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The economy can't recover until parents have child care again – CNN

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The coronavirus pandemic has already shut schools and day cares, leaving America’s working parents stuck juggling their professional and child care responsibilities at home. Now the summer holidays are around the corner, but it’s uncertain whether summer camps will open.
“Covid-19 has taught us a lot of things, but one critical thing it’s showed us is how important child care is to a functioning economy,” said Frances Donald, chief economist and head of macro strategy at Manulife Investment Management.
Beyond the risk of workers burning out, millions of people staying at home is a strain on the economy. And economists fear that could slow down the recovery.

The economy suffers when people stay home

In the economy everything is connected. If people aren’t going to work, that has a knock-on effect: Working from home means people don’t spend money on train tickets, gas, lunches or dry cleaning.
These might sound like mundane or small-ticket items. But they’re an important engine of economic activity, and if that kind of everyday spending remains on hold, it will slow down the pace of the recovery, Donald said.
Consumer spending contributes some two-thirds to US economic growth. Every dollar that consumers don’t spend takes away from economic growth.
Early data are already showing the economic effects of the pandemic: Personal consumption expenditures dropped 7.5% in March. US GDP collapsed by 4.8% between January and March, its worst performance since 2008.
It’s not clear when, or even if, parents will be able to get back to the office this summer. Day cares remain closed, and some summer camps across the country have already delayed start dates and payment deadlines. The American Camp Association told CNN in an email that camps are awaiting further guidance from the CDC and local governments, while also working on contingency plans including virtual programs.
But if summer activities simply move online, parents still can’t go to the office. And even if camps do open for the season, parents might not feel comfortable sending their kids there.
Mike Englund, principal director and chief economist at Action Economics, said all of this means households with two working parents will need to adopt a strategy to cope, perhaps with one parent working from home, quitting their job or not looking for a new one if they were laid off.
That continues the knock-on effect.
If people leave the labor force altogether to take care of their kids, “that reduces the labor force and the employment level, so we get a less rapid bounce,” Englund added.

The future of work and child care

Child care is also a problem of privilege because it’s expensive. And the current unemployment situation is highlighting that inequity.
A lot of jobs that were lost because of coronavirus were on the lower end of the income spectrum. And parents with lower incomes might have to choose between child care and reentering the job market when the economy begins to reopen, said Elise Gould, senior economist at the Economic Policy Institute.
“This will dampen how families, particularly low-income families, access the economy that is opening up to them again,” said Donald.
In the future, there might be more government support for child care, she suspects. That’s already happening in places like Illinois, for example, where the state is now picking up the child care costs for essential workers.
Since April 1, essential workers in health care, human services, government and infrastructure qualify for the state’s child care assistance program. That means Illinois will cover most, if not all, of the costs of child care for essential workers, irrespective of their income.
Between these kinds of social programs and the mainstreaming of remote work, coronavirus could change the nature of work forever.

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Province's decision to reopen economy still lacks some clarity: CFIB – HalifaxToday.ca

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The Atlantic Vice President of the Canadian Federation of Independent Business says he’s pleased with the province’s decision to reopen the economy, but adds it still lacks some clarity.

On Wednesday, Premier Stephen McNeil announced the province’s next steps to reopening the economy, saying businesses that were required to shut down due to the COVID-19 pandemic will be able to restart operations on June 5.

Jordi Morgan told NEWS 95.7 he’s happy to hear this, but adds there are still some questions that need to be answered.

“It remains to be seen how well this happens because we’re still not entirely clear on what all the requirements are for these individual businesses,” said Morgan.

Morgan is also pleased with the province’s new small business reopening and support grant, a $25 million fund that will help businesses welcome back customers safely.

“Very happy to see that because there are a number of businesses that are going to require some bridging to reopen, invest in personal protective equipment and other things that are necessary in order to operate the business,” said Morgan.

He says once they get all the guidelines in place, they’ll have a better idea of how to operate and keep both the public and employees safe.

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Nearly 40% of the economy may vanish in Q2 because of COVID-19, but then do something surprising – Yahoo Canada Finance

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The S&P 500 has crossed the 3,000 level again and investors are clearly riding high on hope for a second half economic recovery post the worst of COVID-19.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.” data-reactid=”17″>But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.” data-reactid=”18″>“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.

Gapen believes the U.S. economy may contract a whopping 40% annualized in the second quarter, then surprisingly grow by 25% in the third quarter and 8% in the fourth quarter.

Part of Gapen’s cautiousness on the economy in the second quarter stems from his outlook on the consumer, which comprises two-thirds of the U.S. economy as is often cited.

A woman shops for clothes Wednesday, May 27, 2020, in Los Angeles. California moved to further relax its coronavirus restrictions and help the battered economy. Retail stores, including those at shopping malls, can open at 50% capacity. (AP Photo/Marcio Jose Sanchez)
A woman shops for clothes Wednesday, May 27, 2020, in Los Angeles. California moved to further relax its coronavirus restrictions and help the battered economy. Retail stores, including those at shopping malls, can open at 50% capacity. (AP Photo/Marcio Jose Sanchez)

“I think when we move into the third quarter, the savings rate will start coming down. All else equal, we are expecting the consumer to remain cautious. I think you will see a blend. Some return to normalcy, but it will take time,” Gapen explains. “Negative wealth is still at play. Equity markets are doing well, but the average household may not feel that. And I think that there will be caution and a preference for saving.”

To be sure, recent economic data warrants the markets taking a short-term breather.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Another 2.123 million Americans filed for unemployment benefits&nbsp;in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.” data-reactid=”34″>Another 2.123 million Americans filed for unemployment benefits in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.

Pending home sales in April fell 33.8% year over year, the National Association of Realtors said Thursday. That marked the biggest decline since January 2001.

“I think the market has priced in that April is probably the worst of the economic data,” explained Sevens Report Research founder Tom Essaye. “While it looks like the worst is behind us — which is great — we need to start to see more improvement.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”37″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read the latest financial and business news from Yahoo Finance” data-reactid=”38″>Read the latest financial and business news from Yahoo Finance

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.” data-reactid=”50″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

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France Paves Way for Economic Restart After Taming Virus – BNNBloomberg.ca

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(Bloomberg) —

France will lift domestic travel restrictions and allow most bars, restaurants and museums to reopen as the country slowly unfreezes its economy following weeks of stringent controls to contain the coronavirus epidemic.

While France won’t completely return to normal, it can ease restrictions starting on Tuesday as confinement measures proved more effective than expected in combating the spread of the disease.

“Freedom will finally become the rule again, and prohibition the exception,” Prime Minister Edouard Philippe said Thursday, following a cabinet meeting. “The results in terms of public health are good, even if we remain cautious.”

From the coming weekend, the state will accelerate plans to restart schools, reopen parks and scrap a rule limiting travel within France to 100 kilometers. The government favors opening internal European Union borders from June 15, while leaving a decision on travel beyond the bloc to the EU.

In areas including Paris and the surrounding region, lifting curbs will be slightly slower. Bars and restaurants will only be able to open outdoor spaces, and sports centers will not open until the next phase starting June 22.

France is following other major European economies in relaxing restrictions on the public. Germany has already undertaken a broad restart of businesses. In Spain, cafes and restaurants in Madrid and Barcelona re-opened this week, and foreign tourists should be allowed in again from July without a two-week quarantine.

Greece is also relaxing curbs on travels, re-opening restaurants and allowing foreign tourists from mid-June.

‘New Front’

Economic pressure to relax the rules was mounting in France after it implemented one of the strictest lockdowns. For two months, locals were banned from going more than one kilometer away from their homes without a justification.

The government eased some restrictions earlier this month, following a drop in the number of severe Covid-19 infections. But the economy has continued to suffer with activity around 21% below normal levels, according to estimates from national statistics agency Insee, which expects France’s 2020 contraction to be deeper than the 8% the government forecast.

“A new front is opening today: The country will have to fight against the impact of a historic recession,” Philippe said.

The French state has already announced a plan to revitalize the car industry and will announce another plan for the aircraft sector next week.

The government has also earmarked 18 billion euros ($20 billion) for the hard-hit tourism industry, which represents around 7% of GDP. France has suggested domestic tourism would be possible during the summer with some restrictions, but that trips to foreign countries could remain on hold.

Read More: Tourism Slump Has Holiday Destinations Scrambling

The restaurant and hotel industry has warned that social-distancing measures could dent profitability in the long run, as fewer people will be able to be catered to and costs will rise.

©2020 Bloomberg L.P.

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