy could slow so much as to slide into a recession. The unemployment rate, which began the year at an ultra-low 3.4%, has since risen to 3.9% as more Americans have come off the sidelines to look for jobs and not found them right away. The number of people receiving unemployment aid, though still low, has risen. And for much of this year, hiring has been concentrated in just a few sectors — notably health care, restaurants and hotels and government — rather than broadly across the economy.
The November jobs report from the Labor Department is expected to show that employers added a still-solid 172,500 jobs last month, according to a survey of economists by FactSet. That would slightly exceed October’s 150,000 gain.
Yet November’s increase will be exaggerated by the addition of United Auto Workers members as well as by Hollywood actors whose strikes ended in October and who returned to work in November. Their return is expected to account for about 40,000 of November’s job gains.
Hiring has been cooling as the Fed’s sharp interest rate hikes have raised borrowing costs for consumers and businesses, depressing sales of homes, cars, appliances and other high-priced purchases and investments. From August through October, job growth averaged 204,000 a month, down sharply from a 342,000 average in the same three-month period in 2022.
Though the nation’s jobless rate remains comparatively low, economists nevertheless worry that a rising rate can feed on itself: Unemployed workers tend to cut back on spending, thereby slowing the economy and leading other businesses to lay off employees, too. By one rule of thumb, if the jobless rate were to rise just a few tenths of a percentage point more, the increase would be consistent with the start of a recession.
Yet if the data did start to point toward a recession, Fed Chair Jerome Powell could signal that the central bank would cut rates soon to lower borrowing costs. Such a message would likely ignite a rally in the financial markets and potentially boost the economy.
For now, most analysts are offering a positive outlook of slower but still steady growth and easing inflation. The economy is expected to expand at a modest 1.5% annual rate in the final three months of this year, down from a scorching 5.2% pace in the July-September quarter. Cooler growth should help bring down inflation while still supporting a modest pace of hiring.
The economy is still expanding even after the Fed has raised its benchmark rate 11 times, from near zero in March 2022 to about 5.4%, the highest level in 22 years. The aggressive pace of those hikes has made mortgages, auto loans and business borrowing much more expensive.
At the same time, inflation has tumbled from a peak of 9.1% in June 2022 to just 3.2% last month. And according to a different inflation measure that the Fed prefers, prices rose at just a 2.5% annual rate in the past six months — not far below the central bank’s target.
Such progress has fueled speculation in the financial markets that the Fed could soon cut its benchmark rate, perhaps as early as March. Wall Street traders now expect five rate cuts next year, according to futures prices tracked by CME FedWatch. Most economists envision fewer.
Christopher Waller, a key Fed official who typically favors higher rates, buoyed the markets’ expectations last week when he suggested that if inflation kept falling, the Fed could cut rates as early as spring.
Powell, though, pushed back against such speculation last Friday, when he said it was “premature to conclude” that the Fed has raised its benchmark rate high enough to quell inflation. And it was too soon, he added, to “speculate” about when the Fed might cut rates.
But Powell also said interest rates are “well into” restrictive territory, meaning that they’re clearly constraining growth. Many analysts took that remark as a signal that the Fed is done raising rates.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
