MEXICO CITY — Mexico’s economy contracted by 0.5% in October from September in seasonally adjusted terms, making a poor start to the fourth quarter after nine months of stagnation, figures from the national statistics agency showed on Tuesday.
The decline in economic output was the biggest since a 0.5% contraction in March, and the third negative reading in four months, according to the data from the agency known as INEGI.
Mexico’s economy has struggled to gain traction under President Andres Manuel Lopez Obrador, who took office in December 2018 pledging to ramp up growth to 4% per year.
Instead, the economy has been flat this year, slipping into a mild recession in the first half of 2019.
Compared with the same month a year earlier, economic activity shrank by 0.8% in unadjusted terms in October, the figures showed. (Reporting by Dave Graham; Editing by Alison Williams)
$350B in pandemic savings was supposed to give the economy a huge boost. It still hasn't happened – CBC.ca
After the pandemic hit in 2020, some business owners and households were hard hit financially as a result of lockdown measures. But at the same time, many Canadians saw their bank accounts grow because of their reduced spending.
Those savings ballooned to over $300 billion and became so large that economists expected there would be a big boost to the economy when all that money was eventually spent.
But today, that sizeable stimulus still hasn’t happened. Experts aren’t sure exactly why.
The savings did help the economy, but not nearly as much as envisioned, and the bulk of the money is still sitting in bank accounts.
To this day, total household savings are still about $350 billion more compared to before the pandemic began, according to Statistics Canada. Lower and middle income households spent much of what they saved during the pandemic, while higher-income households have actually saved up more money, experts say.
That amount has stayed relatively consistent over the last year or two with little indication of a big spending splurge to come.
“There’s still a lot of excess savings that’s been accumulated during the pandemic that is still in the system. We haven’t seen a drawdown of that,” said Charles St-Arnaud, an economist with Alberta Central credit union. “The question at this moment is why?”
As economists dive into this financial data, what’s apparent is not only the disparity between income levels in the country, but also a trend of how the overall amount of pandemic savings in Canada remains quite large, while the savings stockpile has nearly all evaporated in the U.S.
“The question is, when does that richer cohort decide to use it?” said St-Arnaud. “There doesn’t seem to be an inclination to increase consumption.”
As a result, the massive savings stockpile can’t be counted on to help the country avoid a possible recession this year. There’s also no cushion for lower-income households that continue to feel the financial pain of a higher cost of living.
No shortage of savings
The pandemic didn’t bring financial gain for everyone, especially for those who lost their jobs and businesses or racked up debt to stay afloat. Not everyone had extra money in the bank following a few years of restrictions — but many did.
In 2020, the average Canadian saved more than $5,000, for a total of $212 billion, according to Statistics Canada. Some people spent the money on travel and other purchases, while others paid down debt, made a down payment on a property, or started a renovation project.
Of the roughly $350 billion in savings, some of the money is no longer available because people used it to pay down debt or a mortgage. Using Statistics Canada data, economists say that leaves about $230 billion sitting in bank accounts, term deposits and other investments.
The initial boost of savings was spread relatively evenly across different age groups and income levels, St-Arnaud said.
But that’s now changed. The majority of the savings now belongs to higher-income Canadians, while lower- and middle-class households have used up their pandemic savings or are making withdrawals because experts say they likely need it to keep up with inflation.
Living expenses — from food and clothing to rent and utilities — are soaring throughout Canada.
“Earlier we may have, I don’t want to say overstated the importance of these savings, but we thought that these may insulate people from a broader pullback in spending,” said Carrie Freestone, an economist with RBC.
She points to data from the fall of 2023 showing how lower- and middle-income Canadians struggled to save money, and that’s one reason why consumer spending is falling. Without the cushion of savings, said Freestone, those households will feel more of a squeeze from inflation.
“We’re still going to see a bit of a pullback in consumption at the beginning of this year until the Bank of Canada starts cutting rates,” she said.
WATCH | A look at the Canadian savings stockpile since the pandemic began:
In the U.S., Americans also saved up plenty of money during the pandemic. Still, as restrictions eased, they opened up their wallets and spent it. That flood of cash, in the trillions of dollars, helped stimulate the economy, even as interest rates rose and price tags climbed. Overall, the American economy has performed much better than experts had predicted.
“The majority of the population doesn’t have on average much of that savings leftover, if anything,” said Freestone. “It’s just a totally different trend that’s playing out” compared to Canada, she said.
There are several theories for why Canadians, on average, have held onto the savings, while Americans were much more inclined to spend. For starters, Canadian government support during the pandemic lasted longer compared to the U.S.
Conversely, lockdown measures eased much sooner in most states, so there were more opportunities to spend.
On average, Canadians carry much higher debt than Americans, so they may be more resistant to spending, experts say.
Among other suggestions, there’s also the different ways that mortgages are structured. In the U.S., the majority of homeowners sign a 30-year mortgage with a locked-in rate. Canadians, on the other hand, typically renew their mortgages every five years.
“A lot of mortgages are coming up for renewal over the next couple years that are going to renew into higher interest rates,” said Karen Routledge, an investment advisor and financial planner with Wellington-Altus Private Wealth.
Wealthier Canadians less inclined to cash in savings
Besides holding on to savings to pay down a mortgage, Routledge said there are many other reasons why some of her clients are holding on to savings, such as saving up for a bigger expense or simply wanting to take advantage of higher returns on term deposits and GICs.
“Interest rates on cash are better than they’ve ever been in pretty much the last 20 years,” she said. “They’re actually getting paid for it.”
Wealthier Canadians don’t need to use the savings to keep up with routine expenses, so some experts say they are less inclined to spend it.
“So, it just stays on the sideline and it might stay indefinitely,” said St-Arnaud, the economist with Alberta Central.
Economic growth has stuttered for much of the last year as a result of the Bank of Canada’s rate hikes in 2022. Wage growth is helping some households to keep up with inflation, while population growth is also helping keep the economy from falling into a recession.
Germany Confirms Bleak Economic Outlook With 2024 Growth of 0.2% – Bloomberg
Germany sees its faltering economy expanding by just 0.2% this year — a much flatter rebound than the 1.3% that Chancellor Olaf Scholz’s government was predicting as recently as the fall.
Geopolitical tensions and high interest rates are weighing on the recovery, though rising real wages and a robust labor market should help over the course of 2024, Economy Minister Robert Habeck, who first revealed the meager growth outlook last week, said Wednesday in a statement.
Loblaw to invest more than $2 billion in the Canadian economy, creating thousands of jobs and opening more than 40 … – Loblaw Companies
Brampton, ON, February 20, 2024 –Loblaw Companies Limited (TSX: L, “Loblaw” or the “Company”), Canada’s food and pharmacy retail leader, expects to invest more than $2 billion dollars into the Canadian economy in 2024. This record investment reflects Loblaw’s commitment to enhancing its store network, creating job opportunities, and improving accessibility to affordable food and healthcare services for communities across the country.
The Company’s capital investments this year are expected to create more than 7,500 jobs in Canada, reinforcing Loblaw’s position as a major contributor to Canada and its economy. Part of the Company’s investment will be in its store network, with plans to build more than 40 new stores, expand or relocate another 10 and renovate more than 700 others.
“This year, we are investing where Canadians need it most. We will introduce more than 40 new discount stores and 140 new pharmacy care clinics in communities across the country – making healthcare and affordable food more accessible to more people,” said Per Bank, President and CEO, Loblaw Companies Limited. “These investments in Canada are a catalyst for job growth and the creation of countless opportunities, in our stores, in our company and with the many partners who work with us.”
For decades, Loblaw has made significant investments in the Canadian economy. This year’s investment is in addition to more than $10B the company has invested since 2016.
Forward Looking Statements
This News Release contains forward-looking statements about the Company’s capital expenditure plans and their impact. Forward-looking statements reflect the Company’s estimates, beliefs and assumptions, which are based on management’s perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Numerous risks and uncertainties could cause the Company’s actual results, and the impact of the capital expenditures described in this News Release, to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in the Company’s MD&A in the Company’s 2022 Annual Report and in the Company’s 2022 Annual Information Form for the year ended December 31, 2022, both of which are available on SEDAR+ at www.sedarplus.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company’s expectations only as of the date of this News Release. Except as required by law, the Company does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About Loblaw Companies Limited
Loblaw Companies Limited is Canada’s food and pharmacy leader, as well as its largest retailer and private sector employer. With approximately 2 billion transactions each year in its unmatched network of 2,500 stores and national e-commerce options, Loblaw brings food, pharmacy, beauty, apparel and financial services to customers through many of Canada’s favourite and most-trusted brands: President’s Choice, No Name, Loblaws, Shoppers Drug Mart, No Frills, Real Canadian Superstore, T&T, Joe Fresh, PC Express and PC Financial. The Company’s loyalty program, PC Optimum, has more than 18 million members and is one of Canada’s largest and best-loved reward programs.
Loblaw’s purpose is to help Canadians live life well. It makes good food affordable, health, beauty and wellness accessible, saving for the future possible, and essential style achievable.
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