(Bloomberg) — The $900 billion stimulus package agreed to by U.S. lawmakers over the weekend could keep the economy from contracting again, but pandemic-related risks remain if activity doesn’t start to bounce back next year.
The fiscal relief package includes $600 one-time checks to individuals, more funding for the Paycheck Protection Program and a 10-week extension of unemployment benefits, with each week supplemented by a $300 payment. Those measures — which Congress may approve Monday — could help prop up a U.S. economy that’s been deteriorating in recent weeks.
The relief is less than what Democratic Party lawmakers proposed, and President-elect Joe Biden’s administration will likely seek additional stimulus when he takes office in January.
Initial jobless claims are at a three-month high, November’s payroll gains were well below expectations and retail sales declined in both October and November. The passage of additional fiscal support, combined with increasing numbers of Americans being vaccinated, means the economic recovery should be off and running by mid-2021, Mark Zandi, chief economist at Moody’s Analytics, said in a note.
The stimulus deal “has come just in time to forestall a double-dip recession,” Zandi said. The package will add approximately 1.5 percentage points to annualized real GDP growth in the first quarter of 2021, and about 2.5 percentage points to next year’s growth, he said.
Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., said on Bloomberg Television that the relief package “should be very helpful for the economy,” and estimated that it could boost GDP by as much as 3% over time.
Still, many of the protections expire in the first quarter, meaning additional relief could be needed by March. While the Covid-19 vaccine rollout is expected to pick up by spring, the sectors most impacted by the pandemic are unlikely to approach full reopening until later in the year, Andrew Husby, economist at Bloomberg Economics, said in a note.
What Bloomberg’s Economists Say…
“The package directs aid where it is needed most. Along with a quicker-than-expected start to vaccine rollout, this is a key reason our 2021 outlook has been unchanged (3.5% expansion in gross domestic product for 2021), despite the package being slightly smaller than the baseline we have carried since the summer.”
— Andrew Husby, economist
For the full note, click here
Lawmakers had been struggling for months to reach a deal, and for many Americans the new stimulus package didn’t come soon enough. The number of Americans out of work for the long term has more than doubled since August, and an increasing number of businesses are losing revenue or even closing permanently.
“This stimulus really is a stopgap, it’s come really late and it’s a little lame, honestly — it’s not as big as I would have liked,” Megan Greene, a senior fellow at Harvard’s Kennedy School of Government, said on Bloomberg TV. “If we’d waited until the new administration had come into power, particularly if the Republicans control the Senate, then it probably would have been even smaller, so I think this was probably the best that we realistically could have hoped for.”
The rescue package doesn’t include aid to state and local governments, many of which are facing huge budget shortfalls. Without funding, they’ll be forced to cut jobs, programs and services at an inopportune time for the broader economy, Zandi said.
The passage of new fiscal relief will largely depend on the outcome of the Georgia runoffs, which will determine which party controls the Senate, said Jennifer Lee, senior economist at BMO Capital Markets.
Ultimately, the most important driver of the recovery will be increased economic activity, which is largely dependent on an effective vaccine, Lee said. While the stimulus package “kicks the can down the road” until March, there could still be challenges this winter, she said.
“There are going to be tons of negative headlines in the first quarter — seasonally it’s weak anyway — but because of these lockdowns you’re going to see further weakness,” she said.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
