Trump looks like he could roll the dice by pushing to open up the economy by Easter. Doing so would be in contravention of the advice of most public health experts.
But the president seems desperate to fight for a second term with at least some evidence that the worst has passed and the economy is recovering.
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“Every day we stay out, it gets harder to bring it back very quickly,” he said at a White House briefing on Thursday.
On Thursday morning, fresh data showed new unemployment claims had rocketed to 3.2 million during the previous week. That figure was more than four times bigger than the previous all-time high, which was recorded in 1982.
Just prior to the crisis hitting, new claims had been filed at around the rate of 200,000 per week.
Almost all economists agree that the United States will soon be officially in a recession, with GDP expected to fall precipitously at least through the second quarter.
But the president opened his briefing on Thursday by insisting that things were “going to be better than ever” once the crisis passes. On previous occasions, he has promised that the economy will come “roaring back.”
On Thursday, he also said that people “don’t want to be sitting around” and held out the possibility of opening the nation up bit by bit.
“We may take sections of our country that aren’t so seriously affected,” he said. “We’ve got to start the process pretty soon.”
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But there is simply no way that the United States economy can bounce back quickly from such a seismic shock, according to most economists.
“It’s a mess,” said Mark Zandi, the chief economist of Moody’s Analytics. “At the moment, it feels like we are in a bit of a free-fall. We are headed to at least high single-digit unemployment, maybe double-digits unemployment.”
Zandi asserted that there would “not be a v-shaped recovery; maybe a Nike swoosh-shaped recovery.”
Whether that is fast enough for Trump’s reelection hopes is another question.
A president who had previously bragged about the stock market’s gains during his tenure has seen those gains largely wiped out — though some losses have been pared by a three-day upward bounce this week.
On Wednesday, Trump claimed that the media were hoping that the COVID-19 crisis would have a profound and negative effect because they wanted to see him beaten in November.
“The media would like to see me do poorly in the election,” he said.
Behind the scenes, even some Trump allies are worried about his push to reopen the economy as early as mid-April, fearing that a resurgence of the virus would be catastrophic, both in terms of public health and politically in terms of Trump’s reelection hopes.
But others defend his basic impulses on the issue.
Sam Nunberg, who worked for Trump’s 2016 campaign, said that it was unfair to portray the situation as a simple one in which the president was on one side and all experts on the other.
Nunberg argued that “expert opinion” did not begin and end with public health professionals such as Dr. Anthony Fauci, the key scientist who has been openly skeptical of Trump at times.
“He has other expert opinion he needs to listen to — on the economy, on defense, in agriculture, in labor,” Nunberg said.
Trump aides and allies sought to play down the significance of the new unemployment figures on Thursday.
But if Team Trump has clear incentives to play down the impact of the crisis, outside experts tell a different story.
“This is not just a recession. It’s different even from the Depression,” said Julian Zelizer, a professor of history and public affairs at Princeton University.
“It’s a total shutdown. People are scared not just about how long this lasts but what happens? Are they actually going to lose all their money?”
Professor Allan Lichtman of American University, one of the few prominent forecasters to predict Trump’s 2016 election win, asserted that no party has held onto the White House “in the midst of a recession, even extremely mild and fading recessions like in 1960 and in 1992.”
Still, neither Zelizer nor Lichtman were willing to count Trump out. Zelizer noted the tendency of voters to move in volatile ways “when people are really scared not just for their health but for their economic well-being.”
Lichtman noted that one of the most distinctive characteristics of Trump’s presidency has been the apparently unshakeable loyalty of his base.
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So far, Trump’s approval ratings during the crisis have ticked up. His net job approval in the RealClearPolitics average of polls as of Thursday evening — negative 2.5 points — was his best ever, except for a vanishingly brief honeymoon period in the first weeks of his presidency.
Zandi, the economist, acknowledged that there were some silver economic linings to the present moment, because the current crisis was clearly the result of a freak occurrence, rather than springing from fundamental flaws in the financial system, as was the case in the crash of 2008.
Still, he noted that Trump will have to grapple with a grim picture if he is to win a second term.
“Unemployment on Election Day is going to be high single digits. If he’s lucky, it will be five or six percent,” Zandi predicted.
“People’s savings are depleted, their net worth is lower, there will be business failures. You would think that would be a problem for the president.”
The Memo is a reported column by Niall Stanage, primarily focused on Donald Trump’s presidency.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
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.
