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The Economy Continues To Gain Strength In 12 Charts – Forbes

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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.

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.

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.

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.

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.

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.

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.”

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.

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.

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.

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.

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Economy

Canada to go big on budget spending as pandemic lingers, election looms

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By Julie Gordon

OTTAWA (Reuters) – Canada‘s Liberal government will deliver on its promise to spend big when it presents its first budget in two years next week amid a fast-rising third wave of COVID-19 infections and ahead of an election expected in coming months.

Finance Minister Chrystia Freeland has pledged to do “whatever it takes” to support Canadians, and in November promised up to C$100 billion ($79.8 billion) in stimulus over three years to “jump-start” an economic recovery in what is likely to be a crucial year for her party.

Prime Minister Justin Trudeau’s Liberals depend on the support of at least one opposition group to pass laws, and senior party members have said an election is likely within months as it seeks a clear majority and a free hand to legislate.

Furthermore, by September, all Canadians who want to be vaccinated will be, Trudeau has said.

Freeland has said the pandemic created a “window” of opportunity for a national childcare plan, and that will be reflected in next Monday’s budget along with spending to accelerate Canada‘s shift toward a more sustainable economy.

“It will be a green and innovative recovery plan aimed at creating jobs,” said a government source who declined to comment on specific measures. The budget will aim to help those “who have suffered most” the effects of the pandemic, the source said.

Critics say the government would be better to hold off on blockbuster spending because the economy has shown it is poised to bounce back, and to prevent the country from racking up too much debt.

“Clearly a garden-variety stimulus package is the last thing we need. This is pile-on debt,” said Don Drummond, an economist at Ontario’s Queen’s University.

“The risk is that at some point interest rates are going to go up and we’re going to be in trouble,” he said, pointing to the mid-1990s when Canada‘s debt-to-GDP ratio skyrocketed, leading to rating agency downgrades and years of austerity.

The Bank of Canada cut its benchmark interest rate to 0.25% to counter the economic fallout of the COVID-19 crisis and has said rates will not rise until labor market slack is absorbed, currently forecast for into 2023. That may change when it releases new projections on April 21.

EXPANDING ECONOMY

More than 3 million Canadians lost their jobs to the pandemic. As of March, before a third wave forced new lockdowns, only 296,000 remained unemployed because of COVID.

Despite still-high unemployment levels in hard-hit service sectors, the economy has expanded for nine straight months even as provinces have adjusted health restrictions to counter waves of infections.

“Once we see sustained reopening, we do think that the recovery will have quite a bit of momentum on its own,” said Josh Nye, a senior economist at RBC Economics.

“We think Canada‘s economy will be operating pretty close to full capacity by this time next year,” he said.

Economists surveyed by Reuters expect Freeland to project a deficit in the range of C$133 billion to C$175 billion for fiscal 2021/22, up from the C$121.2 billion ($96.7 billion)

deficit forecast in November. https://tmsnrt.rs/3wSJPcm

The deficit for fiscal 2020/21 ended in March is forecast by the government to top a historic C$381.6 billion ($304.5 billion).

Canada announced on Monday a C$5.9 billion ($4.7 billion) aid package for the country’s largest airline carrier, Air Canada, and said talks were ongoing with No. 2 carrier WestJet Airlines Ltd and others.

 

(Reporting by Julie Gordon in Ottawa; Additional reporting by Fergal Smith in Toronto; Editing by Steve Scherer and Peter Cooney)

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Economy

CANADA STOCKS – TSX ends flat at 19,228.03

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* The Toronto Stock Exchange’s TSX falls 0.00 percent to 19,228.03

* Leading the index were Corus Entertainment Inc <CJRb.TO​>, up 7.0%, Methanex Corp​, up 6.4%, and Canaccord Genuity Group Inc​, higher by 5.5%.

* Lagging shares were Denison Mines Corp​​, down 7.0%, Trillium Therapeutics Inc​, down 7.0%, and Nexgen Energy Ltd​, lower by 5.7%.

* On the TSX 93 issues rose and 128 fell as a 0.7-to-1 ratio favored decliners. There were 26 new highs and no new lows, with total volume of 183.7 million shares.

* The most heavily traded shares by volume were Toronto-dominion Bank, Nutrien Ltd and Organigram Holdings Inc.

* The TSX’s energy group fell 1.61 points, or 1.4%, while the financials sector climbed 0.67 points, or 0.2%.

* West Texas Intermediate crude futures fell 0.44%, or $0.26, to $59.34 a barrel. Brent crude  fell 0.24%, or $0.15, to $63.05 [O/R]

* The TSX is up 10.3% for the year.

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Economy

Canadian dollar outshines G10 peers, boosted by jobs surge

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar advanced against its broadly stronger U.S. counterpart on Friday as data showing the economy added far more jobs than expected in March offset lower oil prices, with the loonie also gaining for the week.

Canada added 303,100 jobs in March, triple analyst expectations, driven by the recovery across sectors hit by shutdowns in December and January to curb the new coronavirus.

“The Canadian economy keeps beating expectations,” said Michael Goshko, corporate risk manager at Western Union Business Solutions. “It seems like the economy is adapting to these closures and restrictions.”

Stronger-than-expected economic growth could pull forward the timing of the first interest rate hike by the Bank of Canada, Goshko said.

The central bank has signaled that its benchmark rate will stay at a record low of 0.25% until 2023. It is due to update its economic forecasts on April 21, when some analysts expect it to cut bond purchases.

The Canadian dollar was trading 0.3% higher at 1.2530 to the greenback, or 79.81 U.S. cents, the biggest gain among G10 currencies. For the week, it was also up 0.3%.

Still, speculators have cut their bullish bets on the Canadian dollar to the lowest since December, data from the U.S. Commodity Futures Trading Commission showed. As of April 6, net long positions had fallen to 2,690 contracts from 6,518 in the prior week.

The price of oil, one of Canada‘s major exports, was pressured by rising supplies from major producers. U.S. crude prices settled 0.5% lower at $59.32 a barrel, while the U.S. dollar gained ground against a basket of major currencies, supported by higher U.S. Treasury yields.

Canadian government bond yields also climbed and the curve steepened, with the 10-year up 4.1 basis points at 1.502%.

 

(Reporting by Fergal Smith; Editing by Andrea Ricci)

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