HOUSTON —The novel coronavirus is sparking an economic slide that has sentgovernments scrambling, put people out of work and left businesses on the brink of closing, if they haven’t already.
In Texas, the economic double whammy of the public health crisis combined with the steep drop in oil prices has experts here unclear abouthow deeplyCOVID-19 will impact the state’s economy.
But they are certain about the sensation it will deliver.
“It’s going to hurt,” said Julia Coronado, a financial consultant who also teaches at the McCombs School of Business at the University of Texas at Austin. “There’s the health shock and the oil shock. It’s going to be an extra hit on the state’s economy.”
As Texans limit how much they’re in public as they wait out the public health crisis, many people have lost jobs or had their hours cut by businesses adapting to limited or shuttered operations. That’s left unknown numbers of Texans in need of money to cover housing costs and other essential expenses. President Donald Trump’s administration put together a $1 trillion economic stimulus plan, about half of which is earmarked as direct payments to individuals.
But experts warned they don’t know yet when money will arrive.
Many hope Congress can agree — quickly — on the package’s details, after the U.S. Senate passed legislation Wednesday that would allow free testing for COVID-19, expand paid sick leave measures and provide financial boosts to food assistance programs.
Meanwhile, John W. Diamond, director of the Center for Public Finance at Rice University’s Baker Institute, said Texas’ 3.5% unemployment rate, barely better than the country’s 3.6% rate, likely will not last.
From March 8 through March 14, there were 19,968 unemployment insurance claims filed with the Texas Workforce Commission, 7,383 more than were filed during the same week in 2019.But those new figures don’t include people out of jobs or facing fewer hours since local governments across the state banned dine-in restaurant service and shuttered bars this week. Gov. Greg Abbott is expected to make an announcement Thursday about whether he plans statewide closures of bars and a statewide prohibition on dine-in services at restaurants.
Analysts expect the state’s unemployment number to go up once this week’s numbers are recorded.
“I wouldn’t be shocked if we saw unemployment levels here up to 5%,” Diamond said.
The Texas Workforce Commission, which receives unemployment insurance claim applications, expects to see a crush of submissions, but a spokesman said the agency “has over 1,000 staff helping support unemployment insurance services.”
Milena Arias, 26, moved to Austin in late February to look for jobs in mass communications. She had only been a server at Lucy’s Fried Chicken for a week and a few days when the local chain laid her off, anticipating a loss of business due to the COVID-19 crisis.
Arias has been planning to file for unemployment, but she hasn’t been able to cut through the busy phone lines at the Texas Workforce Commission. She said she understands the spike in traffic but wishes government agencies would have had a plan for the economic impacts of the coronavirus.
“That’s kind of the frustrating thing, its definitely like no one was prepared for this,” Arias said.
Larry Stuart, an employment lawyer in Houston, said employees could apply for unemployment benefits if they are laid off, they are furloughed or their hours are significantly reduced. Employers, if they’d prefer, could cut an employee’s hours but continue offering the employee work on a scaled-down, part-time basis, and the employee could still apply for unemployment, Stuart said.
Whether unemployment benefits will be enough to stem an economic slide is another question.
“There’s a good chance we’re going to go into a recession,” said Stuart, who’s also a business professor at Rice University. “And that doesn’t bode well for longer-term employment.”
Meanwhile, the state is sitting on billions in its Economic Stabilization Fund, analysts said. But the same forces hurting the economy and household finances are also battering state revenues and coffers.
The majority of the state budget relies on retail sales tax revenues and the energy sector, which saw oil prices plummet to around $22 a barrel Wednesday, down from over $60 a barrel at the beginning of the year, perhaps shaking the industry more in Texas than anywhere else.
“Texas is likely to go from pulling up the national economy, like it did last year, to pulling down the national economy this year,” said Keith R. Phillips, an economist with the Federal Reserve Bank of Dallas since 1984. “And that’s because of the sharp decline of the energy sector.”
Some form of relief, however, could come with housing — at least for some people. On Wednesday, the U.S. Department of Housing and Urban Development announced a 60-day moratorium on evictions and foreclosures for homeowners with federally backed loans.
But experts say that all homeowners and renters deserve relief during the ongoing crisis.
In Texas, housing advocates are calling for a statewide moratorium on evictions and foreclosures of mortgages that are not backed by the federal government. Abbott’s patchwork response to the virus has left Texans in different counties facing different financial fates as many workers’ abilities to earn income are undermined by the need to stop the spread of the virus.
“We have to think that this is an incredibly traumatic moment, and it is inhumane to continue pursuing evictions,” said Christina Rosales, deputy director of the advocacy organization Texas Housers.
Some counties and courts are considering evictions and foreclosures “nonessential” cases and are following the recommendations of the state judicial branch to temporarily postpone them. But, Rosales said, there isn’t any uniformity.
“Some are halting them for two weeks, some for two months,” she said. “We don’t have any idea how long this will last, but ideally this needs to be uniform, and the state can accomplish that.”
A spokesman for Abbott’s office did not respond to requests for comment about what the governor’s options are or whether he is considering any moratoriums on evictions and foreclosures.
Smaller businesses have not typically received great amounts of money from large federal economic stimulus packages, as large sectors such as energy and the airlines often have. But the latest federal stimulus package does have $300 billion earmarked for such companies.
And the U.S. Small Business Administration announced updates Tuesday to its application process in hopes of expediting it, which could be a viable option for many businesses in Texas hit hard by social distancing that experts say will slow the public health crisis.
“It’s really a difficult spot for small businesses right now,” Phillips said, “because they don’t know how long this is going to last. And I wish I could tell them. I wish I knew that.”
Carrington Tatum and Juan Pablo Garnham contributed to this report.
Disclosure: The McCombs School of Business and Rice University have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
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.
