United States President Donald Trump on Wednesday evening deviated slightly from his usual playbook of relentlessly touting the strength of the US economy, acknowledging during a news conference that the coronavirus could dent growth.
But when asked about the sharp selloff in US stocks – that has seen the DJIA plummet more than 2,000 points or 7 percent since the start of trading this week – Trump seized the opportunity to deflect blame on to his Democratic rivals for the presidency who had held a televised debate Tuesday evening.
“I think the financial markets are very upset when they look at the Democratic candidates standing on that stage making fools of out of themselves,” Trump told reporters.
“And it (the stock market) certainly took a hit because of [the coronavirus] and I understand, that’s also because of supply chains and various other things,” he added. “I think the stock market is will recover. The economy is very strong.”
Though Trump’s outlook may be characteristically rosy, according to experts who spoke with Al Jazeera, the risks the outbreak presents to the US economy – now in year 11 of a record expansion – remains far from certain.
‘Things may calm down’
At least 2,770 people have died from the coronavirus and although the outbreak shows signs of slowing in China, it is accelerating in other parts of Asia, Europe and the Middle East.
On Wednesday, concerns mounted in the US after health authorities confirmed a Northern California resident who had not travelled abroad to an affected area or had contact with someone known to be infected had contracted the virus.
On Thursday, Goldman Sachs strategists lowered their profit growth outlook for US companies this year to zero, citing fallout from coronavirus including a severe decline in Chinese economic activity, lowered end-demand for US exports, supply chain disruptions, slowing US economic activity and heightened uncertainty.
But some forecasters are reluctant to make definitive calls on how the outbreak could unfold and inform the trajectory of fears that are already gripping investors and businesses.
“It is still too soon to tell because we do not know how far geographically it will spread,” said Christine McDaniel, a senior research fellow focusing on trade at George Mason University’s Mercatus Center.
“If the new reality is that we are going to be living with this new virus strain, then the sooner that reality sets in – and individuals and workers and firms internalise, ie, once societies resign to this new reality – then the fear factor may diminish,” McDaniel told Al Jazeera, adding that “things may calm down.”
Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations, also thinks it is premature to advance concrete estimates where coronavirus and the economy are concerned.
But he told Al Jazeera that the implications for the aviation, hotel, restaurant, cruise and shipping industries were undeniably bad, adding that the retail sector “could also potentially be another victim” on the demand side of the economy.
That would be a big blow because consumer spending is the engine of the US economy, accounting for some two-thirds of growth.
“It is very clear that this is an acute disease outbreak, [with] an impact on people’s consumption patterns,” said Huang, adding that citizens adopt “social-distancing measures and governments adopt quarantine-related measures”.
An illustration released by the Centers for Disease Control and Prevention in Atlanta, Georgia, shows the coronavirus [MAM/CDC/Reuters]
Knock-on effects
With governments – including in the US – responding to the outbreak by curtailing flights, the effect on the travel sector is likely to be vast.
Only Chinese airlines are currently flying from China to the US, with fewer than 1,000 travellers arriving on American shores a day – other carriers have simply cancelled flights.
This could have a knock-on effect for the whole US economy says McDaniel, who notes that the tourism industry accounted for about 9 percent of the country’s economic output in 2018, about $1.87 trillion of gross domestic product. That translates into almost eight million jobs and 11 percent of exports.
“People are not going to want to travel with this new fear, at least until a vaccine is found,” said McDaniel. “For every one dollar spent directly on tourism and travel, another 72 cents is [indirectly] generated from that dollar.”
On the supply side, some experts are concerned that the high level of absenteeism at plants in China could threaten US manufacturers who rely on Chinese-made components, particularly the automotive, electronics and pharmaceutical sectors.
“Many pharmaceuticals so heavily rely upon active pharmaceutical ingredients from China and India,” Huang said. “If factories are shut down past April, it could have a huge impact on the global drug supply.”
The pharmaceutical industry is one of many where US manufacturers rely on a supply chain that begins in China [File: Reuters]
‘This will be contained’
As fears mount that US companies will face losses stemming from the outbreak, investors have been fleeing stocks for safe havens like gold and bonds.
But some analysts caution against using stock prices as a proxy for the economic impact of coronavirus.
“The stock market is overreacting, like they always do,” said Robert Scott, an economist at the Economic Policy Institute.
“But there’s no question it can have a real negative impact on the economy,” he told Al Jazeera. “It could certainly curtail trade between the US and China in the short term, over the next month or two – particularly disruptive in manufacturing,” he added noting how dependent US manufacturers are on parts sourced from China.
That interdepenency, said Scott, bolsters arguments against globalisation, which Democrats and Republicans have criticised for damaging US manufacturing and costing US jobs.
A container ship sails near the Kwai Tsing Container Terminal in Hong Kong, China, where the coronavirus outbreak has shut down factories [Paul Yeung/Bloomberg]
“This illustrates to me one of the real costs of increasing globalisation, this reliance on extended international supply chains,” said Scott. “If more of these supplies were produced in the US, we’d be less vulnerable to this type of disruption.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
