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There Is No Panacea for the Coronavirus Economy – The New Yorker

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Even under optimistic scenarios, restoring the economy to health is going to be an extended and difficult task.Photograph by Spencer Platt / Getty

The stock market posted another strong performance on Friday, with the Dow Jones Industrial Average rising more than seven hundred points. It has now regained about half of the losses it suffered between late February and late March, as the death toll from the coronavirus mounted and great swaths of the economy were closed down. Indeed, the market is only about eighteen per cent below its all-time peak, which came on February 12th.

Investors were reacting to some encouraging news about a possible treatment for people hospitalized with COVID-19 and to the prospect of parts of the economy reopening soon. On Friday, Texas announced the lifting of some restrictions, and Michigan’s governor, Gretchen Whitmer, expressed the hope that some of her state’s economy could “re-engage” as early as May 1st. These developments came a day after the White House released a set of guidelines for reopening the economy, which envisage a three-stage process, with states moving from one stage to the next as they meet various “gating criteria” related to the incidence of the virus, testing capacity, and hospital capacity.

Within the past week, the virus claimed roughly two thousand lives a day in the United States. Within one twenty-four-hour period, more than forty-five hundred people had died from COVID-19 and the President’s medical advisers have acknowledged that any reversal of the shutdowns, even a limited one, will be risky. Some Asian territories that seemed to have the virus under control, including Japan, Hong Kong, and Singapore, recently experienced a second wave of infections. The possibility of something similar happening here surely explains why Trump, in a conference call with governors on Thursday, said, “You are going to be calling your own shots.” “Trump’s the-buck-stops-with-the-states posture is largely designed to shield himself from blame should there be new outbreaks after states reopen or for other problems,” the Washington Post reported, citing current and former Administration officials who have been involved in the crisis response.

Despite a month of shutdowns and distancing measures, the virus hasn’t stopped spreading, but the rate of new infections has gone down. At a national level, based on figures from the Covid Tracking Project, the number of cases is rising by about 4.7 per cent, which is down from about 7.5 per cent a week ago. Ian Shepherdson, the founder of Pantheon Macroeconomics, has been looking at what’s happening in other countries, too. In the past week or so, Germany, Spain, and Italy have announced limited steps to reopen stores and other businesses. These countries waited until the daily new infection rate had fallen to a bit below the current U.S. level, Shepherdson said. By this time next week, the U.S. rate may well have closed that gap.

In absolute terms, however, the number of new infections is still much higher in the United States, because the over-all number of cases is so large. So far, most governors, Republican and Democrat, have resisted the idea of lifting stay-at-home orders. But the economic cost of the shutdown is rising—in the past four weeks, more than twenty-two million Americans have lost their jobs or been furloughed, figures released on Thursday showed. And in some Democrat-run states, conservative protesters have staged demonstrations against the restrictions, with Trump openly egging them on.

The big question is what will happen if some businesses do start to reopen. Shepherdson said that the outlook in the United States is complicated by a pattern of infection that varies greatly across regions and states. “If you are in a state that has done well, the danger is that if you open up you could get flooded by people from next door,” he said. He cited the experience of Rhode Island, which is situated between two hot spots—New York and Boston—and where the number of cases is still rising by about nine per cent a day.

Practically everybody agrees that comprehensive testing will be vital going forward. For example, in “National Coronavirus Response: A Road Map to Reopening,” released at the end of March, the American Enterprise Institute, a conservative think tank that carries influence at the White House, said that we need “better data to identify areas of spread and the rate of exposure and immunity in the population.” During Thursday’s briefing about the Administration’s new guidelines, Dr. Deborah Birx, the coördinator of the White House’s virus-response task force, claimed that the necessary data would be available from three different sources: test results from people exhibiting COVID-19-like symptoms; reports of influenza-like symptoms across the country; and expanded “sentinel surveillance”—i.e., testing of people in high-risk areas, such as indigenous communities, nursing homes, and “inner-city federal clinics.” Right now, about a hundred and twenty-five thousand tests are being carried out each day. By the end of April, the U.S. will have administered more than five million tests in total, Vice-President Mike Pence said at Thursday’s briefing.

But many governors, medical experts, business leaders, and economists are highly skeptical about the extent of testing, which is still largely confined to people who have already developed symptoms. The key to keeping down the infection rate is locating and isolating asymptomatic carriers and then doing contact tracing.

“The reality is we are not even testing health-care workers,” Paul Romer, a Nobel-winning economist who is a professor at New York University, told me on Friday. “We need to be testing all of them regularly, and many others, too. Trump’s medical advisers are stuck with blinkers on. They are not stepping back and looking at the big picture.’’ In Romer’s view, this involves creating a public-health strategy that can be sustained for a year or eighteen months, until a vaccine is developed. The only available options, he said, are continued shutdowns or a massive expansion of testing to find and isolate asymptomatic carriers before they spread the disease. Romer, who served as the chief economist at the World Bank from 2016 to 2018, is calling for at least ten million tests per day, and ideally as many as twenty million or thirty million.

Absent large-scale testing, the outlook is grim, he said. “As soon as we stop the shutdowns, we’ll go right back to exponential growth. It won’t even help us much if we get down to very low rates of infection first, because exponential growth is so fast you get right back there very quickly.” Given the limits to testing capacity and the Trump Administration’s refusal to take the lead in this area, Romer suggested that the most likely outcome is a series of reopenings and renewed shutdowns, as the infection rate rebounds. “From an economic perspective, that is almost as bad as a permanent shutdown,” he said. “Nobody is going to invest. Nobody is going to reopen a restaurant.”

Not everybody agrees with that analysis, of course. But there is general agreement among economists that even under optimistic scenarios, where the rate of infection doesn’t shoot back up immediately, restoring the economy to health is going to be an extended and difficult task. “Absent a vaccine or treatment breakthrough, reopening will be gradual,” the economists at Goldman Sachs wrote this week. “Several other countries have taken steps toward reopening. We see three lessons from their experiences. First, initial reopening timelines often prove too optimistic. Second, even countries at the forefront of reopening have gradual and conservative plans. Third, recovery is easier and quicker in manufacturing and construction than in consumer services.”

Today’s American economy is predominantly a service economy, of course. Private-service industries, such as retail, finance, lodging, entertainment, and restaurants, contribute close to seventy per cent of the gross domestic product. Even if some restaurants do defy Romer’s prediction and reopen, they will have to meet social-distancing requirements, which will reduce their capacity. The same goes for airlines, hotels, gyms, and many other businesses. “No amount of stimulus spending is going to change those realities,” Shepherdson said. He is predicting that G.D.P. will plummet at an annualized rate of thirty per cent in the April-to-June quarter, before rebounding somewhat, but not fully, in the second half of the year. For 2020 as a whole, Goldman Sachs is predicting that G.D.P. will decline by more than five per cent. That would be the biggest fall since the aftermath of the Second World War.

For now, the stock market is focussing on the upside. Shepherdson said that institutional investors, whose performance is often measured against the market, can’t afford to miss out on a rebound, and they are placing a great deal of faith in the Federal Reserve. “If you are out of the market now, you are fighting against the momentum, you are fighting the stimulus, and you are fighting the Fed,” he said. “The only thing you have going for you is the truth—the recovery is going to be very slow, and on the virus front there are going to be relapses.”


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Saskatchewan says economy is rebounding despite 12.5% unemployment rate – Globalnews.ca

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The Saskatchewan government is feeling confident its economy is on the rebound.

This comes despite the unemployment rate being 12.5 per cent at the end of May, according to Statistics Canada’s latest Labour Force Survey released Friday.

By the end of April, the unemployment rate in the province was 11.3 per cent. Saskatchewan’s unemployment rate is, however, the second-lowest among provinces and below the national average of 13.7 per cent.


READ MORE:
Saskatchewan loses nearly 53K jobs from March to April: Statistics Canada

“The Saskatchewan workforce is still being seriously affected by the COVID-19 pandemic but there are a number of signs that show Saskatchewan’s economy is both recovering faster, and was less impacted, than other provinces,” said Jeremy Harrison, immigration and career training minister, in a statement.

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“We have the second-lowest unemployment rate in Canada and the number of people working rose in May, which is a strong, positive sign in the COVID-19 era.  The Saskatchewan economy is positioned to strongly improve as we move forward with the Re-Open Saskatchewan plan.”

In Saskatchewan, there were 600 more jobs in May than April, while 87 per cent of those working in February were working in May.


READ MORE:
Nearly 21K jobs lost in Saskatchewan in March due to COVID-19: Statistics Canada

Since February, the number of hours worked in the province has dropped by 9.1 per cent. It’s the second-lowest decline in provinces. Nationally, the average decline in the number of hours worked over that same period is 19.3 per cent.






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“Looking forward, we are seeing positive economic news in Saskatchewan, including announcements about helium and lithium recently,” Harrison said.

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“These new investments will bring jobs and investment to communities across the province and will help lift our economy out of the current challenges facing markets globally.”


READ MORE:
Coronavirus: Canada lost 1 million jobs in March

The province said businesses in Saskatchewan are faring better than other jurisdictions, claiming to have closed fewer than other provinces did.

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“This speaks to the strength of Saskatchewan’s economy and a strong reopening plan aiding in economic recovery,” the province said in a release issued on Friday.

Despite the optimism from the provincial government, the Saskatchewan NDP has laid out three actions it believes the province should take right now to strengthen the economy going forward.

First, to put Saskatchewan businesses and workers first through a Sask-first procurement plan that helps keep jobs in the province. Secondly, make the Saskatchewan Small Business Emergency program more accessible.






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Finally, to end the six-month lockout between Regina’s Co-op Refinery and its workers, which would put 800 Saskatchewan people back to work.

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“New Democrats have urged Premier Moe and this Sask. Party government to protect jobs and small businesses, but clearly not enough has been done,” Opposition Leader Ryan Meili said.

“We know that Saskatchewan’s economy was already shrinking before COVID – and now the Premier’s lack of action to put Saskatchewan workers and businesses first is making things worse.”

Saskatchewan continues its reopen plan with Phase 3 beginning on June 8.

© 2020 Global News, a division of Corus Entertainment Inc.

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Uncertainty abounds as Nova Scotia economy reopens – TheChronicleHerald.ca

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Premier Stephen McNeil is encouraging people to “think local,  support local” as the province’s economy reopens Friday but the future of many small businesses struggling to meet government public health guidelines remain uncertain.

“Businesses will require our support on a go-forward basis,” said McNeil Thursday, before facing criticism from opposition leaders for what they deemed a poorly orchestrated and communicated reopening plan that has left businesses scrambling to reopen.

“There should be a massive information exercise by the Province of Nova Scotia that gives Nova Scotians confidence in the system that’s in play,” said Tory Leader Tim Houston.

Government announced its plan to reopen sectors of the economy, including restaurants and bars, salons and gyms last week. The premier has faced ongoing criticism for not offering clear direction on what specific public health requirements, including equipment, businesses need to meet in order to reopen.   

“The lack of information over the last few weeks and couple of months has really put businesses at a disadvantage,” said Houston. “I’m hearing from lots that are having difficulty getting supplies that they think they need for disinfecting. There’s a whole host of businesses that still don’t know what they’re required to do and what their customers are required to do.”

The province is offering a $25-million grant program that offers up to $5,000  for small business, non-profits and other operations, including dental offices.  The program is intended to help those groups with the costs of buying equipment and cleaning supplies needed to reopen. 

Sectors, including barber shops and hair salons, are frustrated over the limit of 10 occupants permitted in their businesses. Restaurants will essentially be reduced to half capacity. Many businesses are unable to secure protective equipment and cleaning supplies in time to reopen.

Meanwhile, many small businesses are still pleading for rent relief.  The federal Canada Emergency Commercial Rent Assistance Program, offering to cover 75 per cent of  rent for small businesses, has had limited uptake largely because it’s optional for landlords.

Business Minister Geoff MacLellan admitted that businesses would require added financial assistance at least through the initial months of the reopening. He said that’s especially true given that tourism numbers are predicted to drop dramatically this summer, a primary source of for many businesses reopening.

“I think that’s inevitable, to be honest,” said MacLellan. 

His department is working directly with associations representing businesses working to get their reopening plans approved by public health and government.  

“We’ll open up and see how things go the first few days,” said MacLellan. “I’m absolutely certain we’ll hear back from those associations.”

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Economy adds surprise 290,000 jobs in May; unemployment rate at record level – The Globe and Mail

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A worker unloads a delivery of 200,000 masks at a Vancouver city depot, on June 3, 2020.

JONATHAN HAYWARD/The Canadian Press

Canada added 290,000 jobs in May after two months of brutal layoffs, a surprise turn for the job market as provinces have only recently begun to ease lockdown restrictions.

Despite the gain, the unemployment rate rose to 13.7 per cent, the highest since comparable data became available in 1976, as more people started seeking jobs.

“The surprisingly positive readings on employment paint a more optimistic picture of the early part of the recovery, but there’s still a long road back,” said Royce Mendes, senior economist at Canadian Imperial Bank of Commerce, in a note to clients.

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About three-quarters of May’s increase was in full-time positions, while the goods-producing sector (5-per-cent gain) snapped back more forcefully than services (1-per-cent gain).

In turn, men saw stronger employment growth (206,000) than women (84,000). Statistics Canada noted that among parents, women registered fewer job gains than men and were more likely to lose hours.

The total number of hours worked in all industries climbed 6.3 per cent in May, following a plunge of nearly 28 per cent between February and April. There were sizable increases in construction (19 per cent), wholesale and retail trade (11 per cent) and manufacturing (10.9 per cent).

Quebec accounted for nearly 80 per cent of May’s employment increase as it saw a net gain of 231,000 workers. The province allowed the construction industry to return in mid-April and other restrictions began to ease outside the Montreal area in early May.

Ontario was the only province where employment declined last month, although losses were less severe than in March and April. The first stage of the province’s reopening plan took effect after the Victoria Day weekend.

Going into Friday’s job report, it was widely assumed that Canada would experience another month of layoffs. The median estimate from economists was for employment to decline by 500,000 in May, following April’s loss of nearly two million and March’s drop of about one million.

This was partially the result of timing. Statistics Canada surveyed households on their work status between May 10 and 16. By then, many reopening stages had yet to take effect.

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Instead, Friday’s results surprised by showing that employers are already adding to payroll.

As Canada enters its summer months, there are mounting signs of economic activity picking up. Hiring site Indeed Canada has seen a recent uptick in new job postings. Consumer spending, while lower than a year ago, has improved in recent weeks, according to Royal Bank of Canada transaction data. And home and auto sales have perked up, as has business sentiment.

Still, it’s shaping up to be a long recovery in the job market. Many companies are reopening to weaker sales and larger debt obligations, making it difficult to staff at prepandemic levels.

Only 13 per cent of small business owners are planning to add to full-time staff in the next three months, compared to 37 per cent who are planning to cut back, according to recent survey results from the Canadian Federation of Independent Business.

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