On Thursday, the latest sign that the economic decline may be bottoming out came as the government reported that 1.9 million Americans had applied for unemployment insurance during the last week of May — a painfully high number but the lowest since the novel coronavirus started spreading widely in the country in March.
The jobs data follows modest signs that the economy may be inching toward the beginnings of a recovery as the nation reopens. Mortgage applications have surged in recent weeks amid record-low interest rates. Consumption of oil and petroleum products is up. The number of travelers at airports, as measured by the Transportation Security Administration’s precheck numbers, has begun increasing in recent weeks. Even restaurant reservations have inched up.
“This covid recession will go down as the shortest and arguably the most severe in history,” said Mark Zandi, chief economist at Moody’s Analytics.
Zandi said the recession caused by the pandemic is likely to be over, almost as abruptly as it started. He points out that private payrolls declined by 2.76 million people in May, according to a report released Wednesday by payroll processor ADP. That was far below analysts’ estimates.
Yet, even when economists declared the Great Recession officially over in June 2009, the unemployment rate did not return to prerecession levels until 2017, a reminder that the economic pain can linger for years. Similarly, experts predict that this recovery will take years.
Cheered on by President Trump, some states have lifted some of their most severe restrictions in recent weeks, more businesses have reopened — at least partially — and brought back workers. But there is still no sense of when commerce will resume at the scale seen late last year. Until there’s a widely available vaccine against the novel coronavirus, the economy is likely to continue struggling at a low rate. And public health officials continue to warn of a second wave of infections in the fall or winter, which could bring on another round of shutdowns.
For now, the U.S. economy is in limbo, with many companies operating at half capacity and a big question mark about how long firms can survive that way. Idled workers aren’t sure when they will be called back, so they are hoarding cash. State and local budgets have been decimated, which is likely to trigger more layoffs later this year.
“These are extremely ugly numbers, but because there were so many forecasts talking about a total collapse of the economy, the numbers we’re seeing, while extremely bad, aren’t the worst-case scenario,” said Lindsey Piegza, chief economist at Stifel Fixed Income. “It’s not as bad as it could have been. It’s an odd silver lining.”
The dueling stories about this economy — it is improving yet remains greatly depressed — are likely to play out all the way through the presidential election. Trump is seizing on any data showing a rebound and is taking credit for the bounce-back in the stock market, where the S&P 500 index just experienced its best 50-day rally since 1952.
“By the time of [the] election, I believe the economy will be doing phenomenal numbers. Big job increase, big GDP increases, and that’ll be before the election,” Trump said Wednesday on Fox News Radio’s “The Brian Kilmeade Show.”
“The stock market is booming,” he said.
But presumptive presidential nominee Joe Biden and other Democrats have been quick to point out that millions of Americans remain out of work and that the job losses aren’t as bad in other countries, raising questions about the U.S. government’s response to the pandemic. Biden predicts a slow recovery.
“Economic growth is likely to be back in positive territory by the third quarter,” Stifel’s Piegza said, but “what we’re really talking about is going from extremely terrible to slightly less terrible.”
Official government growth data looks at how much the economy changes from quarter to quarter. Since the April-to-June period is likely to be one of the worst in U.S. history, the third quarter, even if sluggish, will look like a big surge, giving Trump a talking point just before the election.
What matters to many Americans is the job situation. When Americans feel it is easy to get work, they tend to give the economy more-positive ratings and spend more. When people fear they will lose their jobs, have to take pay cuts or have trouble finding new work, they tend to save more. In April, the U.S. savings rate hit a record high of 33 percent, a sign of how scared people are.
“The savings buildup over the past two months can hardly be considered firepower for future consumption,” Bob Schwartz, senior economist at Oxford Economics, said in a recent note. “The stimulus checks were a one-time payment that has already run its course.”
The CBO also said that the pandemic will shrink the size of the U.S. economy by nearly $8 trillion in the next decade, assuming there are no more coronavirus waves that trigger crippling shutdowns in coming months.
More than 40 million people have applied for unemployment benefits during the pandemic, and roughly 30 million are receiving them, previously unimaginable figures that wiped out a job market in which unemployment was at historic lows as recently as February.
“Whatever optimism there is from seeing some people return to work, we’re not seeing a drastic move off unemployment,” said Jay Shambaugh, a senior fellow at the Brookings Institution. “If anything, we’re seeing a stable number of people on unemployment. Last year it was around 1.5 million.”
Still, signs that the economy is no longer plunging are an encouraging start, forecasters said.
New data from the Census Bureau’s weekly Small Business pulse survey shows businesses are starting to get back on their feet. In the week ending May 30, about 3 in 5 small businesses reported revenue of above $15,000. That’s a massive reversal from a month earlier, when 60 percent of businesses reported little or no revenue.
Other signs of a turning point are that only a quarter of businesses closed locations in the past week, down substantially from a month earlier, and businesses are reporting fewer supply-chain problems and missed loan payments.
Flights are also picking up. American Airlines announced Thursday an expansion next month as travel demand picks up again. For July, the airline expects to fly 55 percent of last year’s domestic trips, up from a mere 20 percent in May.
Americans are also beginning to eat out again. Restaurant reservations on the online platform OpenTable showed that more than 30 percent of its participating restaurants had begun taking bookings as of June 3, vs. zero throughout most of April.
The Federal Reserve has scaled back its purchases of government bonds, a vote of confidence that the worst probably is over.
Yet, the manufacturing sector is a telling example of just how modest any rebound is.
The industry experienced its worst contraction in April since the Great Recession. The Purchasing Managers’ Index slumped to 41.5 in April, signaling a deep contraction. In May, the index rose to 43.1, an improvement but far below the 50-mark that is considered healthy and expansionary.
Such contradictions are also apparent in the job-market data, economists say. New jobless claims are trending lower, but even with so much of the economy reopening, nearly 2 million people filed new applications for unemployment aid.
“It’s a sign that things are not getting as worse as they were before,” said Nick Bunker, economic research director at Indeed Hiring Lab. “We have seen a reduction in the pace of people becoming jobless. So that’s positive. But we’re still seeing claims at astronomical levels than what we saw before this crisis.”
Job postings tell a similar story. The number of jobs posted on Indeed’s site in May was 5 percent higher than in April. But those numbers were still 34 percent lower at the end of May than at the same date in 2019 — a staggering drop.
“It is, at most, an extremely partial rebound,” Bunker said. “Postings are still growing at a rate far slower than we saw last year. I think it’s worthwhile celebrating that the pace of things getting worse has slowed down. But that means we haven’t hit a bottom yet. There are still a fair amount of folks losing their jobs and folks not hiring yet.”
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.
Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.
The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.
“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.
“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”
Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.
The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.
The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.
Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.
More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.
Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.
“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.
Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.
“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.
Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.
Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.
Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”
“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.
This report by The Canadian Press was first published Sept. 18, 2024.
