President-elect Joe Biden will unveil a stimulus package proposal on Thursday designed to jump-start the economy during the coronavirus pandemic with an economic lifeline that could exceed US$1.5 trillion and help minority communities.
Biden campaigned last year on a promise to take the pandemic more seriously than President Donald Trump, and the package aims to put that pledge into action with an influx of resources for the coronavirus vaccine rollout and economic recovery.
The incoming administration will work with Congress on the quick stimulus package after Biden takes office on Jan. 20, although the impeachment of Trump threatens to consume lawmakers in the initial weeks.
The stimulus package has a price tag above US$1.5 trillion and includes a commitment for US$1,400 stimulus checks, according to a source familiar with the proposal, and Biden is expected to commit to partner with private companies to increase the number of Americans getting vaccinated.
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A significant portion of the additional financial resources will be dedicated to minority communities.
“I think you will see a real emphasis on these underserved communities, where there is a lot of hard work to do,” said another transition official.
Biden plans to introduce his package during a prime-time address on Thursday evening, underscoring the seriousness of the topic, but he will have to compete for attention with the political drama in Washington.
The Democratic-led House of Representatives voted to impeach Trump on Wednesday, making him the first president in U.S. history to be impeached twice. Ten of his fellow Republicans joined Democrats to charge him with inciting an insurrection in last week’s deadly rampage in the Capitol.
The impeachment proceedings threaten to hang over the beginning of Biden’s term.
In a statement on Wednesday night, Biden said: “I hope that the Senate leadership will find a way to deal with their Constitutional responsibilities on impeachment while also working on the other urgent business of this nation.”
3:06 Coronavirus: Biden gets 2nd COVID-19 vaccine, says he’s confident in rollout plan
Coronavirus: Biden gets 2nd COVID-19 vaccine, says he’s confident in rollout plan
The Democratic president-elect said last week the stimulus package would be “in the trillions of dollars” and argued that more spending early on would reduce the long-term economic damage from the shutdowns spurred by the pandemic.
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He also said there would be “billions of dollars” to speed up vaccine distribution, along with money to help reopen schools and for state and local governments to avoid laying off teachers, police officers and health workers.
More than 380,000 people in the United States have died of COVID-19 during the pandemic, with 22.7 million infected during that time. Pandemic-related shutdowns and restrictions have cost millions of U.S. jobs.
Although Trump himself supported US$2,000 checks for Americans in the last round of stimulus, many of his fellow Republicans balked at the high amount, settling on $600 checks instead. Biden may face additional opposition from Republicans to his efforts, but he will be helped by the fact that his fellow Democrats will control both the House and the Senate.
Biden’s incoming White House economic adviser, Brian Deese, told Reuters on Wednesday the president-elect would press Congress to pass immediate stimulus measures and then turn to longer-term economic recovery measures related to healthcare and infrastructure.
(Reporting by Jeff Mason in Wilmington, Delaware, and Jarrett Renshaw in Philadelphia; Additional reporting by Trevor Hunnicutt; Editing by Mary Milliken and Peter Cooney)
(Bloomberg) — Chile’s economy unexpectedly posted a full-year gain for 2023 as upward revisions offset a weak fourth quarter, when a drop in mining compounded the drag from high interest rates and uneven demand.
Gross domestic product rose 0.1% in the October-December period compared with the prior three months, less than the 0.2% median estimate from analysts in a Bloomberg survey, according to the central bank. Revisions to third-quarter growth however meant the economy expanded 0.2% last year, outperforming the median forecast of economists polled by Bloomberg for a drop of 0.1%.
The report represents mixed news for President Gabriel Boric who is trying to turn the page on last year’s weak growth caused by factors including the highest interest rate in over two decades and subdued confidence. Signs including rising energy consumption and a recent increase in retail sales indicate the economy may be turning the corner. Analysts surveyed by Bloomberg see Chile expanding faster than the Latin American average in 2024.
What Bloomberg Economics Says
“Chile’s fourth-quarter GDP data showed weak growth and falling domestic demand — below central bank forecasts and consistent with a widening negative output gap. The print supports the central bank’s quick rate cuts and dovish tone late last year and early in 2024. Leading indicators this year point to a strong rebound in 1Q, with activity rising above central bank projections.”
— Felipe Hernandez, Latin America economist
— Click here for full report
Mining output dropped 2.9% in the fourth quarter compared with the prior three-month period, the central bank reported. The rest of the economy rose 0.6%.
Growth prospects are getting a boost from the central bank’s interest rate reductions, which have shaved 400 points from borrowing costs since late July. Annual inflation is seen slowing toward the 3% target in coming months.
Read more: Chile Rate Cut Bets Shift Again With Smaller Reduction Now Seen
Chile’s government is more optimistic than many private-sector economists in expecting GDP to expand 2.5% in 2024. A recovery in growth will help improve the business environment as the government lures investments in sectors such as lithium, Economy Minister Nicolas Grau said in a March 14 interview.
Still, the administration has made little headway on key reforms, prolonging doubts for investors over possible tax and pension changes.
For millions of common citizens, the real economy remains stuck. There are so many apartments sitting empty in Chile that the government is considering stepping in to buy some, and unemployment is running at 8.4%, well above the pre-pandemic levels near 7%.
Read more: Homes That Buyers Won’t Touch Show Deepening Crisis in Chile
–With assistance from Giovanna Serafim.
(Updates with economist quotes in fourth paragraph)
Economists expect inflation reaccelerated to 3.1% in February
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People banking on an interest rate cut may not like the direction Canadian inflation is heading if analyst expectations prove correct.
Bloomberg analysts expect inflation to reaccelerate to 3.1 per cent in February when Statistics Canada releases its latest consumer price index (CPI) data on Tuesday, following a slowdown to 2.9 per cent year over year in January.
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Article contentArticle contentCPI core-trim and core-median, the measures the Bank of Canada is most focused on, are forecast to come in unchanged from the previous month at 3.3 per cent and 3.4 per cent, respectively.
Policymakers made it clear when they held interest rates on March 6 that inflation remained too widespread and persistent for them to begin cutting.
Here’s what economists are saying about tomorrow’s inflation numbers and what they mean for interest rates.
‘Can’t afford missteps’: Desjardins Financial
The Bank of Canada’s preferred measures “have become biased,” Royce Mendes, managing director and head of macro strategy, and Tiago Figueiredo, macro strategist, at Desjardins Financial, said in a note on March 18, “likely overestimating the true underlying inflation rate.”
They estimated the central bank’s preferred measures of core-trim and core-median inflation are overemphasizing items in the CPI basket of goods whose prices are rising more than five per cent. After adjusting for the “biases,” they estimate the bank’s measures are more in the neighbourhood of three per cent — which is at the top of the bank’s inflation target range of one to three per cent.
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Article content“If the Bank of Canada ignores our findings, officials risk leaving monetary policy restrictive for too long, inflicting unnecessary pain on households and businesses,” they said.
Markets have significantly scaled back their rate-cut expectations based on the central bank’s previous comments. Royce and Figueiredo are now calling for a first cut in June and three cuts of 25 basis points for the year.
“Given the tightrope Canadian central bankers are walking, they can’t afford any missteps,” they said.
‘Inflict too much damage’: National Bank
The danger exists that interest rates could end up hurting Canada’s economy more than intended, Matthieu Arseneau, Jocelyn Paquet and Daren King, economists at National Bank of Canada, said in a note.
“As the Bank of Canada’s latest communications have focused on inflation resilience rather than signs of weak growth, there is a risk that it will inflict too much damage on the economy by maintaining an overly restrictive monetary policy,” they said.
They argue there is already plenty of evidence pointing to the economy’s decline, including slowing gross domestic product per capita, which has fallen for six straight quarters. The jobs market is also on the fritz with the private sector having generated almost no new positions since June 2023, they added.
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Article content“Moreover, business survey data do not point to any improvement in this area over the next few months, with a significant proportion of companies reporting falling sales and a return to normal in the proportion of companies experiencing labour shortages,” the economists said.
Despite all these signs of weakness, inflation is stalling, they said, adding it is being overly influenced by historic population growth and the impact of housing and mortgage-interest costs.
The trio expect very tepid growth for 2024 of 0.3 per cent.
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Rising gas prices: RBC Economics
Higher energy prices likely boosted the main year-over-year inflation figure to 3.1 per cent in February, Royal Bank of Canada economists Carrie Freestone and Claire Fan said in a note.
Gasoline prices rose almost four per cent in February from the month before. But the pair believe a weakened Canadian economy and slumping consumer spending mean “price pressures in Canada are more likely to keep easing and narrowing (to fewer items in the CPI basket of goods).
China’s strong factory output and investment growth at the start of the year raised doubts over how soon policymakers will step up support still needed to boost demand and reach an ambitious growth target.
Industrial output rose 7% in January-February from the same period a year earlier, the National Bureau of Statistics said Monday, the fastest in two years and significantly exceeding estimates. Growth in fixed-asset investment accelerated to 4.2%, strongest since April. Retail sales increased 5.5%, roughly in line with projections.