During 2020 the U.S. economy was on a roller coaster. GDP plunged 5.0% and 31.4% in the first and second quarters, respectively, and then almost climbed out of the hole by growing 33.4% and 4.3% in the third and fourth quarters, respectively. Total economic output decreased 3.5% for the year.
U.S. GDP growth by quarter
Bureau of Economic Analysis
However, with the availability of multiple Covid-19 vaccines and a growing vaccination rate, the economy is poised to deliver strong growth in 2021 as indicators show increasing economic activity.
New York Fed “Weekly Economic Index” up sharply
The New York Federal Reserve publishes a “Weekly Economic Index” whose latest report shows a sharp upturn in March. It depicts an estimate for yearly GDP growth and it wasn’t until two weeks ago that its outlook showed year-over-year growth.
Weekly economic index coming out of the coronavirus lockdowns.
New York Federal Reserve, Haver Analytics, Redbook Research, Rasmussen Reports, the American Association of Railroads, and Booth Financial Consulting
Economic activity highest since March last year
On a weekly basis Aneta Markowska, Jefferies Chief Economist, and Thomas Simons, Jefferies Money Market Economist, publish a report titled “Tracking the Reopening of the U.S. Economy with Real-Time Data.” It is a compilation of various economic indicators showing how the economy is performing long before many official U.S. government reports are generated. Its latest report has the economy at its highest level since March 14 last year but still 6.5% below the beginning of 2020.
U.S. economic activity
Aneta Markowska and Thomas Simons at Jefferies
Jefferies foot traffic data is from retailers, restaurants, shopping, fitness and entertainment establishments. It comprises about 1,900 brands and 170,000 locations. It isn’t a surprise to see a sharp uptick recently as some states have loosened, if not totally removed, any restrictions.
U.S. consumer foot traffic
Aneta Markowska and Thomas Simons at Jefferies, SafeGraph
Jefferies uses OpenTable data from approximately 20,000 restaurants in cities representing 57% of the U.S. population. While Jefferies has foot traffic back to pre-Covid-19 levels, in-door dining restrictions are still impacting restaurants.
U.S. restaurant bookings
Aneta Markowska and Thomas Simons at OpenTable
Flight activity is picking up. There have been 20 consecutive days of TSA screening more than 1 million passengers, with a peak of 1.57 million this past Sunday. Passenger traffic is still down around 40% from a year ago but is definitely on an uptrend. Jefferies flight data comes from Vertical Knowledge, which uses public data to deliver insights.
U.S. flight activity
Aneta Markowska and Thomas Simons at Jefferies, Vertical Knowledge
Consumer confidence surged in March
The Conference Board’s latest consumer confidence survey showed a surge from 90.4 in February to 109.7 in March. Lynn Franco, Senior Director of Economic Indicators said, “Consumer Confidence increased to its highest level since the onset of the pandemic in March 2020. Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months. Consumers’ renewed optimism boosted their purchasing intentions for homes, autos and several big-ticket items. However, concerns of inflation in the short-term rose, most likely due to rising prices at the pump, and may temper spending intentions in the months ahead.”
Consumer confidence
Gregory Daco at Oxford Economics, Haver Analytics, The Conference Board
Manufacturing surveys showing strength
Bill McBride from the CalculatedRisk blog has compiled a chart of the regional Federal Reserves manufacturing surveys and ISM. The New York and Philly Fed surveys are averaged together (yellow, through March), and five Fed surveys are averaged (blue, through March) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management PMI (red) is through February (right axis). The Fed surveys show a sharp upturn and with ISM releasing its March report tomorrow it should also show an increase.
Fed and ISM manufacturing surveys
CalculatedRiskBlog.com, Philadelphia and New York Federal Reserves, ISM
Friday’s job report will give an indication on how strong job growth is
ADP’s estimate for March employment is 517,000, which is actually below economist’s estimates, which range from 650,000 to 750,000. Last month had a 379,000 jobs increase. ADP has the Leisure and Hospitality segment gaining 169,000, which is critical since this industry has been decimated by Covid-19 lockdowns. However, it does seem poised to come back as more people are vaccinated and are booking trips.
There are still about 9.5 million more people unemployed than a year ago. It would take 19 months of 500,000 job gains to get back to the previous level of employment and then more months to take into account what would have been normal job growth since March 2020.
Projected U.S. job gains in March
ADP
Hours worked showing an upturn
Daniel Zhao, Lead Data Scientist on Glassdoor’s Economic Research team, created a graph using the Real-Time Population Survey data, which shows a nice increase in the number of hours worked per person with ages from 18 to 64. After being flat for three months it is now back to March levels a year ago.
Hours worked for people between the ages of 18 to 64
Daniel Zhao, Glassdoor, Dallas Fed Real Time Population Survey
But unemployment claims are still at record levels
However, unemployment claims are still at record levels. Claims, both initial and especially continuing, will have to trend downwards significantly to get employment back to pre-Covid-19 levels.
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.
