Economy

Trump Considers Using Emergency Funds to Bolster Economy Against Virus

Published

5 years ago

March 10, 2020

WASHINGTON — President Trump and his advisers are considering using the Federal Emergency Management Agency as a vehicle to deliver funds to stimulate the economy against mounting damage from the coronavirus, a move that could allow the administration to begin bolstering growth without waiting for Congress.

The idea is one of many options under consideration by the administration to help stimulate the economy, which is facing a slowdown from a virus that is quarantining workers and consumers, scuttling vacations, closing factories and causing other disruptions.

Mr. Trump previewed several ideas at a news conference on Monday evening, but discussions remain in flux and many of the proposals would require congressional approval at a time of deep partisan ire and with the 2020 election looming.

Mr. Trump’s top economic advisers are heading to Capitol Hill on Tuesday to brief Republican lawmakers on the White House’s still-evolving stimulus plans.

Larry Kudlow, director of the National Economic Council, and Treasury Secretary Steven Mnuchin will brief Senate Republicans at their weekly lunch and discuss cutting the payroll tax, offering financial help for workers who don’t get paid sick leave, and providing targeted relief for industries battered by the virus, including cruise lines, airlines and hotels.

They could also raise the possibility of Mr. Trump moving to approve major disaster declarations in a growing number of states that have seen coronavirus outbreaks, according to officials in the administration and in Congress. Such approvals would allow FEMA to begin distributing aid to affected individuals, such as emergency food stamps, and to states and local governments for efforts including “emergency protective measures.”

Mr. Trump’s advisers remain divided over how large of a stimulus package to send to Congress, and what to include in it, with many advisers worrying that too large of a request could feed fear among investors and consumers by suggesting the economy is weaker than it actually is.

The idea of a payroll tax cut in particular has divided Mr. Trump’s advisers, with Mr. Mnuchin and Mr. Kudlow expressing concerns about the cost, whether it would address the problems caused by the virus and what Democrats would demand if they reopen the tax code.

However, Peter Navarro, Mr. Trump’s trade adviser, has been a proponent of the idea, and Mr. Trump has been pushing for it to be included in a package of options.

Mr. Navarro has often been at odds with Mr. Trump’s other economic advisers over trade policy. His appearance with the coronavirus task force at Mr. Trump’s White House briefing on Monday raised eyebrows among some officials who wondered if he had inserted himself into the fiscal stimulus discussion.

Mr. Navarro said in an interview that he was there at the president’s request.

“The president specifically asked during the Oval meeting that I, by name, and other members of his economic and trade team stand with him on the podium and I left when the president left,” Mr. Navarro said.

Congressional Republicans have given the possibility of a payroll tax cut a cool reception, and Republicans aides were skeptical on Tuesday that it would be included in a final package submitted by the administration. Such a package is likely to be worked out in advance by administration officials and top Republicans and their staff in the Senate, which Republicans control.

Officials inside the administration and on Capitol Hill stressed on Tuesday that the details of any such plan were not yet finalized, and that meetings that Mr. Kudlow and Mr. Mnuchin were holding with senators on Tuesday would help to narrow them toward a consensus package.

Leaders in the Democratic-controlled House have also reacted with skepticism to the payroll tax plan. They have pushed for the administration instead to ramp up spending on the public health response to the virus.

One area of agreement among Republicans and Democrats is the need for any package to include government-provided sick pay to workers who are unable to perform their jobs as a result of quarantines or caring for children whose schools are canceled over virus fears. It is unclear how such a program would work and how it would ramp up fast enough to prevent affected workers from missing payments on rent, credit cards or other bills.

Markets rallied on Tuesday morning on news of the stimulus request, after suffering steep losses Monday. But several congressional aides cautioned it will likely take weeks, at minimum, to complete and approve any stimulus bill.

The White House is also considering other plans that would not require congressional action, such as allowing tax payments to be deferred. Mr. Trump said on Monday that the White House would hold another news conference at some point on Tuesday laying out stimulus measures in more detail.

While his advisers worked on the package, Mr. Trump on Tuesday called the Federal Reserve “pathetic” for keeping interest rates too high, renewing a regular gripe as coronavirus spreads both globally and domestically, roiling markets and threatening the economic outlook.

“Our pathetic, slow moving Federal Reserve, headed by Jay Powell, who raised rates too fast and lowered too late, should get our Fed Rate down to the levels of our competitor nations,” he tweeted. “The Federal Reserve must be a leader, not a very late follower, which it has been!”

Jeanna Smialek contributed reporting.

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

Published

2 days ago

November 8, 2024

Anne Joseph

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.

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Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

Published

3 days ago

November 6, 2024

Anne Joseph

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.

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Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

4 days ago

November 6, 2024

Anne Joseph

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.

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