The Covid-19 pandemic is probably turning endemic, with long-lasting negative effects on the economy. The severity of the economic damage depends on the course of the disease in society as well as our response to the disease. The most likely path is for mild reductions in inflation-adjusted GDP, small enough to be hardly noticeable to most people. But the range of possibilities is wide and the future highly uncertain.
A disease is endemic if it persists in the community. Contrast this concept with a disease that is eradicated, as polio has been in most of the world, and with a disease that has run through the susceptible population to the extent that no one is left to be infected. Covid-19 seems likely to become endemic, though the epidemiologists are cautious about their predictions. The scientific basis for Covid-19 becoming endemic includes diminishing immunity over time, potential virus mutation, seasonality and our interventions. Forbes contributor William A. Haseltine also notes potential transmission from pets and livestock, which makes our human vaccines and social distancing less effective in eradicating the disease.
Endemic Covid-19 does not necessarily mean mild disease. Lethality could remain high. And it could also mean sharp spikes in cases, hospitalizations and deaths, especially if seasonality proves to be a critical factor or we see periodic mutations.
Economic impacts of Covid-19, whether endemic or temporary, come from direct damage, regulatory damage and voluntary damage, as I described earlier on the idea of omicron being good for the economy.
Direct damage from endemic Covid-19 begins with the loss of lives and the suffering of the ill and their loved ones. The direct economic damage includes loss of work hours from those who are ill and those caring for the sick. Work is also lost from isolation by people healthy enough to work but avoiding infecting others. Medical care needs would be permanently higher with any endemic disease, leaving few resources for investment and non=medical consumption.
Regulatory damage would be much lower if government policy-makers accepted that the disease could not be eradicated. Countries such as Australia and China are currently aiming for zero-covid, restricting productive activity as well as preferred non-work activity, such as socializing, exercising and traveling. Skeptics note that any international travel is risky to a country’s zero-covid goal, not to mention failure to isolate livestock and pets. For people to continue to have food, water, electricity and sanitation, some people will have to leave their homes, which will mean the disease will continue to find new hosts who will infect others. Eradication within a country is theoretically possible but very difficult for a disease with Covid-19’s infectiousness.
Other countries generally are abandoning extreme lockdowns and transitioning, in fits and starts, to mostly voluntary limitations on social interactions. Eventually all policymakers will ease their restrictions to the point that the economy is not affected.
Voluntary damage to the economy would continue to a small extent in an endemic Covid-19. People who are personally concerned about the disease, either because they are at high risk or are highly risk averse, will avoid crowded settings, including restaurants, concerts and travel by airplane or cruise ship. However, they are likely to spend their income in other ways, such as the shift from services to goods (bicycles and home furnishings, for example) that we saw in 2020. Some people will retire earlier than they otherwise would have, which reduces productive capacity in the country. Others will continue working but in a job less suited to their talents. For example, a restaurant server might shift to a home-based clerical job.
All in all, these changes to the economy will probably total to a fairly small negative impact. Life, and business, will go on.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.
She says the changes will come into force in December and better reflect the housing market.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
