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Trump's budget will wreak havoc on the American economy – CNN

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To start with, President Trump proposes massive immediate cuts to the kinds of public services, protections and health care that help propel short-term economic growth by supporting demand for goods and services. In fact, according to the Brookings Institution’s Hutchins Center Fiscal Impact Measure, which measures the effect that government is directly having on overall gross domestic product, government investment has been directly supporting overall economic growth for most of the last two years. That means that, just last quarter, the government was contributing the most to GDP than at any other point since the end of the Great Recession. President Trump’s budget would reverse that, withdrawing critical support at a time when growth has already slowed.
The cuts are so deep, so massive and so poorly targeted that they could be large enough to even push us to the brink of a recession. Recall that, right now, overall economic activity grew by only 2.1% over the last year. Well, Trump’s budget includes roughly $958 billion in total cuts in the first four years. That amounts to about 1% shaved off of total gross domestic product right there. And some of these cuts would produce outsized effects that drag down growth. Some public spending is especially good at bouncing all around in local economies, supporting local businesses and generating additional dollars for everyone.
Programs like Medicaid, food stamps, and tax credits for low-income families tend to permeate throughout local economies most effectively, and those are exactly the resources that President Trump’s budget envisions cutting, to the tune of about $335 billion in the next four years. These cuts could reduce overall economic activity by another .3% to .4%. Put it all together, and Trump’s plan would slash the overall economic growth rate down to well under 1% over the next few years, putting us right on the edge of outright economic contraction.
But in some ways, it’s the long-term economic damage that President Trump’s budget will cause that should concern us the most. Over the medium and long term, the key to economic prosperity is improving the prospects of everyday people. Workers and consumers are what drive growth and prosperity. When workers have the support and investment they need to do their best work, they innovate, create and do more with less time and fewer resources. When consumers have money in their pockets, they drive demand for goods and services and induce businesses to invest in the future. They all need public support and strong foundations to ensure that private concentrations of wealth and power don’t distort the economy to the advantage of the ultra-wealthy, and to broaden the economic base by bringing more people into full participation.
Trump’s budget slashes at those very foundations: education, health care, research and development. The result would be both a less productive workforce and less consumer demand, producing a weaker economy overall, with the already-rich capturing most of the gains.
Making matters worse, Trump’s budget would worsen economic disparities by race. He proposes cuts to nutrition assistance when black families are more than twice as likely to be food-insecure than white families. He proposes cuts to after-school programs, to student aid and to federal funding for homeless students, all of which will fall disproportionately on young black people. Black Americans already face systemic barriers to economic advancement, barriers that both diminish individual opportunity and hurt our economy overall.
Finally, Donald Trump’s budget would drive overall inequality even higher than it is now, exacerbating the negative economic effects that stem from concentrated income and wealth. His budget includes an extension of his signature tax cuts, which disproportionately benefited the rich. If extended, the richest 0.1% of Americans would get an additional tax cut of approximately $100,000 a year. This, paired with draconian cuts to public services that provide assistance to struggling families, would result in a significant increase in inequality. That’s appalling from a moral standpoint, of course, but it’s also bad economics. Extreme inequality is a drag on the overall economy in numerous ways. It distorts and narrows consumer demand, undermines the foundations for worker productivity and impedes strategic investment. And at a very basic level, higher inequality is associated with slower overall growth and deeper recessions.
Given the various ways that the policies within President Trump’s plan would damage the economy and hurt everyday people, there is a deep irony that the budget also assumes economic growth rates of 3% for the next five years that are well above what any other independent forecaster (such as the Congressional Budget Office’s 1.5% to 1.9%) assumes. In all likelihood, Trump’s budget would yield just the opposite: a much worse economy.

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Economy expected to show continued strength, flood recovery poses challenges | BC Gov News – BC Gov News

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British Columbia’s economic growth is expected to outpace Canada’s in 2021 and 2022, according to projections from the Economic Forecast Council (EFC).

However, yet-to-be-determined economic impacts from recent flooding and extreme weather may affect future forecasts.

Each year, B.C.’s finance minister meets with the 13-member council of private-sector forecasters as part of preparation for the next year’s budget. This year an additional set of discussions was added, providing an opportunity to consult with a new Environmental, Social, Governance (ESG) Advisory Council to further explore how the provincial government can continue to build resilience and support well-being in British Columbia.

Private-sector forecasters anticipate that, despite the pandemic, the province’s economy will grow by 5.3% in 2021 and 4.2% in 2022, which is above the respective national GDP estimates of 4.9% and 4.1%. Although B.C.’s economy contracted in 2020 due to impacts from the COVID-19 pandemic, B.C. was among provincial leaders last year and the economy’s 3.4% decline was smaller than originally projected.

“Momentum from our strong recovery and increasing vaccination rates over the last few months has helped put B.C. on a good path for future economic growth,” said Selina Robinson, Minister of Finance. “There are more challenges ahead, but forecasts signal the work we have done so far has put us on the right track and provided us with a solid foundation to continue responding to the pandemic and recent flooding and support a strong recovery for British Columbians.”

Discussions with the EFC and the ESG Advisory Council focused on current events, issues affecting B.C.’s economy and the environmental, social and governance opportunities and challenges facing the province. Key topics at the meetings:

  • climate change risks and impacts on people,
  • housing affordability,
  • reconciliation with Indigenous Peoples,
  • trade tensions and supply chain disruptions,
  • standard of living, poverty and inequality,
  • diversity and inclusion,
  • economic resilience and sustainability,
  • natural resource development, and
  • policies and measures that build shared prosperity.

 “As we look to our recovery, we are aligning our investments with our priorities to ensure that while we grow our economic resilience, we are also making progress on addressing climate change, reducing poverty and inequality, and advancing reconciliation with Indigenous Peoples,” Robinson said. “Following the incredible hardship our province has faced with this year’s floods and fires during a pandemic, it’s never been more important for us to share ideas about building resilience and sustainability.”

Several forecasters noted that the provincial government’s commitments to addressing climate change, its 10-year housing plan, record levels of capital investment and continued work to diversify the economy, have helped to insulate the province from some economic impacts and position the province well for longer-term sustainable growth.

Forecasts and feedback from the two councils will be used to inform the next provincial budget, which will be released on Feb. 22, 2022. EFC members will also have an opportunity to submit revised forecasts in early January.

Quick Facts:

  • In the Province’s Second Quarterly Report, which does not yet incorporate impacts from the recent extreme weather and flooding, B.C. projected a revised deficit of $1.7 billion for the 2021-22 fiscal year, which is a significant improvement from the deficits previously estimated in Budget 2021 and the First Quarterly Report.
  • Environmental, social and governance are three main categories often discussed when evaluating sustainability performance, risk mitigation planning and societal well-being.

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Canadian dollar hits a 10-week low on rising risk aversion

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The Canadian dollar weakened against its U.S. counterpart on Friday as investors took advantage of a jump in the currency after stronger-than-expected domestic jobs data to add to bearish bets, with the loonie extending this week’s decline.

The loonie was trading 0.2% lower at 1.2829 to the greenback, or 77.95 U.S. cents, after touching its weakest level since Sept. 21 at 1.2846. For the week, the loonie was down 0.3%.

“We have seen a swift move lower in risk appetite ever since the stock market opened,” said Erik Bregar, an independent FX analyst. “The spike higher (in the loonie) this morning, it was a nice move to fade and keep riding the trend down.”

Wall Street‘s major indexes fell as investors grappled with a disappointing U.S. jobs gain and uncertainty around the potential impact of the Omicron coronavirus variant, while the price of oil, one of Canada‘s major exports, settled 0.4% lower at $66.26 a barrel.

Canada‘s economy posted a job gain of 154,000 in November, eclipsing estimates for an increase of 35,000, while the jobless rate dropped to a new pandemic low.

Economists say the data is unlikely to change the Bank of Canada‘s guidance at a policy announcement next week amid worries over the new variant and after massive recent flooding in British Columbia that has hampered trade through Vancouver.

Still, analysts are sticking with bullish forecasts on the Canadian dollar, expecting oil prices to rebound and the Bank of Canada to hike interest rates before the U.S. Federal Reserve, a Reuters poll showed.

Canadian government bond yields were mixed across a flatter curve.

The 2-year rate rose 3.6 basis points to 1.009%, while the 10-year touched its lowest level since Sept. 27 at 1.425% before recovering slightly to 1.433%, down 7.3 basis points on the day.

 

(Reporting by Fergal Smith; editing by Barbara Lewis and Sandra Maler)

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B.C. adds 4,600 jobs in November as economy braces for effects of flood disaster – Business in Vancouver

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B.C. adds 4,600 jobs in November as economy braces for effects of flood disaster – Economy, Law & Politics | Business in Vancouver


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