In response to questions, Powell said it was too early to assess the scope of the threat the virus poses to the U.S. economy. But he observed that the economy “is in a very good place,” with strong job creation and steady if modest growth.
“We will be watching that carefully,” he said about the virus’ impact. “And the question we will be asking is will these be persistent effects that could lead to a material reassessment of the outlook” in the United States.
The daily death toll in China topped 100 for the first time, raising the number of deaths there from the virus above 1,000. China remained mostly closed to business, with around 60 million people under virtual quarantine in the country.
The lockdown has raised concerns about how much damage the loss of production in China, the world’s second-largest economy, will inflict on global supply chains. China accounts for more than 80% of smartphone and notebook production globally and more than half of global TV and server production, according to recent estimates.
In the midst of his testimony Tuesday, Powell drew an attack from a familiar corner: President Donald Trump, the man who nominated him to the Fed’s chairmanship but who has repeatedly attacked him since for not cutting rates more aggressively.
“Fed rate is too high,” Trump tweeted. “Dollar tough on exports.”
The president complained in his tweet that the Dow Jones Industrial Average had slipped during Powell’s testimony, though the Dow later recovered. It was unclear that Powell’s testimony had directly affected stock prices either way.
Asked during the hearing about the tweet, Powell gave his standard reply that he and other Fed officials are concerned only with their mandate to serve the economy and do not consider outside criticism — from the president or anyone else — in their policy-making.
“My colleagues and I are completely focused on using our tools to support … our goals, and that is all we are focused on,” he said.
Powell was also asked about negative interest rates, a policy that Trump appeared to endorse in his tweet as a way to further boost the economy.
“That’s not a tool we’re looking at,” he said, noting that some research has suggested that negative rates could hurt banks’ profitability.
Powell, who has made frequent visits with both House and Senate lawmakers to understand their concerns, faced sharp questioning from Rep. Katie Porter, D-Calif., about a recent photo that showed him attending a party at the Washington home of Jeff Bezos, head of Amazon. Porter noted that Trump’s daughter Ivanka and son-in-law Jared Kushner, as well as presidential counsellor Kellyanne Conway, were at the Bezos party at a time when Trump has exerted pressure on the Fed, an independent government agency, to lower interest rates.
Powell replied that he didn’t talk with any of those people and was mainly escorting his son and his son’s new wife to the party, where he introduced them to former Trump Defence Secretary James Mattis.
Porter also pressed Powell if he knew how costly child care had become.
“It costs a lot,” the chairman said. But he said he didn’t know specifically because all his children are grown.
Several lawmakers asked the chairman about how the Fed is addressing the issue of climate change. Rep. Sean Casten, an Illinois Democrat, said that changing weather patterns and rising sea levels could threaten banks that have provided mortgages to homes in coastal areas.
Powell said banks should take that into account and later acknowledged that climate change could eventually influence Fed policy.
“As severe weather becomes more common — and that’s connected to climate change — you will see those things … entering our supervisory practices as well as our economic forecasting,” he said.
On interest rates, Powell said the Fed “believes that the current stance of monetary policy will support continued economic growth, a strong labour market” and annual inflation returning to the committee’s 2% target level.
As long as incoming economic data “remains broadly consistent with this outlook, the current stance of monetary policy will likely remain appropriate,” he said.
The chairman expressed satisfaction with many economic barometers, noting that the expansion is well into its 11th year — the longest period of uninterrupted U.S. growth on record. Last year, the economy was being buffeted by a global slowdown and rising uncertainty sparked by Trump’s trade war with China and other nations.
Powell said that while the “global headwinds had intensified last summer,” the economy proved resilient. He noted that job openings remain plentiful and that employers appear increasingly willing to hire workers with fewer skills and train them.
Those developments, he said, mean that the benefits of a robust job market are becoming more widely shared, with employment gains broad-based across racial and ethnic groups and levels of education.
Powell suggested that the government should capitalize on low borrowing rates to put the federal budget on a sounder footing. The Trump administration proposed a new budget Monday that projects that the deficit will top $1 trillion this year before starting to decline. The Congressional Budget Office sees the deficit remaining above $1 trillion over the next decade.
Putting the budget on a sustainable path while the economy is strong, the chairman said, would help ensure that policymakers would have the room to use the budget to help stabilize the economy during a recession.
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AP Economics Writer Christopher Rugaber contributed to this report.
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.
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.
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.
