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Nine Worrying Signs About the Economy – The Atlantic

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The American economy isn’t looking great right now. U.S. GDP shrank last quarter, despite a hearty showing from American consumers. Inflation is high; markets are down; both wages and personal-savings rates show some troubling statistical signals. Is the U.S. destined to have a recession in 2022? I don’t know for sure. But here are nine signs that worry me.

1. Everybody’s stock portfolio is disgusting right now. The Nasdaq is down 30 percent. Growth stocks and pandemic darlings such as Peloton and Zoom have crashed more than twice that amount. Hedge funds that backed these growth stocks, including Ark and Tiger Global, have been crushed. If you look at your 401(k), you’ll see that … no, scratch that, you should under no circumstances look at your 401(k).

“The stock market is not the economy” is a thing that some people like to say. But it’s not a very useful mode of analysis. Health care isn’t the economy either, and neither is the gross metropolitan product of Los Angeles. But if either of those things crashed by 30 percent in a quarter, we would all agree that was important. Sharp declines in equity values can trickle down through the economy in all sorts of ways, discouraging investment and spending, or leading to a contagion of layoffs.

2. The crypto bubble has popped. Crypto fans had a fun ride, powered by exuberant risk taking in an era of low interest rates. But now the car is coming down the other side of the roller coaster. As fear and interest rates spike, investors are selling off their positions and billions of dollars of value are being erased from the industry. By one estimate, more than $200 billion of stock-market wealth has been destroyed within crypto alone, in just a matter of days. The bursting of the crypto bubble seems quite reminiscent of the dot-com bubble of 2000, when the Nasdaq crashed and the effects reverberated throughout the economy, wiping out retail investors and pulling down business investment until we ended up in a brief recession. If the crypto bubble popping were the only thing happening right now, I don’t think a recession would be likely. Except it’s not even close to the only (or even the most important) thing happening right now.

3. Inflation is very high and broad-based, and that’s bad. This week’s inflation headlines were a bit confusing. The Wall Street Journal reported that inflation had “eased.” The New York Times reported that prices are “rising rapidly,” at a pace close to a 40-year record. Who’s right? They both are. The rate of price increases is declining, but the level of price increases is still extremely high and frustratingly broad-based. Several months ago, some economists offered succor to worried consumers by pointing out that inflation was overwhelmingly about a handful of weird categories, such as used cars. Well, that’s no longer true. Today used-car prices are actually declining as inflation has moved on to service industries, such as restaurants and tourism. This week, gas prices hit their highest average nominal price ever. Inflation is bad for all sorts of reasons. People really hate it: The University of Michigan’s Index of Consumer Sentiment is near its 60-year low.

4. A lot of people feel poorer than they did one year ago. Unemployment is very low, and the labor market is tight, which means workers can easily quit jobs and take new positions to make more money. (This trend is sometimes confusingly referred to as the “Great Resignation.”) That’s a nice situation. But inflation is rising every month, and raises rarely come more than once a year. That means “real,” or inflation-adjusted, wages are actually declining. Worse, according to the Atlanta Federal Reserve, wage growth is starting to level off, even as inflation continues to march on. This isn’t a tenable situation.

5. Savings are falling, and debt is rising. From 2020 to 2021, the U.S. government sent most American households several thousand dollars in checks to get them through the pandemic. With much of the economy shut down, many Americans held on to that stimulus cash, and the personal-savings rate soared to a 60-year record. But now Americans have spent just about all that cash, and the personal-savings rate has fallen to below its 2010s average. During an unstable moment for the economy—with markets collapsing, and inflation rising, and the Federal Reserve slamming the brakes on the economy—the typical household doesn’t have much in the way of protection. Instead consumer debt is breaking new record highs.

6. The Federal Reserve’s interest-rate hikes are already causing mayhem. One of the Federal Reserve’s mandates is to keep inflation around 2 percent. Well, so much for that one. Inflation has skyrocketed past 8 percent, leading the Fed to announce a spree of rate hikes designed to slow down economic activity. In theory, the plan works like this: The Federal Reserve raises interest rates, which makes it more expensive to borrow money for mortgages, cars, and business investments. As a result, investment in all those categories and more declines, and the economy cools off. But here’s the problem. Modern history has very few examples of unemployment this low and inflation this high where rate increases haven’t caused a recession. On the path to crushing inflation, the Fed may destroy trillions of dollars of wealth and economic activity.

7. China is a mess. The world’s second-largest economy has had a strange 2022. China’s zero-COVID policies have led to shocking lockdowns in major cities such as Shanghai, freezing economic activity. China is also dealing with a real-estate-investment implosion, falling business confidence, and startling declines in economic activity. Why is this troubling for the U.S.? Because China was projected to account for about one-quarter of global economic growth in the next few years. When China sneezes—or, more apt, when Chinese officials forcibly quarantine anybody who sneezes—the world could catch a cold. The U.S. might have been in a strong position to deal with a Chinese slowdown if its other trading partners were all doing well. But they’re not.

8. A recession is coming for Europe. The U.K. economy is shrinking, and the central bank says inflation will exceed 10 percent this year. War in Ukraine has sent energy prices skyrocketing throughout Europe, and most economists believe that the continent’s economy will contract this year. Europe seems very likely headed toward both stagnation and inflation—the dreaded combination that, 50 years ago, gave birth to the awful term stagflation. If Europe shrinks while Chinese growth decelerates, American exporters will have a hard time contributing to growing GDP.

9. Oh yeah, it’s still a pandemic. Restaurant activity and airline travel are nearly back to their pre-pandemic highs as most Americans return to something like “normal.” But we don’t know what else the virus and its variants are going to throw at us. Could the next variant be more transmissible and more deadly, and also get around our immunity? I hope not. But these are the 2020s. Anything is possible.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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N.B. election: Parties’ answers on treaty rights, taxes, Indigenous participation

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FREDERICTON – The six chiefs of the Wolastoqey Nation in New Brunswick distributed a survey on Indigenous issues to political parties ahead of the provincial election, which is scheduled to kick off Thursday. Here are some of the answers from the Progressive Conservative, Liberal and Green parties.

Q: How does your party plan to demonstrate a renewed commitment to recognizing our joint treaty responsibilities and acknowledging that the lands and waters of this territory remain unceded?

Progressive Conservative: The party respectfully disagrees with the assertion that land title has been unceded. This is a legal question that has not been determined by the courts.

Liberal: When we form government, the first conversations the premier-designate will have is with First Nations leaders. We will publicly and explicitly acknowledge your treaty rights, and our joint responsibility as treaty people.

Green: The Green Party acknowledges that New Brunswick is situated on the unceded and unsurrendered territories of the Wolastoqiyik, Mi’kmaq and Peskotomuhkati peoples, covered by the Treaties of Peace and Friendship. Our party is committed to establishing true nation-to-nation relationships with First Nations, grounded in mutual respect and co-operation as the treaties intended.

Q: How does your party propose to approach the issue of provincial tax agreements with First Nations?

Progressive Conservative: The government of New Brunswick operates in a balanced and fair manner with all organizations, institutions and local governments that represent the citizens of this province, including First Nations. Therefore, we cannot offer tax agreements that do not demonstrate a benefit to all citizens.

Liberal: Recent discussions with First Nations chiefs shed light on the gaps that existed in the previous provincial tax agreements with First Nations. Our party is committed to negotiating and establishing new tax agreements with First Nations that address the local needs and priorities and ensure all parties have a fair deal.

Green: The Green Party is committed to fostering a respectful relationship with First Nations in New Brunswick and strongly opposes Premier Blaine Higgs’s decision to end tax-sharing agreements. We believe reinstating these agreements is crucial for supporting the economic development and job creation in First Nation communities.

Q: How will your party ensure more meaningful participation of Indigenous communities in provincial land use and resource management decision-making?

Progressive Conservative: The government of New Brunswick has invested significant resources in developing a robust duty to consult and engagement process. We are interested in fully involving First Nations in the development of natural resources, including natural gas development. We believe that the development of natural gas is better for the environment — because it allows for the shutdown of coal-fired power plants all over the globe — and it allows for a meaningful step along the path to reconciliation.

Liberal: Our party is focused on building strong relations with First Nations and their representatives based on mutual respect and a nation-to-nation relationship, with a shared understanding of treaty obligations and a recognition of your rights. This includes having First Nations at the table and engaged on all files, including land-use and resource management.

Green: We will develop a new Crown lands management framework with First Nations, focusing on shared management that respects the Peace and Friendship Treaties. We will enhance consultation by developing parameters for meaningful consultation with First Nations that will include a dispute resolution mechanism, so the courts become the last resort, not the default in the face of disagreements.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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Canadian Coast Guard crew member lost at sea off Newfoundland

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ST. JOHN’S, N.L. – A crew member of a Canadian Coast Guard ship has been lost at sea off southern Newfoundland.

The agency said in a release Wednesday that an extensive search and rescue effort for the man was ended Tuesday evening.

He was reported missing on Monday morning when the CCGS Vincent Massey arrived in St. John’s, N.L.

The coast guard says there was an “immediate” search on the vessel for the crew member and when he wasn’t located the sea and air search began.

Wednesday’s announcement said the agency was “devastated to confirm” the crew member had been lost at sea, adding that decisions to end searches are “never taken lightly.”

The coast guard says the employee was last seen on board Sunday evening as the vessel sailed along the northeast coast of Newfoundland.

Spokeswoman Kariane Charron says no other details are being provided at this time and that the RCMP will be investigating the matter as a missing person case.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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