New York Governor Andrew Cuomo gives his a press briefing about the coronavirus crisis on April 17, … [+] 2020 in Albany, New York. He extended quarantine measures until May 15. “We have to continue doing what we’re doing. I’d like to see that infection rate get down even more,” he said. (Photo by Matthew Cavanaugh/Getty Images)
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President Donald Trump was being his usual self on Friday. This time, he was blasting New York governor Andrew Cuomo during a live press conference on his Twitter feed, practically demanding Cuomo thank him for all he’s done. Instead, Cuomo said Trump should be at work, not watching TV, and not on Twitter.
Regardless, this week we moved beyond the fears of hospital exhaustion rates and COVID-19 patients unable to get a ventilator to calls to “liberate Michigan” and other states.
It will all be politicized. Markets won’t care.
So long as governors are coming up with plans for a gradual re-opening, as well as the White House, then investors will confirm among themselves — with increasing surety — that there is light shining through the cracks. We can dig ourselves out of this hole.
It’s a hole that Ray Dalio, famed hedge fund manager from Bridgewater Associates, said this week in Bloomberg webinar has cost the U.S. around $5 trillion in lost wages.
A health care worker shapes a heart through a window at Jacobi Medical Center on April 17, 2020 in … [+] the Bronx, New York.(Photo by ANGELA WEISS/AFP via Getty Images)
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On April 14, St. Louis Fed Chief Jim Bullard made the case for a V-shaped recovery once the economy is open, and millions furloughed get their jobs back.
In a webcast with the St. Louis Regional Chamber, Bullard said, “There is no reason the economy can’t come back in a V shape. I know it’s become popular to say that is not going to happen. I think it can happen.”
According to Bullard’s vision of the near-term future, the U.S. will adopt a variant of Asia’s mitigation methods of using widespread testing, social distancing and vigilance to contain the virus spread in a gradual re-open.
“As incidents of the disease go way down, then I think you should be able to reopen,” Bullard said. “Ideally you would like to test everybody. If you can’t test everybody, you are going to have to use relatively crude substitutes, like taking everybody’s temperature.”
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis: rolling shutdowns for a year, … [+] or until vaccine. Photographer: Chris Goodney/Bloomberg
Bullard’s comments pleased Wall Street and was a welcome note of optimism in contrast to doom-and-gloom projections of rolling shutdowns as offered by Minnesota Fed Chief Neel Kashkari on “60 Minutes” on April 5.
Then again, that was prior to “hell week”. That was the week that was supposed to be one part September 11 terrorist attack, one part Pearl Harbor. Luckily, that did not happen as mitigation efforts are clearly having the desired effect on the viral spread.
Wall Street Ready. Main Street Wary, But Hopeful
Markets have been ahead of the curve.
Since bottoming on March 23, the S&P has rallied about 24%. The bear market in equities is over for now. The Dow is down 17% from its February 19 high.
On April 16, the Trump Administration issued their own guidelines to enable individual states to reopen. Some states were already coordinating on this, even as New York and Connecticut extended the lockdown until mid May.
Under the guidelines, states are asked to reopen one step at a time, rather than all at once. The main policies and timelines are up to individual governors, with the White House Coronavirus Task Force providing guidelines.
Better yet, the guidelines were approved by Task Force medical leaders Anthony Fauci and Deborah Birx, making it harder for Trump’s opponents to lay blame on him should COVID-19 death rates continue unabated post-quarantine. This is on doctors Fauci and Birx, too.
A recent Gallup poll suggests the vast majority have grown accustomed to the lockdowns and do not want to press their luck in opening too soon.
According to pollsters at Ipsos, U.S. consumer confidence has been stagnant since it declined precipitously in the third week of March as the COVID-19 pandemic led to millions of job losses.
Wage and employment gains won in the Trump presidency have been lost. He hopes he can get most of it … [+] back if the economy re-opens next month. (Photo by Alex Wong/Getty Images)
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Their latest survey, conducted on April 14 and 15, shows that while the mood is depressing, people remain hopeful.
Consumer confidence dropped to 45.1 on their index ranging on a scale of 1 to 100 from 46 a month ago. That’s down 18 points from where it was in January, an 18-year high at the time. It’s also down from where it was in March, at 60.1.
Confidence in one’s personal financial situation, the local economy and employment six months from now is 60.2, about three points lower than where it was in March and on par with historical averages.
In percentage terms, 71% said they are less comfortable buying big ticket items today than they were six months ago. That number has been relatively flat over the last two weeks.
The battle to re-open the economy is happening around the world.
In Brazil, the battle to open it happened right at the time it was being closed.
Brazil’s version of Fauci, Health Minister Luiz Mandetta, was let go this week due to disagreements on how to balance fighting the viral spread, and keeping Brazilians — many of them who were sent back to the poor house after two years of economic recession — gainfully employed. Brazil does not have the money to pay for millions of unemployed people like the U.S. and Europe.
In Europe, they are gradually re-opening in certain areas of Italy and Austria. The German’s are, too, but they are fighting over dates.
China has been open, but in fits and starts. They are setting an example for what the rest of the world can expect once they get back to work.
In deciding to postpone New York state’s opening until May 15, Governor Cuomo stated that he wants to see infection rates fall lower on the infection curve first.
Some 28,823 people have died from COVID-19 in the U.S. as of Friday, with another 4,226 having COVID-19 as a probable cause, according to the Center for Disease Control and Prevention.
Over 22 million people have been laid off nationwide, with many of them expected to return to work once the economy gets going again.
Others have taken wage cuts and lost bonuses for the year, which is the equivalent of a wage cut. Those won’t be coming back.
Once the economies do re-open, no one is expecting to see crowded restaurants, bars and planes anytime soon. Like the gradual opening of the economy, people will gradually get over their fears of catching COVID-19.
As scientists and the medical community share ideas about what they know of the disease, and how to treat it, there will be less unknowns, ushering in a return to normalcy.
Memorial Day weekend 2019 in Asbury Park, New Jersey. Memorial Day is the unofficial start of … [+] summer. Last year the government banned vaping and smoking at the Jersey Shore. Will they ban going to the beach this Memorial Day? (Photo by Kena Betancur/Getty Images)
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I have Memorial Day weekend as what I call my “pitchforks and torches” date.
If by then states are still in nearly full quarantine, with people banned from gathering on beaches and restaurants still closed, my guess is that small business owners, and individuals will increasingly lose their patience.
Some protests already occurred this week, though I do not know who organized them. Attendees were quickly dismissed as the usual cast of right wingers supporting Trump’s call to re-open.
Memorial Day weekend is the official start of the important summer business season for numerous cities from Kennebunkport to Provincetown; Myrtle Beach to Kissimmee and Orlando, Florida. The call for a return to normal will get louder there as many shop owners survive the year on Memorial Day to Labor Day consumer spending.
Who will see a continued need for strict quarantine measures if governors are saying their hospitals are in the clear? Protecting hospitals from a surge in COVID-19 patients was the main reason for the quarantine measures.
If Wall Street’s rising, but Main Street is closed, it creates more wealth for those heavily invested in the market, and is a loss of wealth for those dependent on wages to maintain their economic status.
That’s when coronavirus ceases to become a public health crisis, and it becomes a financial crisis because companies and individuals cannot pay their bills.
Instead of a financial crisis caused by bankers gambling on mortgage-backed derivatives like in 2008, it’s one forced upon the masses to protect them from an unknown virus. People get that. But when the pandemic is over, the socio-economic and political crisis will last longer if the economy remains in intensive care.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.
Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.
The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.
Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”
Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.
Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.
This report by The Canadian Press was first published Sept. 10, 2024.
