News broke this morning that real GDP grew at an annualized rate of 33.1% in the third quarter of 2020—beating expectations and setting an all-time record.
This jump in GDP is nearly double the previous record set 70 years ago.
Thanks to President Trump’s policies, the American economy is weathering the global pandemic better than any other major Western country, including those of Europe. As the Council of Economic Advisers wrote this morning:
While the pandemic hit every major economy around the world, the United States experienced the least severe economic contraction of any major Western economy in the first half of 2020, with the Euro Area economy’s contraction being 1.5 times as severe as the contraction of the U.S. economy.
Since April, America has gained over 11.4 million jobs, recovering more than half of those lost because of lockdowns. Retail sales are already above pre-pandemic levels, many construction and manufacturing jobs have returned, business activity is at a 20-month high, and new jobless claims fell to their lowest level this week since the beginning of the pandemic.
This “V-shaped” recovery is beating economist predictions and outpacing the slow recovery under former President Obama. After the 2008-09 recession, it took the Obama Administration 4 times as long to regain the same share of lost economic output.
Two big reasons explain President Trump’s success. The first is that his pro-growth, pro-worker agenda made our economic fundamentals stronger. Before Coronavirus swept the globe, American incomes hit a record high in 2019 while poverty rates hit a record low. Median incomes saw their biggest one-year jump ever.
Second, President Trump took targeted action to help American workers and families after the Coronavirus hit. His Administration negotiated the CARES Act, implemented the Paycheck Protection Program to save jobs, extended supplemental unemployment benefits, paused student loan payments, and halted evictions.
Today, the left wants to emulate Europe, issue endless lockdowns, and use the pandemic as an excuse to grow government control of the economy and society. President Trump wants to keep working with the private sector, protect the most vulnerable among us, and safely reopen our economy and schools.
Today’s GDP report makes it clear: The data supports President Trump’s strategy.
The Great American Comeback is well underway—a testament to both President Trump’s policies and the strength and resilience of America’s workers and families.
New Businesses Starting At Record Rates Despite The Pandemic's Effect On Economy – NPR
LULU GARCIA-NAVARRO, HOST:
OK. You may be surprised to hear there’s currently a startup boom in the United States. Despite the pandemic – or maybe because of it – new businesses are starting at record rates. Here’s Greg Rosalsky of NPR’s Planet Money.
GREG ROSALSKY, BYLINE: In 2019, Roberto Ortiz, a veteran software designer, was working hard on a new app with a couple of friends. They designed it. They developed it. They pitched the idea to investors and began raising money. Ortiz even moved his wife, his dog and his 3-month-old baby from Denver to San Francisco so they could launch it. By then, it was early 2020. But there was a problem.
ROBERTO ORTIZ: We were building a platform that connects wholesale food providers to restaurants.
ROSALSKY: (Laughter) Oh, no.
Oh, no because the pandemic was about to destroy the restaurant industry.
ORTIZ: So picture me and my co-founders trying to sell technology to restaurant owners when COVID just shut down their business.
ROSALSKY: The business was ruined. On Zoom call after Zoom call, they debated what to do next. And then it hit them. What if they made a better version of Zoom, one that would be a stronger replacement for high-powered business meetings, product launches or conferences at fancy hotels.
So Zoom is sort of like the Holiday Inn or something. And then like…
ORTIZ: It’s the Motel 6, yeah.
ROSALSKY: Ortiz and his co-founders decided they could build something prettier and fancier than Zoom, like the Ritz-Carlton for virtual events. And with months of hard work, they built it. It’s called Welcome. They officially launched a couple weeks ago. They’ve got numerous clients and over 30 employees. They’ve already raised $12 million. They’ve come a long way since March.
ORTIZ: It’s one of those things where we have to pinch ourselves often.
ROSALSKY: There are a lot of entrepreneurs pinching themselves these days. Welcome is just one of 4 million new businesses registered in 2020. Welcome to the startup boom. Economist John Haltiwanger has been helping the Census Bureau track all this. When it comes to new business applications, he says, they’ve never seen anything like this before.
JOHN HALTIWANGER: It’s the highest level on record.
ROSALSKY: The biggest areas of growth are in e-commerce, online retail and online services, which makes sense. The pandemic has devastated activities that require being face-to-face. Most of us don’t want to shop at stores, travel on planes or do meetings in person. It’s like these new online businesses are growing out of the ashes of old brick-and-mortar businesses. Economists have a term for this. It’s called creative destruction. Nobody likes the destruction part. It means jobs lost and dreams dashed.
HALTIWANGER: What you don’t want to have happen is destruction and then no creation.
ROSALSKY: There weren’t a lot of businesses created during the Great Recession around 2008, and it slowed down the recovery. But the pandemic recession looks like it might be different. We don’t know if all these startups will fill the hole of all the jobs lost and destroyed businesses or if they’ll even survive after the pandemic ends. But Roberto Ortiz is banking on a new era for virtual interaction in the business world.
ORTIZ: And so is travel really necessary to close a deal? Is it really necessary to gather 5,000 people in one place, or are there alternate ways of getting the same outcomes using and leveraging technology?
ROSALSKY: There’s definitely been a lot of destruction in 2020. Hopefully we’ll look back and also see it as a year of creation.
Greg Rosalsky, NPR News.
(SOUNDBITE OF DYE O’S “ARISING”)
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A $900 Billion Plan Would Help the Economy, but Not Fix It – The New York Times
The economic recovery, slowing for months, is in danger of going into reverse. That’s why a growing list of economists, business lobbyists and other advocacy groups are urging lawmakers to rally around the $908 billion aid package currently gaining bipartisan support in Congress.
A plan of that size would fall short of doing everything that economists argue Congress should do to help workers and businesses during the coronavirus pandemic. But they said that if lawmakers could get the details right, Congress should do it anyway.
“It’s within the range where you could argue it does enough good that it would be worth taking it,” said William E. Spriggs, a Howard University economist who served in the Labor Department under President Barack Obama. “But it leaves a ton on the table, and still leaves us with a big problem going forward.”
The $908 billion compromise is not even a legislative proposal yet. It is a bipartisan framework, assembled by a group of senators led by Susan Collins, Republican of Maine, and Joe Manchin III, Democrat of West Virginia. Many of its details are still being negotiated, including how the government ought to distribute more aid to small businesses.
Once the bill is complete, its success is not assured: Senator Mitch McConnell of Kentucky, the majority leader, has stopped short of endorsing it, and so has President Trump, who would need to sign any legislation approved in the lame-duck congressional session. But Speaker Nancy Pelosi of California has backed it as a starting point for renewed negotiations, and President-elect Joseph R. Biden Jr. said Friday that he was “encouraged” by the effort.
Experts say the plan would provide relief to several battered corners of the economy. It includes nearly $300 billion for small-business aid, $180 billion for unemployed workers, and $160 billion for state, local and tribal governments.
The plan wouldn’t help everyone who needs aid, and the support might not last long enough to bridge the economy to the rebound that is expected to come when coronavirus vaccines are widely distributed. And much depends on the details, particularly when they come to Americans who have been unemployed for months and small businesses that struggled to tap government programs early in the pandemic.
But if the plan was passed soon, it would send money out quickly. And with virus cases rising and economic gains stalling, a growing number of politicians are willing to accept such a compromise.
“You get most of the way there, you don’t turn around at the end,” said Gov. Mike DeWine of Ohio, one of several Republican governors who has called for more federal aid. “We can’t stop now, and I guess I would say that to my friends in Congress: We need your help one more time here. Help get us through what’s going to be a very tough winter.”
November employment data released by the Labor Department on Friday underscored his point. Job growth slowed to 245,000, the weakest monthly gain of the recovery so far. The number of people trapped in long-term unemployment rose to nearly four million. Restaurants and retailers, whose rehiring of furloughed workers helped power the rebound in earlier months, cut jobs in November. The number of people who have lost their jobs permanently rose, the latest sign that the crisis will leave lasting economic scars.
“I do feel a greater sense of urgency now, especially after seeing the jobs report,” said Karen Dynan, a Harvard economist and former Treasury Department official in the Obama administration. “We’re really starting to see the cracks now.”
Perhaps the top goal for the aid package is preventing millions of families from losing their only source of income the week after Christmas.
As many as 13 million Americans are receiving benefits under two programs that expanded and extended the existing unemployment insurance program. Those programs, created by Congress in the spring, are set to expire at the end of the year — an outcome that members of both political parties have said they want to avoid.
The aid package being discussed in Congress would extend both programs, while also reviving the extra unemployment benefit that expired over the summer, most likely at half the original $600-a-week level. But depending on how the negotiations go, it may not further extend eligibility for people who are close to the end of their benefits already.
Putting money into the pockets of the unemployed could be good for the broader economy: Research has found that unemployment benefits are among the most effective forms of economic stimulus because recipients are likely to spend rather than save the money. And by helping families avoid foreclosures, evictions and debt defaults, unemployment benefits can prevent the financial damage from spreading.
But the most compelling argument may be not economic but humanitarian: Without the money, many families could go hungry, become homeless and face other hardships.
“If households are in financial catastrophe, then we have a moral obligation as a country to help households regardless of what their spending or not spending does to the aggregate economy,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution.
Money in the proposal would similarly provide a lifeline to some small businesses that risk closing for good amid weak demand between now and when vaccines become available. Even large companies could be hurt if many smaller firms go under, which is one reason large business groups have called for immediate aid to small companies.
“Jobs created by small businesses impact big businesses’ ability to sell to those people,” said Suzanne Clark, the president of the U.S. Chamber of Commerce. “So we’re really worried about the totality of the ecosystem and the number of small businesses just hanging on by a thread.”
But many business groups warn that the compromise plan does not include enough money, potentially leaving some companies without aid, in a repeat of the government’s initial round of Paycheck Protection Program loans in the spring. Lawmakers could again find themselves almost immediately facing pressure to allocate more money to the program.
The structure of the aid is unlikely to provide a long-term bridge for certain types of businesses, including many in the hospitality industry, that might not return to pre-pandemic levels of activity for months or years.
The deal would provide money to state and local governments, though the $160 billion being discussed is a small fraction of the $1 trillion that Democrats initially proposed last spring.
State and local aid has been a major sticking point in negotiations, with Mr. McConnell dismissing it as a “blue-state bailout.” But Republican-led states face some of the biggest revenue gaps.
States and local governments, which have been battered by pandemic-related costs and collapsing tax revenues, have already cut more than 1.3 million jobs, and much deeper cuts loom. Those cuts could have both short- and long-term consequences. A new round of public-sector layoffs and furloughs, combined with slowing private-sector hiring, could derail the precarious recovery. And cuts to schools, public transportation and other services could make it harder for the economy to regain momentum once the pandemic has passed.
Even if Congress does reach a deal before the end of the year, Mr. Biden warned Friday that lawmakers would need to spend more once he took office. “The country’s going to be in dire, dire, dire straits if they don’t,” he said.
Canadian economy added 62,000 jobs in November, Statistics Canada says – KitchenerToday.com
Statistics Canada says the economy added 62,000 jobs in November compared with an addition of 84,000 in October.
The gains were mostly focused in full-time work with a gain of 99,000 jobs, offset somewhat by a decline in part-time work of 37,000 positions.
The average economist estimate had been for a gain of 20,000 jobs and the unemployment rate to remain unchanged, according to financial data firm Refinitiv.
The gains in November left the country 574,000 jobs short of recouping the approximately three million jobs lost from lockdowns in March and April that sent the unemployment rate skyrocketing to 13.7 per cent in May.
Last month, the unemployment rate fell to 8.5 per cent compared with 8.9 per cent in October.
But the pace of gains has slowed, with employment rising by 0.3 per cent in November compared to an average of 2.7 per cent per month between May and September.
In Waterloo Region, the unemployment rate dropped from 10.8 per cent in October to 9.1 per cent in November.
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