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Economy

On the ballot in the US midterms: Economy – Al Jazeera English

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Nathan Rojas, 23, lives in Georgia, United States and drives daily from his parents’ home to his job. Rising gas prices this year have made his commute a struggle.

“Not everybody can work from home,” Rojas said. “Gas isn’t a privilege, it’s a necessity.”

At the grocery store, Rojas said his family buy half the meat they did a year ago because food prices have risen so steeply.

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Rojas voted early Wednesday at the Putnam County Board of Elections in Eatonton, Georgia, which residents in his county can do between October 17 and November 4. He said he switched from the candidate his sister advised him to vote for to one he thought could help temper inflation and lower taxes for the less wealthy.

Crucial midterm elections due in the US on November 8 – when voters decide if Democrats or Republicans will control the US House of Representatives or Senate – come at a time when inflation in the country is running rampant. The Federal Reserve has hiked interest rates to the highest levels since early 2008, making the economy a pressing poll issue alongside vital concerns like women’s reproductive rights and access to voting.

A Pew Research poll conducted in mid-October determined that the economy is top of mind for 79 percent of voters. Among these respondents, Republicans outnumbered Democrats. The cost of food, gas and housing, respectively, are the three most concerning economic issues, according to poll respondents.

The effect of increasing grocery prices can be seen at food pantries, according to Alicia Harrison, the program director for MEND, an interfaith network of 22 food pantries throughout Essex County, New Jersey.

“There continues to be a tremendous amount of need,” said Harrison. “Not only have the pantries not seen a decrease, they’ve actually seen an increase over the last few months. They’re seeing new clients every week.”

She attributed this increase to people who had depleted their financial savings since the pandemic and the end of the eviction moratorium that had been in place during the pandemic, as well as the rising prices. “For a lot of these people, every incremental increase means they have to decide what they’re buying. It’s a big struggle.”

US food prices rose 11.4 percent between August 2021 and August 2022, according to data in the latest Consumer Price Index from the Bureau of Labor Statistics.

According to economic data released on October 27 by the Department of Commerce, the US economy grew in the third quarter after two quarters of shrinkage. The growth was fuelled by consumer and government spending, both federal and state, as well as local, according to the data.

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Vote for a ‘functioning democracy’

But for many US voters, the economy cannot take precedence over other pressing social issues. According to the same Pew Research poll, nearly 70 percent of respondents said “the future of democracy in the country” was their guiding concern and more of them were voting for a Democratic candidate over a Republican.

That includes Corporate Communications Executive Morgan Baden of Maplewood, New Jersey. “Economics absolutely don’t matter when democracy itself is on the ballot,” said Baden, who is also a young-adult author. “Like most people, inflation is a concern for me and I see the difference in pricing and the corresponding supply chain issues every day. But that’s the case across the globe, not just in the US, and it’s a shame certain politicians are trying to blame the current administration for something that’s clearly a global issue. I hope American voters can see through that.”

For many voters who are immigrants, how candidates talk about — and plan to support — immigrant communities is vital.

Basma Alawee, 36, of Jacksonville, Florida, said she will vote only for local candidates who recognise the value of immigrant workers in an area where many hiring managers say they cannot find applicants.  “We have not been seeing good policy locally toward taking out the barriers when immigrants apply for jobs,” Alawee said.

Laila Martin, 36, a resident of Harrisburg, Pennsylvania, said she is “looking for champions” of the immigrant community when she votes. Martin recently became a US citizen and this is her first time voting here.

A CBS News Battleground Tracker poll found that 63 percent of those who plan to vote for Democrats believe “a functioning democracy” is a bigger concern than “a strong economy”, compared with 29 percent of those leaning Republican. Conversely, 70 percent of likely Republican voters support a strong economy over a functional democracy, compared with 29 percent of likely Democratic voters.

Journalist and Democratic commentator Terry Blount said on Twitter that “the people who were voting about the economy were always going to vote” but that the midterms were going to see many first-time voters concerned about “their rights…being taken away”. Blount suggested Roe v Wade, gun violence and Medicare were bigger concerns for those new voters than the economy.

INTERACTIVE_US MIDTERMS_Key issues

A survey of 1,000 Black voters conducted by KFF/TheGrio found that 28 percent who said they were more likely to vote in the 2022 midterms than they had been to vote in previous elections were driven by the desire to vote Republicans out of office. Nearly three-quarters of those polled said the economy would drive their midterm votes, with 81 percent saying they felt the economy was stacked against Black people.

Glynda Carr, the co-founder and president of Higher Heights for America, a PAC that supports Black female candidates for political office, wrote on Twitter: “While we know the economy weighs heavily on the minds of Black voters this midterm, we know that the economy cannot be separated from key issues like voting rights and criminal justice reform.”

Student loans, not avocado toast

Another poll, by left-leaning think-tank Data for Progress, found that President Joe Biden’s student debt relief plan was motivating people to vote, with 46 percent of voters saying they were more likely to cast a ballot because of the plan. Fifty-two percent of Democrats and 49 percent of Republicans said they were more likely to vote in the midterms because of the student debt relief plan.

Meanwhile, two-thirds of college students polled by online-learning platform Course Hero said inflation was driving their vote. Sixty-six percent of those planning to vote for Democrats said student loan forgiveness, as well as the cost of college and student loans, would influence their vote, while inflation and the rising cost of rent, gas and groceries was a driving force for 73 percent of Republican students.

Jackie Smith, 25, of Sacramento, California, said contrary to what older generations believe, it is not Starbucks and avocado toast keeping her bank balance low. Smith took out $60,000 in student loans to attend graduate school after receiving a full-ride scholarship to her undergraduate university. “I definitely will be voting for candidates who understand that this is an issue,” she said. Her graduate degree made it possible for her to get a better job but she said the debt will make it “very difficult to buy a house, get married, [or] make some long-term financial decisions like having kids”.

Nejra Sumic, 35, of Phoenix, Arizona, said she is voting for local and state candidates who support Proposition 308, which would allow undocumented immigrants to pay the same in-state tuition to Arizona universities as students who are citizens.

“These midterms can make or break the next generation of college students,” said Smith.

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Economy

U.S. economic growth for last quarter revised up slightly to healthy 3.4% annual rate – The Globe and Mail

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The U.S. economy grew at a solid 3.4 per cent annual pace from October through December, the government said Thursday in an upgrade from its previous estimate. The government had previously estimated that the economy expanded at a 3.2 per cent rate last quarter.

The Commerce Department’s revised measure of the nation’s gross domestic product – the total output of goods and services – confirmed that the economy decelerated from its sizzling 4.9 per cent rate of expansion in the July-September quarter.

But last quarter’s growth was still a solid performance, coming in the face of higher interest rates and powered by growing consumer spending, exports and business investment in buildings and software. It marked the sixth straight quarter in which the economy has grown at an annual rate above 2 per cent.

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For all of 2023, the U.S. economy – the world’s biggest – grew 2.5 per cent, up from 1.9 per cent in 2022. In the current January-March quarter, the economy is believed to be growing at a slower but still decent 2.1 per cent annual rate, according to a forecasting model issued by the Federal Reserve Bank of Atlanta.

Thursday’s GDP report also suggested that inflation pressures were continuing to ease. The Federal Reserve’s favoured measure of prices – called the personal consumption expenditures price index – rose at a 1.8 per cent annual rate in the fourth quarter. That was down from 2.6 per cent in the third quarter, and it was the smallest rise since 2020, when COVID-19 triggered a recession and sent prices falling.

Stripping out volatile food and energy prices, so-called core inflation amounted to 2 per cent from October through December, unchanged from the third quarter.

The economy’s resilience over the past two years has repeatedly defied predictions that the ever-higher borrowing rates the Fed engineered to fight inflation would lead to waves of layoffs and probably a recession. Beginning in March 2022, the Fed jacked up its benchmark rate 11 times, to a 23-year high, making borrowing much more expensive for businesses and households.

Yet the economy has kept growing, and employers have kept hiring – at a robust average of 251,000 added jobs a month last year and 265,000 a month from December through February.

At the same time, inflation has steadily cooled: After peaking at 9.1 per cent in June 2022, it has dropped to 3.2 per cent, though it remains above the Fed’s 2 per cent target. The combination of sturdy growth and easing inflation has raised hopes that the Fed can manage to achieve a “soft landing” by fully conquering inflation without triggering a recession.

Thursday’s report was the Commerce Department’s third and final estimate of fourth-quarter GDP growth. It will release its first estimate of January-March growth on April 25.

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Canadian economy starts the year on a rebound with 0.6 per cent growth in January – CBC.ca

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The Canadian economy grew 0.6 per cent in January, the fastest growth rate in a year, while the economy likely expanded 0.4 per cent in February, Statistics Canada said Thursday.

The rate was higher than forecasted by economists, who were expecting GDP growth of 0.4 per cent in the month. December GDP was revised to a 0.1 per cent contraction from zero growth initially reported.

January’s rise, the fastest since the 0.7 per cent growth in January 2023, was helped by a rebound in educational services as public sector strikes ended in Quebec, Statistics Canada said.

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WATCH | The Canadian economy grew more than expected in January: 

Canada’s GDP increased 0.6% in January

41 minutes ago

Duration 2:20

The Canadian economy grew 0.6 per cent in January, the fastest growth rate in a year, while the economy likely expanded 0.4 per cent in February, Statistics Canada says.

“The more surprising news today was the advance estimate for February,” which suggested that underlying momentum in the economy accelerated further that month, wrote CIBC senior economist Andrew Grantham in a note.

Thursday’s data shows the Canadian economy started 2024 on a strong note after growth stalled in the second half of last year. GDP was flat or negative on a monthly basis in four of the last six months of 2023.

More time for BoC to assess

The strong rebound could allow the Bank of Canada more time to assess whether inflation is slowing sufficiently without risking a severe downturn, though the central bank has said it does not want to stay on hold longer than needed.

Because recent inflation figures have come in below the central bank’s expectations, “it appears that much of the growth we are seeing is coming from an easing of supply constraints rather than necessarily a pick-up in underlying demand,” wrote Grantham.

“As a result, we still see scope for a gradual reduction in interest rates starting in June.”

WATCH | Bank of Canada left interest rate unchanged earlier this month: 

Bank of Canada leaves interest rate unchanged, says it’s too soon to cut

22 days ago

Duration 1:56

The Bank of Canada held its key interest rate at 5 per cent on Wednesday, with governor Tiff Macklem saying it was too soon for cuts. CBC News speaks with an economist and a couple who might be forced to sell their home if interest rates don’t come down.

The central bank has maintained its key policy rate at a 22-year high of five per cent since July, but BoC governors in March agreed that conditions for rate cuts should materialize this year if the economy evolves in line with its projections.

The bank in January forecast a growth rate of 0.5 per cent in the first quarter, and Thursday’s data keeps the economy on a path of small growth in the first three months of 2024. The BoC will release new projections along with its rate announcement on April 10.

Growth in 18 out of 20 sectors

Growth in January was broad-based, with 18 of 20 sectors increasing in the month, StatsCan said. The agency said that real estate and the rental and leasing sectors grew for the third consecutive month, as activity at the offices of real estate agents and brokers drove the gain in January.

Overall, services-producing industries grew 0.7 per cent, while the goods-producing sector expanded 0.2 per cent.

In a preliminary estimate for February, StatsCan said GDP was likely up 0.4 per cent, helped by mining, quarrying, oil and gas extraction, manufacturing and the finance and insurance industries.

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Economy

Yellen Sounds Alarm on China ‘Global Domination’ Industrial Push – Bloomberg

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US Treasury Secretary Janet Yellen slammed China’s use of subsidies to give its manufacturers in key new industries a competitive advantage, at the cost of distorting the global economy, and said she plans to press China on the issue in an upcoming visit.

“There is no country in the world that subsidizes its preferred, or priority, industries as heavily as China does,” Yellen said in an interview with MSNBC Wednesday — highlighting “massive” aid to electric-car, battery and solar producers. “China’s desire is to really have global domination of these industries.”

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