Economy

Opinion | America’s Very Peculiar Economic Funk – The New York Times

Published

3 years ago

March 3, 2022

I’ve been on a few trips recently and took the opportunity to do a bit of naked-eye economic assessment. As I’m sure many people can confirm, planes are flying full, while shops and restaurants are jammed. It definitely looks like a booming economy out there.

That’s also what the numbers say. In his State of the Union address, President Biden — while acknowledging that inflation has eroded wage gains — pointed to the 6.5 million jobs added last year, “more jobs created in one year than ever before in the history of America.” This claim was entirely correct.

Yet the public doesn’t believe it. According to a new survey by Navigator Research, only 19 percent of Americans believe that the U.S. economy is experiencing more job growth than usual, while 35 percent say that it is experiencing more job losses than usual.

You might be tempted to say that ordinary Americans don’t pay attention to official statistics, that what matters is their lived experience. But what people are actually experiencing in their daily lives is a very strong job market. For example, according to the latest survey from the Conference Board, 53.8 percent of consumers said that jobs were “plentiful,” a near-record, while only 11.8 percent said that jobs were hard to get. And anyone who walks around U.S. cities can see the proliferation of help-wanted signs.

The survey results on the job market are, as I see it, the final nail in the coffin of attempts to deny that there’s something very peculiar going on with how Americans perceive the economy, that there’s a huge disconnect between economic reality, which is mixed — inflation is a big concern, but job growth has been terrific — and public perceptions, which are weirdly dismal.

It’s not just the dissonance between what people say about their own employment prospects and what they say about job creation. The same dissonance is clear, albeit in a more muted form, when we contrast what people say about their personal finances and what they say about the state of the economy.

According to the long-running Michigan Surveys of Consumers, a plurality of Americans say that their personal financial situation is better than it was a year ago. This is consistent with estimates suggesting that despite inflation most people saw rising real income in 2021. You can quibble with the estimates, but it’s clear that no major group is substantially worse off. And it’s worth remembering, for historical context, that blue-collar real wages declined steadily for most of the Reagan era, which didn’t stop voters from seeing that era as one of economic triumph thanks to strong job growth.

Yet if you ask people “How’s the economy doing?” as opposed to “How are you doing?” you get a very different answer: Economic sentiment has plunged.

You could argue that people hate inflation even when their incomes are keeping up, because it conveys a sense that things are out of control. And there’s surely something to that, although consumer sentiment is even worse than you’d expect given recent inflation.

But here’s another peculiar result from surveys: Long-run inflation expectations have stayed remarkably stable, suggesting that people don’t see things as being out of control. And again, inflation aversion can’t explain why people say that we’re losing jobs amid a huge employment boom.

So there’s something odd happening here, even if what it is ain’t exactly clear.

My experience is that many people in the news media go ballistic when you talk about the disconnect between economic perceptions and actual performance, either because they imagine that it shows contempt for ordinary Americans or because they take it as an assertion that they aren’t doing their jobs. In fact, I’m not at all sure what explains that disconnect. But it takes extraordinary intellectual contortions to deny that the disconnect exists.

And look, there’s plenty of evidence that public perceptions of society can diverge from reality. Even the Michigan Surveys have noted that economic perceptions are now hugely affected by partisanship. This is true for both parties, although the effect is stronger for Republicans, who feel worse about the economy than they did in June 1980, when unemployment was above 7 percent and inflation was 14 percent.

Or consider the case of crime. Crime rates have ticked up in the past few years, but this follows an epic decline between the early 1990s and the mid-2010s. Yet during the era of plunging crime, voters consistently told pollsters that crime was increasing.

So what voters believe does not always reflect reality. When Biden administration officials argue that they’ve done a better job on the economy than they get credit for, they have truth on their side.

And while I do not come here to bash the news media, I do feel that we’re missing a big part of the story if we take negative public views of the economy at face value without pointing out that they’re at odds not just with official statistics but also with self-reported experience. And we should try to understand where that disconnect is coming from.

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

Published

2 days ago

November 8, 2024

Anne Joseph

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.

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Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

Published

3 days ago

November 6, 2024

Anne Joseph

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.

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Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

4 days ago

November 6, 2024

Anne Joseph

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.

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