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This Is the Strangest Economy Ever – The Atlantic

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The Atlantic

In an age punctuated with almost biblical chaos—plague, brutality, and surreal images of the president posing with a holy book he fumbles like a strange cut of meat—there has been one queasy and bizarre constant: “… and stocks rose.” On Wednesday, U.S. deaths from COVID-19 officially surpassed 100,000, and stocks rose. On Friday, the Commerce Department reported that GDP plummeted nearly 5 percent in the first three months of the year, and stocks rose. Over the weekend, Americans took to the streets of large cities and small towns to protest the killing of George Floyd and call for an end to years of police brutality and systemic racism against black Americans, as their mostly peaceful movements were often attacked by police and beset by chaos tourists smashing the windows of local stores. And stocks rose.

In fact, stocks seem to do nothing but go up these days. April was the best month for the Dow since the Reagan administration, and stocks were up in May as well. In the time that officially recorded U.S. deaths from COVID-19 increased from 100 to 100,000, the S&P 500 rose by 20 percent. What is going on?

A popular answer to that question is that“the stock market is not the economy.” This observation is very popular, technically true, and mostly useless. It’s like going around screaming “My neck is not my body!” Your neck is a part of your body, and the stock market is a part of the economy; in both cases, if the former is acting in an irregular way, it’s probably worth looking into.

When we look deeper, the story that emerges is confusing and contradictory. Americans locked in their houses with children, work, and baked bread have created an extinction-level event for small businesses, which has resulted in unprecedented layoffs and furloughs. But thanks to government stimulus, overall income has increased, and Americans have shifted spending to the virtual economy, compressing 10 years of anticipated e-commerce growth into a matter of weeks.

The COVID-19 crisis is simultaneously thrusting Americans into the pre-urban homestead economy of the 1830s, re-creating the Depression-era joblessness of the 1930s, and pulling forward the virtual economy of the 2030s. We are living in the weirdest economy ever.

In at least three ways, this recession is completely bizarre and ahistorical. And each weirdness helps explain the perceived gap between the stock market and the rest of the economy.

First, the economy is not really “broken,” as it was in the Great Recession, when the U.S. housing market collapsed like a wobbly Jenga set as the stock market, labor market, and manufacturing industry all came clattering to the ground at once. Instead, a global pathogenic pulse, whose reverberations are being felt in every corner of the world, has suddenly interrupted an otherwise normally functioning economy. That means we can’t solve the economic crisis until we solve the public-health crisis.

But that logic also leads to the assumption that if the public-health problem is solved, the economic recovery could be quick. That’s why stocks have jumped on optimistic rumblings about vaccines trials. When every company is in the plague business, every stock is a vaccine stock—and every cheery vaccine headline is a corporate-equity stimulus.

Second, this crisis combines an unprecedented shutdown of the physical economy with an unprecedented federal effort to distribute emergency cash to tens of millions of families. In April, consumer spending suffered the worst drop on record in the same month that personal income saw the biggest increase on record. Read that again. It sounds totally implausible, but here’s how it happened. As department stores, restaurants, and shops closed, consumer spending and employment in those places plummeted. But the federal government also passed the CARES Act, which distributed thousand-dollar checks to tens of millions of families and increased jobless benefits by $600 a week. As a result, the typical unemployment-insurance recipient has been earning 34 percent more than he or she did while working. With millions of Americans earning more in unemployment than they were at work, personal income soared in April by 10 percent.

The CARES Act, along with emergency moves by the Federal Reserve to shore up the financial sector, are almost certainly a major factor behind the stock-market recovery. For evidence, look at the timing of the S&P 500’s big reversal—the week after March 21. What happened that week? The Fed announced that it would do whatever it takes to avoid a financial collapse, and the president signed the CARES Act into law. Corporations and labor aren’t always aligned, but here they are: The federal bonanza has made both investors and workers richer.

Third, although retail is in the toilet, just about everything that has to do with housing is fine. New-home sales are higher than they were one year ago. Mortgage applications are higher than they were in late February. Grocery sales have boomed, and Wayfair furniture sales are up. Thumbtack, an online marketplace for independent workers such as yoga instructors and electricians, is showing a full recovery in home construction, home maintenance, and moves. With the physical economy shut down, American have been sent back to the 19th-century economy, before the boom in urban services, when families cooked, cleaned, worked, reared children, and cared for animals at home (recent pet-product sales are way up).

A profound message is lurking in these green shoots: The plague economy is extraordinarily unequal. Many high-income workers can afford to buy new homes because they are, for now, inoculated from the economic devastation by virtue of the fact that they can do their jobs from home. Remote work serves as an employment vaccine for a large swath of the white-collar workforce.

Digital technology’s insulation from the physical world might be the most durable aspect of this crisis. Online spending on food, furniture, and home appliances have increased in tandem with remote-working software, such as Zoom and Skype. That explains why a handful of tech companies—like Microsoft, Apple, Amazon, Google, Facebook, Cisco Systems, and Adobe—have driven almost all of the stock market’s gains this year. But even cloud-based firms are tethered to the earthbound economy. Media layoffs and Big Tech hiring freezes show how the downturn could hurt a lot of white-collar workers.

The theme that ties all of these stories together is divergence. Consumer spending has diverged from consumer income. The at-home economy has diverged from the out-of-home economy. The stock market has diverged from the labor market. And the technology sector has, for now, accelerated into the future, breaking away from many other publicly traded companies. If you’re confused about the economy, I don’t blame you. What I can tell you is that today’s economy is that of 1830, 1930, and 2030, all at once. The question I cannot answer is: What year will it be tomorrow?

We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.

Derek Thompson is a staff writer at The Atlantic, where he writes about economics, technology, and the media. He is the author of Hit Makers and the host of the podcast Crazy/Genius.

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Saskatchewan economy adds 30,000 jobs in June as businesses open up again: Statistics Canada – CBC.ca

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Saskatchewan added more than 30,000 new jobs in June as businesses began to open back up from the COVID-19 pandemic.

Saskatchewan’s unemployment rate dipped to 11.6 per cent in June from a high in May of 12.5 per cent, according to a Statistics Canada report on Friday. 

At the national level Canada added almost one million jobs in June.

The national jobless rate fell to 12.3 per cent, down from the record-high of 13.7 in May. There are still 1.8 million fewer jobs in Canada today than there were in February.

Jason Childs, an associate professor of economics at the U of  R, said he was pleasantly surprised by the employment gains.

“To be gaining 30,000 jobs provincially and nearly a million jobs nationally is some unexpected good news, which is nice for a change,” he said.

Employment is rebounding as more businesses open up across Canada. (Statistics Canada, Labour Force Survey)

The growth in Saskatchewan was split between 22,000 full-time jobs and 10,000 part-time jobs.

Childs cautioned that the jobless rate in the province is still more than six per cent higher than it was at this time last year, when it was 5.2 per cent, and there still about 40,0000 fewer jobs than before the pandemic.

“[Some people] don’t appreciate how deep the hole we’re in is and this is not a hole we’re going to get out of quickly,” Childs said. “[Unemployment] has more than doubled from this time last year.”

All those job losses have not been evenly distributed throughout the population.

Young workers are taking the brunt of the job losses in the province.

One in five people 15 to 24 years old are without a job, compared to 8.6 per cent of workers over the age of 25.

University of Regina associate professor of Economics Jason Childs says we have a long way to go to get back to pre-pandemic economic levels. (CBC)

Unemployment among First Nations is 18.4 per cent and the Métis jobless rate is 17.3 per cent.

Childs said both those groups already have higher unemployment and they will have a harder time getting back in the workforce.

“People looking for that first job are going to have a really tough time right now because anything that opens up you’re probably going to be competing with somebody who’s got a lot more experience,” he said.

The one sector hit hardest by the pandemic is food and accommodation, where an estimated 400,000 workers across the country are still without a job.

Employment increased in all provinces in June, but it remains below February levels. (Statistics Canada, Labour Force Survey)

Childs said those jobs are dependent on consumer spending and tourism, and that people’s financial habits have changed during the pandemic.

“I still think we’re going to see a drag [on the economy] as we get what’s called the Paradox of Thrift,” Childs said.

“As people begin to save for their own protection we may see that drag on economic activity as consumption falls off.”

He said people are beginning to cut back on ‘luxuries’ like going out to eat or grabbing a cup of coffee.

“That’s a place where you can cut back fairly easy,” he said.

“People are dealing with a massive amount of uncertainty right now and uncertainty breeds caution and doesn’t breed spending.”

Childs said no amount of fiscal stimulus is going to solve this crisis without consumer confidence.

“You need to get people back to a place where they feel comfortable and safe spending in order to return to the previous level of economic activity,” he said. “Or we’re just gonna have to get used to this.”

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Jason Kenney sees supply shortage in oil and gas when global economy rebounds from COVID-19 – Edmonton Journal

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COVID-19 has put Canada in a “deep fiscal hole,” and the only way to get out of it is to spark the oil and gas sector, Premier Jason Kenney said Friday.

Noting the federal government’s announcement Wednesday it expected to post a $343-billion deficit, Kenney expressed optimism that demand for oil would bolster Alberta’s recovery.

“When the global economy comes back from COVID, when demand returns for oil and gas, we are going to see something of a supply shortage, because of the upstream exploration that has been cancelled,” he said at a Friday news conference.

“So we’ll see prices go up, and that will be a great opportunity for Alberta especially as we make progress on pipelines,” Kenney said.

At Friday’s market close, West Texas Intermediate crude was priced at just over US$40.

TC Energy’s Keystone XL pipeline, which the government of Alberta has committed $7 billion in financial support, faced a legal hurdle this week when the U.S. Supreme Court refused to let construction begin on the project.

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Economy adds 953000 jobs in June, unemployment rate falls – CKPGToday.ca

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By Wendy Perch

Jul 10, 2020

PRINCE GEORGE -The national jobless rate fell from a record 13.7 percent in May to 12.3 percent last month, as the economy added nearly one-million jobs.

However, one local tax partner is not sold on the numbers. Stan Mitchell with KPMG said, “the unemployment/employment rates are driven by those who are actively seeking employment so when we’re on the EI system, people had to fill out their report cards but with the CERB it’s not so much like that. Stats Canada, with statistics as good as they are, they projected that that 12.3 percent unemployment would go to about 16 percent unemployment in the case of somebody looking for work.”

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