WILMINGTON, DE – DECEMBER 22: President-elect Joe Biden speaks prior to the holiday at the Queen … [+] theatre on December 22, 2020 in Wilmington, Delaware. Biden spoke ahead of the Christmas holiday and called the $900 billion coronavirus aid bill passed by Congress on Monday a start, insisting on more economic relief after the inauguration. (Photo by Joshua Roberts/Getty Images)
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As we say goodbye to 2020, our focus is on 2021 and the many things that will unfold. Last year was, to say the least, difficult and life altering for people, businesses, and governments worldwide. The explosion of misinformation, which was also mind boggling, contributed greatly. The Covid-19 Pandemic will surely be remembered as a key turning point in American and world history. Many trends emerged and other trends accelerated as a result.
We’ll discuss todays Georgia Senate runoff, the coronavirus, the economy, a Biden presidency, and investment themes for 2021 and beyond.
Georgia Election
Residents of Georgia are voting to elect two senators. Currently, republicans hold a 50-48 edge in the Senate. If the democrats win both seats, they will have the edge with a 50/50 balance where Kamilla Harris casts the deciding vote in the event of a tie. More importantly, democrats will assume the Senate majority role, replacing Mitch McConnell. However, if either republican is victorious, republicans will control the Senate. The polls indicate it will be a very close race. Early voting favored the democrats and it’s been suggested that republicans need to win the in-person voting by a 70/30 margin to overcome the heavily democratic weighted early voting. That’s a tall order for sure. We’ll see.
It’s not unusual for the party of a newly elected president to control both sides of Congress. This was the case for the last four presidents (Trump, Obama, Bush, and Clinton). What is unusual is for one party to sweep the presidency and Congress in the same election. If that does occur, I believe we must look no further than the handling of the coronavirus.
Covid-19
The coronavirus is surging in many parts of the world. Moreover, given the emergence of a new and more contagious strain (but NOT more deadly), experts believe the worst is yet to come. With over 85 million cases worldwide and 21 million here in the U.S., plus the slow rollout of the vaccine, it’s easy to see how. Why has the vaccine rollout failed to reach the Trump administration’s goal? I attribute it to a lack of coordination and inadequate funding. The latter issue is why I wrote a Forbes article December 7 entitled, Why The Next Coronavirus Stimulus Bill Will Happen Soon. In it, I stated that neither party wants to be remembered as the “party that failed to fund the vaccine rollout.” I’m glad they finally came together.
This virus is insidious. While it has the worst effect on the elderly and those with certain comorbidities, it is also mysterious. It has taken the lives of otherwise healthy individuals in their 30s, 40s, and 50s. Even if the actual numbers are not exact, the fact that it is unpredictable is reason enough to be cautious.
Economy
Early on we were faced with the prospect of the worst economy since the Great Depression. To their credit, Washington stepped in and provided relief in the CARES Act, which took effect March 27, 2020. The question at that time was: How efficient and effective will the federal government be in getting relief to those who need it? We now know it was extremely effective. However, when the federal unemployment subsidy expired July 30, Congress failed to act, leaving millions of workers in several industries to figure it out for themselves. Finally, five months later, Washington acted. How could they fail to act when so many were out of work due to government policies mandating the closure of entire industries?
President Biden
With a Biden presidency comes democratic policies. However, this is contingent upon the Georgia vote today. If the democrats fail to win both seats in the Georgia Senatorial race, republicans will have the power to prevent Biden from implementing his policies. If the democrats win Congress, here’s what I expect will happen (in no certain order):
· Increased tax rates on highest income earners
· If Congress repeals the 2017 Trump tax cuts, higher taxes on the majority of taxpayers
· Increased regulation (i.e., less business friendly)
· Legalization (at the federal level) of cannabis
· More aggressive action on climate initiatives (rejoin the Paris Agreement)
· More aggressive action to stem Covid-19
· Rejoin the W.H.O.
· Via Congress: Bill to repeal liability protections for gun manufacturers
· Massive new stimulus bill
· Effort to help minorities gain more prominent positions
These are only a few of the items to watch. Again, it depends on what happens in Georgia today. Regardless, Biden’s first order of business will be the virus. During this phase, I doubt he will attempt to raise taxes or promote economically unfriendly policies. These policies may get pushed to 2022.
Biden turned 78 on December 20, 2020. Camilla Harris is only 56. If Biden is unable to complete his term, Harris would become president. Harris has a much more left-leaning view than Biden.
Investing Themes
Which industries will lead the 2020s? Here are a few ideas and a few companies to consider.
Online retail was already gaining traction, but with Covid-19, it has accelerated greatly. In short, companies like Amazon, Walmart, Shopify and others will continue to reap the benefits from the pandemic. If individuals adopt this method of consumerism long enough, it will become a habit and a new way of purchasing what they need, including groceries.
Some of the “work from home” movement will stick in a post pandemic world, reducing demand for office space, and allowing companies to lower expenses. This will benefit companies like Zoom and usher in a new wave of companies offering this service. This may also depress commercial real estate prices.
Health care is another industry that should benefit as more people seek medical help. With the surge of Covid-19, many hospitals have decided not to perform elective and non-life-threatening procedures. Thus, there should be a good deal of pent-up demand for these services.
On the climate front, we will see an increase in clean energy, including electric vehicle production. Currently, Tesla is the leader, but competition is quickly ramping up.
Artificial intelligence is another beneficiary of the Pandemic.
With the growth of online activity and especially after the recently discovered hacks on many government institutions, cybersecurity will become increasingly important.
Infrastructure will be another place to consider, however, it’s not clear when this may happen.
From investing themes to a Biden presidency to the economy to Covid-19, one thing is sure, 2021 will look vastly different from the pre-pandemic era. What will happen and when will it happen? It depends largely on today’s Georgia election, after which, we’ll know much more.
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.
