Even as the U.S. economy deteriorates in the face of another coronavirus onslaught, there’s plenty of reason for hope as the new year approaches.
The start of a massive effort to vaccinate Americans against the virus is the chief source of optimism. The promise of an effective treatment will allow the U.S. to gradually return to normal in 2021 and undo the damage to the economy seen this year.
Adding to the good cheer is a pending deal in Congress, after months of bitter political recriminations, to provide nearly $1 trillion in aid for millions of unemployed Americans and thousands of struggling businesses. Not long ago a deal seemed out of reach.
” For once, Congress has surprised on the upside, delivering more and earlier than expected,” said Aneta Markowska, chief economist at Jefferies LLC and reigning MarketWatch forecaster of the month.
The immediate path of the economy, however, is still laden with obstacles.
Layoffs are on the rise again, consumer spending has softened and key business segments such as restaurants and retailers are struggling to cope with fresh government restrictions aimed at limiting the spread of the virus.
A flurry of indicators next week leading up the Christmas holiday will provide another window into how much the economy has been affected by the record increase in coronavirus cases.
At the top of the list is a key measure of business investment included in the report on durable goods orders known as “core orders.”
Investment in the goods-producing part of the economy has posted surprisingly strong gains in the past six months, rising to a one-and-a-half-year high in October, as companies look past the current pandemic to brighter times in 2021.
Manufacturers have been more insulated from the pandemic than service-oriented companies that deal directly with consumers, but they’ve also been stung by the latest outbreak. More workers are calling in sick or staying home to take care of relatives and companies can’t find enough people to fill open jobs.
Still, the manufacturing industry is set to lead the U.S. recovery in 2021, especially if the global economy recovers as well and American exports bounce back.
A pair of surveys on the attitude of consumers, meanwhile, will also clue investors in on how worried they are about the coronavirus pandemic. Even if consumers are very anxious right now, though, the arrival of vaccines and more federal aid are likely to lift their spirits early in the new year.
The weekly report on jobless benefit claims, published the day before Christmas, probably won’t give Wall Street
anything to cheer about.
New claims, a rough measure of layoffs, jumped to a nearly four-month high in mid-December as restaurants and other service-oriented businesses laid off workers temporarily or closed for good.
The increase in jobless claims put more pressure on Congress to finally agree to a new aid package. The bill likely to approved is expected to include extended unemployment compensation and up to $300 extra a week in extra federal benefits.
Taiwan economy seen growing 3.61% in fourth quarter on boost from exports: Reuters poll – The Guardian
TAIPEI (Reuters) – Taiwan’s economy is expected to have expanded 3.61% year-on-year in the fourth quarter, a Reuters poll showed, as the export-dependent island continued to shake off the coronavirus jolt with a return of strong shipments and consumer confidence.
The trade-dependent economy grew 3.92% in the third quarter from a year earlier, in a solid rebound from a 0.58% contraction in the second quarter.
Taiwan, a key hub in the global technology supply chain for tech giants such as Apple Inc, is expected to have posted slightly slower gross domestic product (GDP) growth of 3.61% on year in October-December, according to the poll of 14 economists.
Predications varied widely from growth of 2.1% to as high as 6.83%.
Exports in 2020 rose 4.9% to $345.28 billion, a record high by value for a single year.
In December, Taiwan’s central bank revised up its growth outlook for this year.
It raised its 2020 forecast for GDP growth to 2.58% from 1.6% predicted in September, and projected 2021 growth at 3.68%, compared with 3.28% seen at its last quarterly meeting.
Taiwan’s exports have benefited from the work-and-study from home trend around the world, which has boosted demand for laptops, tablets and other electronics made with components supplied by firms like Taiwan Semiconductor Manufacturing Co Ltd (TSMC).
Taiwan’s largest trading partner China registered faster-than-expected economic growth in the fourth quarter of last year, with GDP up 6.5% year-on-year.
Taiwan’s preliminary fourth-quarter figures will be released on Friday. Revised figures, including details and government forecasts, will be published about three weeks later.
(Poll compiled by Carol Lee; Reporting by Ben Blanchard; Editing by Shri Navaratnam)
New coronavirus variants pose major risk to the global economy, IMF warns – CTV News
The pandemic could slam the brakes on a global economic turnaround this year despite mass vaccination programs and unprecedented levels of stimulus, according to the International Monetary Fund.
The IMF expects the global economy to grow by 5.5% this year, it said on Tuesday, or 0.3 percentage points faster than its previous forecast in October. The upgrade reflects “expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies,” the group said. (The IMF estimates that the world economy shrank by 3.5% in 2020, its biggest peacetime contraction since the Great Depression.)
But it also warned that surging infections in late 2020, renewed lockdowns and logistical problems with vaccine distribution could hamstring growth. If new variants of the coronavirus also prove difficult to contain, global output this year would be 0.75% less than the IMF expects.
Looking further ahead, the IMF expects global growth to slow to 4.2% in 2022.
“Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens,” Gita Gopinath, chief economist of the IMF, said in a blog post.
Some countries will recover more quickly than others. China, which was the only major economy to grow in 2020, is forecast to achieve growth of 8.1% this year. The United States should emerge from its deep slump to expand by 5.1%, a pace that’s 2 percentage points faster than the IMF predicted in October.
The 19 countries that use the euro are expected to see growth of 4.2% in 2021. The United Kingdom, which endured a 10% contraction last year as it left the European Union and is now battling a new coronavirus variant, would rebound with relatively modest growth of 4.5%.
“The wide divergence reflects to an important extent differences across countries in behavioral and public health responses to infections, flexibility and adaptability of economic activity to low mobility, preexisting trends, and structural rigidities entering the crisis,” the IMF said.
The pandemic is causing “exceptional uncertainty,” according to the IMF.
“Although new restrictions following the surge in infections (particularly in Europe) suggest growth could be weaker than projected in early 2021, other factors pull the distribution of risks in the opposite direction,” the IMF said.
If the vaccine distribution and efficacy go smoothly, for example, output could exceed expectations by as much as 1% globally, with companies hiring and expanding capacity in anticipation of rising demand.
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