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Tories target Trudeau on economy as new StatCan figures show recent contraction – Alaska Highway News



OTTAWA — Liberal Leader Justin Trudeau faced broadsides for his government’s efforts to make housing affordable and his handling of the economy that contracted just ahead of the election call.

Affordability has already emerged as a key election talking point among the major parties, and it landed back on the campaign trail alongside the economy on Tuesday.

Statistics Canada reported the economy contracted at an annualized rate of 1.1 per cent between April and June, and estimated another drop in real gross domestic product in July.

Speaking in the Ottawa suburb of Kanata, Trudeau said there are pockets of the economy that remain weak, pointing to arts and culture as an example, even as he argued the economy overall was roaring back.

It’s why, he said, emergency supports have dropped in value, even though the Liberal government extended their lifespan through the fall because of weaker-than-expected economic indicators.

He also argued that Conservative plans for child care, among other proposals, would hurt the pace of the economic recovery if women aren’t able to enter the workforce in greater numbers.

Trudeau didn’t directly say if he foresaw a time, if re-elected, that he may have to adjust federal spending to prevent spiralling deficits.

After eking out a gain in June to end the second quarter of the year, the economy appears to have contracted in July and left overall economic activity about two per cent below the levels seen prior to the pandemic in February 2020.

Speaking in Ottawa, O’Toole said the figures show the country is “heading further down the road of recession, not the road of recovery” under the Liberals, vowing to wrangle deficits over a decade to balance the books.

Pressed for details on where he would cut spending, O’Toole said he wouldn’t cut at all and suggested something the Conservatives have long hammered Trudeau over — that the budget would balance itself.

“We will grow the economy so that we can get back to balance in a responsible and equitable way without cuts. That is our plan,” he said.

Experts say when the economy is good, or perceived to be going in the right direction, voters are inclined to reward the incumbent government. If voters feel the opposite, they are inclined to punish the incumbent.

Perceptions of the economy often come down to what individuals see in their day-to-day lives, such as whether businesses in their community are opening or closing, and how their peers are faring financially.

In Coquitlam, B.C., NDP Leader Jagmeet Singh looked to capitalize on that by outlining his plan to increase the capital gains tax on house flippers as a plank in making housing costs more affordable.

Statistics Canada noted Tuesday that Canadian households took on $84.2 billion more in mortgage debt over the first half of 2021, adding to the $62.3 billion in the last half of 2020 as the housing prices soared amid low supply, high demand, and rock-bottom interest rates.

A cooling housing market was part of the reason why the economy didn’t fare as well as expected over the last few months, but Singh argued his plan wouldn’t further affect long-term growth.

“It’s about the type of economic growth that we want,” he said. 

“We don’t want economic growth to be driven by rich investors that want to make profit off of housing, or foreign investors that see an opportunity to invest in our Canadian housing market, driving up the cost of housing for Canadians who can’t afford a home.”

Also causing problems with the economy were supply-chain issues that don’t yet look to have abated.

Green Leader Annamie Paul proposed to cut down on food imports by one-third and replace them with more domestic production, which she said would help rural economies and improve food security. 

“An overreliance on global supply chains will necessarily mean that there is a compromise, there is a threat to our sovereignty and our national security,” she said in Toronto.

The dual attacks on Trudeau from Singh and O’Toole landed as a new poll suggests Conservatives and New Democrats have momentum heading into the second half of the federal election campaign, while the Liberals are bleeding support.

Thirty-four per cent of decided voters who took part in the Leger survey said they support O’Toole’s Conservatives — ahead of the Liberals and up four percentage points since Aug. 16, when the campaign got underway.

Support for Singh’s New Democrats is also up four points, to 24 per cent, support for Trudeau’s Liberals is down five points to 30 per cent, and Green party support is down three points to two per cent.

In Quebec, support for the Bloc Québécois stands at 29 per cent, behind the Liberals at 33 per cent.

The online poll of 2,005 Canadians, conducted Aug. 27 to 30 in collaboration with The Canadian Press, cannot be assigned a margin of error because internet-based polls are not considered random samples.

This report by The Canadian Press was first published Aug. 31, 2021.

Jordan Press, The Canadian Press

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Germany is the biggest economy in Europe. What if it shifts left? – CNN



London (CNN Business)Angela Merkel is about to bow out as chancellor of Germany after 16 years, marking the start of a new era for Europe’s largest economy.

The results of Sunday’s election are hard to predict, and the formation of a government could take weeks or months to play out. But when the dust settles, polls indicate that the new chancellor could be the left-leaning Social Democratic Party’s Olaf Scholz, who steered Germany’s economy through the pandemic as finance minister in a coalition with Merkel. Meanwhile, the Greens could more than double their number of seats in parliament.
Scholz’s SPD and the Greens could partner with the pro-business Free Democratic Party, gaining enough power to shift the country’s economic agenda to the left. Taxation and spending could increase as political leaders double down on digitization and climate policy, while wariness about rising government debt may take a back seat.
“Greens and liberals in a coalition would bring the freshest innovative forces that we have had in a while in a German government,” said Carsten Brzeski, ING’s global head of macro research.

Spend more, worry later?

Global banks say that the eventual outcome of post-election jockeying among the parties is far from certain, while advising investors to prepare for two potential results: a coalition of the SPD, Green Party and the FDP, or a narrow victory for Merkel’s center-right Christian Democratic Union, led by Armin Laschet, which would also likely need to team up with the Greens and FDP.
The former option would mark a move to the left, but would be less dramatic than an alliance between the SPD, Greens and hard-left Die Linke. This result, which could produce much more ambitious efforts to redistribute wealth and levy taxes, has been downplayed by analysts, and would likely take investors by surprise.
Whichever combination takes charge will have to manage the ongoing recovery from the coronavirus pandemic. Germany’s economy is on track to grow by 2.9% this year and 4.6% next year after contracting by 4.9% in 2020, according to the latest projections from the Organization for Economic Cooperation and Development.
Yet recent data indicates momentum could be slipping. The Ifo index, which tracks the country’s business climate, fell for the third month in a row in September, according to data released Friday. Slower growth in China, snarled supply chains and surging gas prices are likely to be taking a toll.
This pullback could add to pressure on the country’s new leaders to scrap Germany’s notoriously strict fiscal rules so they can keep spending on the domestic economy.
The country enshrined a so-called “debt brake” in the constitution in 2009, severely limiting public borrowing after the financial crisis with few exceptions. Because of the pandemic, debt rules were suspended until 2023. That allowed German borrowing to jump, with the country’s debt-to-GDP ratio climbing sharply to 70% in 2020.
Though such a ratio pales in comparison with the United States, where debt is now projected to exceed annual GDP, Germany’s centrist parties have been eager to get the country’s public finances back under control. The Greens, meanwhile, want more permanent easing of debt rules.
UBS strategists Dean Turner and Maximilian Kunkel think the debt brake — which has become a key tenet of German fiscal conservatism — is likely to remain in place, since overturning it would require a two-thirds majority in parliament.
Still, they expect Germany’s new leaders will find other ways to increase spending to address the climate crisis, an issue that gained even greater prominence after devastating flooding hit the country in July.
“The one common area of agreement for all parties is the need to tackle climate change,” Turner and Kunkel wrote in a recent research note. Whatever coalition emerges, they continued, green investment “will rise.”

Tackling the climate crisis

Brzeski expects that the incoming governing coalition, no matter its makeup, will create a special investment vehicle to circumvent the debt brake, allowing money to flow to green initiatives.
With a more liberal coalition government, however, some timelines could be moved up.
“[The Greens] would likely push for an acceleration of the green transition of the German economy as a pre-condition for entering government,” Goldman Sachs said in a recent note to clients.
The Green Party has called for a 70% cut in greenhouse gas emissions from 1990 levels by 2030, compared to the current government goal of 65%. It also wants coal plants shuttered by the end of this decade, rather than by 2038, and for new cars to be emissions-free by that point, too.
This could set up a clash with Germany’s most powerful businesses. In its latest strategy update, Volkswagen (VLKAF) said it wanted 50% of sales to come from electric cars by 2030, rising to almost 100% in 2040.
How much the state should intervene could generate friction between coalition members.
“The biggest controversy will be: How do you change people’s behavior?” Brzeski said. “Do you do this by incentives, and by educating people, or do you do this by [increasing] prices and costs?”
A left-leaning government in Germany could also lead to an increase in taxes for the wealthiest Germans, with the SPD proposing a new wealth tax on the super-rich.
But banks are emphasizing that it remains hugely unclear how the election will play out — and the more conservative CDU could still prevail, keeping Germany more firmly on its current fiscal and economic path.

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Province Invests in Wellington County Businesses to Boost Local Economy – Government of Ontario News



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Province Invests in Wellington County Businesses to Boost Local Economy  Government of Ontario News

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Powell meets a changed economy: Fewer workers, higher prices – 95.7 News



WASHINGTON (AP) — Restaurant and hotel owners struggling to fill jobs. Supply-chain delays forcing up prices for small businesses. Unemployed Americans unable to find work even with job openings at a record high.

Those and other disruptions to the U.S. economy — consequences of the viral pandemic that erupted 18 months ago — appear likely to endure, a group of business owners and nonprofit executives told Federal Reserve Chair Jerome Powell on Friday.

The business challenges, described during a “Fed Listens” virtual roundtable, underscore the ways that the COVID-19 outbreak and its delta variant are continuing to transform the U.S. economy. Some participants in the event said their business plans were still evolving. Others complained of sluggish sales and fluctuating fortunes after the pandemic eased this summer and then intensified in the past two months.

“We are really living in unique times,” Powell said at the end of the discussion. “I’ve never seen these kinds of supply-chain issues, never seen an economy that combines drastic labor shortages with lots of unemployed people. … So, it’s a very fast changing economy. It’s going to be quite different from the one (before).”

The Fed chair asked Cheetie Kumar, a restaurant owner in Raleigh, North Carolina, why she has had such trouble finding workers. Powell’s question goes to the heart of the Fed’s mandate of maximizing employment, because many people who were working before the pandemic lost jobs and are no longer looking for one. When — or whether — these people resume their job hunts will help determine when the Fed can conclude that the economy has achieved maximum employment.

Kumar told Powell that many of her former employees have decided to permanently leave the restaurant industry.

“I think a lot of people wanted to make life changes, and we lost a lot of people to different industries,” she said. “I think half of our folks decided to go back to school.”

Kumar said her restaurant now pays a minimum of $18 an hour, and she added that higher wages are likely a long-term change for the restaurant industry.

“We cannot get by and pay people $13 an hour and expect them to stay with us for years and years,” Kumar said. “It’s just not going to happen.”

Loren Nalewanski, a vice president at Marriott Select Brands, said his company is losing housekeepers to other jobs that have recently raised pay. Even the recent cutoff of a $300-a-week federal unemployment supplement, he said, hasn’t led to an increase in job applicants.

“People have left the industry and unfortunately they’re finding other things to do,” Nalewanski said. “Other industries that didn’t pay as much perhaps … are (now) paying a lot more.”

Christopher Rugaber, The Associated Press

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