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 – 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.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
