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Trump's diagnosis adds to toxic cocktail of uncertainty that's damaging the economy – CNN



A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.
It’s a truism that investors hate uncertainty. But this year had been unusually chaotic, even before the leader of the world’s largest economy and his wife tested positive for Covid-19. The diagnosis deals a new psychological blow to a recovery that was already losing steam. Lack of certainty could be just as damaging economically as anything else this year.
The data: An index published by the Federal Reserve Bank of St. Louis that tracks economic policy uncertainty spiked to record highs in May as the pandemic rampaged across the United States. The index, which is based on newspaper stories that discuss uncertainty, changes to the tax code and disagreement among forecasters, has been elevated for most of the year. Not even the global financial crisis produced as much uncertainty.
“Every uncertainty measure we consider rose sharply in the wake of the Covid-19 pandemic. Most measures reached all-time peaks,” the group of economists who created the index wrote in a working paper published by the National Bureau of Economic Research in June.
The researchers estimated in April that half of the expected economic contraction caused by the pandemic would result from increased uncertainty.
How that happens: It’s been clear for a while that 2020 will go down as an extraordinarily unsettled year. But the level of uncertainty really matters for companies, workers and investors.
When faced with uncertainty, consumers usually spend less and save more. Companies cut back on production, investment and hiring. Financial markets become more volatile and increasingly difficult to trade.
That’s primarily because uncertainty clouds the future. Imagine, for example, a small business owner or CEO who needs to decide whether to install a new production line. Doing so means spending money that won’t be recovered if the project is never completed — giving the owner a very good reason to wait for greater clarity.
The same principle applies to consumers. High uncertainty causes risk-averse households to delay big purchases. Research suggests that people are particularly cautious when their job prospects are unclear.
The situation now: The coronavirus remains a potent threat across much of the world outside China, and the US election looms as another source of uncertainty. Before he tested positive for Covid-19, Trump refused to guarantee a peaceful transition of power, threatening a contested election and potential constitutional crisis without historical precedent.
“The news that President Trump and the First Lady have tested positive for Covid-19 has brought the pandemic back to the forefront of market attention and raised a lot of questions, with few immediate answers, ahead of next month’s election,” Societe Generale strategist Kit Juckes said Friday.
“By now we understand that this virus affects most people mildly and a small minority very severely … However, the path of the election campaign will inevitably change and uncertainty has obviously increased,” he added.
Case study: Want an example of how uncertainty harms an economy? Look no further than the United Kingdom.
Four years after Britain voted to leave the European Union, the country is still negotiating a Brexit trade deal with its largest export market. Talks have so far failed to achieve a breakthrough on two key sticking points: fishing rights and rules on government aid to companies.
The coming weeks will be crucial. Having a new deal with the European Union would help limit further damage to businesses as they desperately attempt to recover from the pandemic, which caused UK GDP to crash by 20% in the second quarter.
But years of uncertainty have already done significant damage to the country’s economy. GDP growth in the three years after the June 2016 Brexit referendum slowed by nearly one full percentage point to 1.6% as business investment stagnated, according to analysts at Berenberg.

The US jobs recovery is losing momentum fast

The US jobs recovery is running out of steam.
The economy added 661,000 jobs in September, the Bureau of Labor Statistics said on Friday. The unemployment rate stood at 7.9%.
Not great: Job growth slowed significantly from the 1.5 million jobs added in August. The figure for July was 1.8 million.
And even though the economy added back more than 1 million jobs every month between May and August, recovering just over half the jobs lost, the country is still down 10.7 million jobs since February, before Covid-19 hit. And the number of jobs lost permanently continues to rise.
Some companies announced large-scale layoffs last week, which will be a further drag on the recovery in the coming months. Disney, United and American Airlines all announced layoffs last week.
Glassdoor chief economist Andrew Chamberlain said on Friday that the latest report reveals a “two-sided economy.”
“More than 12.6 million Americans remain out of work as COVID-19 rages on, while in other pockets of the economy employers added millions of new jobs,” he said.
Monday: ISM Non-Manufacturing Index
Tuesday: Levi Strauss earnings, Jerome Powell speech
Wednesday: Fed minutes, US crude oil inventories, German production data
Thursday: US jobless claims, Delta Air Lines and Domino’s Pizza earnings

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You're Not Welcome Here: How Social Distancing Can Destroy The Global Economy – NPR



Paris is under nightly curfew, starting at 9, to curb the spread of rising coronavirus cases.

Kiran Ridley/Getty Images

Kiran Ridley/Getty Images

Stay out.

It’s what people are being asked to tell each other. Less than 10 days ago, London banned people who live in different households from meeting each other indoors, to stop the spread of the coronavirus.

“Nobody wants to see more restrictions, but this is deemed to be necessary in order to protect Londoners’ lives,” London Mayor Sadiq Khan told the London Assembly.

Taking away the welcome mat is key to cutting off the path of the coronavirus. From the beginning of the pandemic, cities, states and countries have banned each other. And now, eight months into lockdowns that have led to immense stress and fatigue among people, some places around the world are introducing even more draconian measures.

The path toward recovery continues to be inherently antisocial and runs counter to how humans interact, live lives and conduct their business. This unwelcome policy — which has already harmed families, societies and economies — has the potential to lead to a tectonic shift in how the world functions in the foreseeable future.

End of globalization?

Some people worry that this moment is strengthening the hand of nationalism that was rising before the pandemic and that it is accelerating the changing relationships between countries.

President Trump’s “America First” strategy of the last four years had increased tensions between the United States and the rest of the world, specifically China. It was already leading to friction in the smooth supply-and-demand economic chain that has been the hallmark of an interdependent global world. But the self-isolation during the pandemic could mean the end of globalization as we know it.

“The coronavirus pandemic could be the straw that breaks the camel’s back of economic globalization,” according to Robin Niblett, director of the think tank Chatham House, in a Foreign Policy article.

Specifically, the global supply chain is very much at risk. Tax deductions in the U.S. designed to bring back jobs in pharmaceuticals, medical supplies, electronics and auto manufacturing have led companies to invest heavily in production in this country in the last few years.

“The needs that surfaced during the pandemic to bolster supply chain resilience may further accelerate such moves,” according to Moody’s Investors Service Senior Vice President Robard Williams.

Social distancing brought mighty economies to their knees

The entire world’s economy has shrunk dramatically. The pandemic delivered the most severe blow to the U.S. economy since the Great Depression as gross domestic product collapsed and millions of jobs were lost.

“This recession was by far the deepest one in postwar history,” Richard Clarida, vice chair of the Federal Reserve, noted in a speech.

A robust economy is dependent upon the movement of goods and people. For instance, restaurants need people to meet, socialize and break bread together. Airlines and hotels need people to travel to conduct business or to see family and friends or new places.

But all that has been vastly reduced. And the effect of that social distancing has been deadly on many businesses. Restaurants have been among the hardest hit. According to Yelp data, more than 60% of restaurants in the U.S. have permanently closed, closely followed by retail stores that sell clothing and home decor (58%) and beauty stores and spas (42%). Airline travel is down around 70%, and hotel occupancy is at record lows.

“Social distancing has stilled our strong economy,” said Eric Rosengren, president and CEO of the Federal Reserve Bank of Boston.

Social distancing is exhausting but works in some places

What’s worse is that despite long and extensive social distancing, there are signs that it has not worked everywhere — especially in freer societies. In fact, more than lockdown orders, it is people’s fears that have a larger impact on their economic behavior, some researchers have found.

The latest signs of increased cases in the U.S. and Europe are even more disheartening for people who feel they have endured a lot.

So, why are governments continuing to rely on lockdowns? That’s because it’s proven that aggressive social distancing does work in countries where the state can enforce strict shutdowns.

In China, where severe lockdowns were enforced in many parts of the country, the coronavirus has been wrestled to the ground. In Wuhan, ground zero of the virus, recent reports cite crowded water parks and night markets. Domino’s Pizza recorded such a huge improvement in sales in the country in recent months that it prompted CEO Richard Allison to call China “a terrific success story in 2020.”

But the Chinese form of enforcement is hard to achieve in democratic societies, most of which are pinning their hopes on a vaccine.

Some of the largest cities in the West are putting in place even more draconian social distancing measures to combat the virus. Paris is under curfew starting at 9 each night. And in London, you can’t even visit or invite a neighbor over for dinner.

But it’s unclear if people in these societies will strictly follow these guidelines or how enforcement will work. It’s already taken a huge toll on the psyche of the populace of many countries. No wonder most people worry that the longer social distancing goes on, a higher price will be paid by households, society and the economy.

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ADRIAN WHITE: Underground economy is thriving –



There is no doubt that COVID-19 has changed the way businesses function in Cape Breton. The pandemic has forced many entrepreneurs to reshape operating strategies for financial survival.  

Think of the new safety protocols for restaurants to protect staff and customers from virus transmission. Think sporting events playing out before near-empty stadiums and instead focused heavily on revenues generated from media broadcast of the event.  

There are just too many changes to business practices to list here in this column including the growth of digitization in our economy but I wanted to single out a few examples to illustrate some telling impacts. 

One major impact comes from folks not feeling safe to travel outside the province or eat out in restaurants due to the pandemic. Instead, they are using some of those cash savings to fund home improvement projects right here in the Cape Breton economy. That is a good thing for our community and our workers and it supports the “Shop Local-Buy Local” mantra being promoted by the local business community. 

Demand in the home improvement sector has soared and is so strong that it has led to a shortage of building materials, a rapid rise in material costs and a shortage of skilled labour to take on those home improvement projects.  

Many new contractors have entered the home improvement business in 2020 and many anxious homeowners are in hot pursuit of their services. Sometimes these contractors show up when expected to do a job and sometimes not. This has been a long-standing problem with small contractors in Cape Breton.  

Some contractors present an official written quote including HST for the project leaving a paper trail to follow while other contractors are quite prepared to take cash from the customer thereby avoiding HST. Cash leaves little trail for CRA to follow when it comes to reporting taxable income. 

This practice leads me to shed some light on the underground economy and its impact on our well-being as a province. Statistics Canada defines the underground economy as “consisting of market-based activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature.”  

I use the construction industry as an easy-to-understand example but you can imagine other opportunities for tax avoidance including buying illegal cigarettes, street sold cannabis, cash tips, paying cash for services, Airbnb cash rentals, or offshore bank accounts not being reported to CRA. 

In Nova Scotia, according to Statistics Canada, the underground economy was estimated to be $1.28 billion in 2018. That is near 3 per cent of provincial GDP. This is revenue that escapes government taxation. Nova Scotia’s underground economy as a share of GDP is higher than the national average which is troubling. Taxes on $1.28 billion would go a long way to offset the forecasted 2020 Nova Scotia budget deficit of $853 million due to the pandemic. 

Some of the underground economy is driven by the fact Nova Scotia has the second-highest personal income tax rates in the country. It remains one of three remaining provinces in the country that still practices “bracket creep” on your personal income tax deduction by not adjusting it to CPI on your annual income tax return.  

The higher the taxes the more incentive it provides for individuals and companies to embrace tax avoidance. Alberta has one of the lowest personal income tax rates in Canada and no provincial sales tax. It abandoned “bracket creep” on its residents decades ago. It also has one of the lowest underground economy as a share of GDP rates in the country running at 1.8 percent of provincial GDP.  

British Columbia has the highest ratio at 3.7 percent of GDP. In Canada, the underground economy was valued at a whopping $61 billion in 2018 amounting to 2.7 per cent of national GDP.  

I can only imagine with the increased demand for home improvement projects in Canada due to the pandemic that underground economic activity will likely increase 50 per cent rising close to $90 billion for 2020. 

In Nova Scotia, residential construction accounts for over 25 percent of the estimated underground economy GDP.  The next six largest contributors to the underground economy amount to about 50 per cent of Nova Scotia’s underground economy. They are retail trade, accommodation/food services, finance/insurance/real estate, manufacturing, professional/technical services and health care/social assistance.   

If we want to grow the Nova Scotia economy and thereby increase tax revenues to pay for the services we all expect, we are going to have to rethink the tax burden on individuals and businesses to bring balance and fairness to the tax environment. It is one of the reasons we struggle to recruit doctors to Cape Breton. Above-average taxes in Nova Scotia hinder economic expansion. High taxes will continue to drive the underground economy and tax avoidance until we address them. 

Adrian White is CEO of NNF Inc, Business Consultants. He resides Sydney & Baddeck and can be contacted at


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The Trump Economy – The New York Times



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President Trump is not running a re-election campaign based mostly on policy. He has released no agenda for a second term, and the Republican Party did not publish a new platform at its convention.

But when Trump tells voters why he deserves to win re-election, he tends to focus on the economy. He created a prosperous economy, he says, and will do so again — better than Joe Biden would — once the coronavirus passes. I want to devote today’s newsletter to explaining the Trump economy, through four key points:

1. The economy was strong before the virus hit. Trump inherited a growing economy, and it kept growing on his watch. It accelerated a bit in his first two years in office, before slowing down again in 2019.

Credit…By The New York Times | Source: Federal Reserve Bank of St. Louis

2. Perhaps the best news: Wages were rising, even for lower-income workers. After more than a decade of economic growth, the labor market had become tight enough that employers were increasing pay more quickly than inflation was rising. The trend began under President Barack Obama and continued under Trump.

Credit…By The New York Times | Source: U.S. Bureau of Labor Statistics

3. Trump deserves some credit. Josh Barro of New York magazine has argued that Trump’s overall economic record is problematic, partly because his tax cuts were so skewed to the rich — but also that Trump got some big decisions right. Most important, he appointed a Federal Reserve chairman, Jerome Powell, who focused on growth (rather than wrongly thinking inflation was a threat) and kept interest rates low.

4. But Trump also deserves some blame — including for the virus and the recession it caused. Trump’s economic policy geared almost completely toward lifting growth in the short term, while largely ignoring long-term dangers.

He increased the deficit, mostly to give wealthy households big tax cuts. He scrapped environment regulations, which increases the likelihood of costly climate destruction. And he hollowed out parts of the government, including its ability to respond to a pandemic.

(One year ago yesterday, Biden tweeted: “We are not prepared for a pandemic. Trump has rolled back progress President Obama and I made to strengthen global health security.”)

The bottom line: Much of the economy’s performance is beyond the control of a president. Trump had the good luck to take office with a far stronger economy than either of his predecessors — Obama and George W. Bush — enjoyed. Just look at the start of each president’s lines in this chart on job growth:

Credit…By The New York Times | Source: Federal Reserve Bank of St. Louis

Later, of course, Trump had the bad luck to have a global pandemic arrive during his re-election campaign.

He has tried to claim full credit for his good luck and deflect all blame for the bad news. But that’s not the fairest way to evaluate the Trump economy. Ultimately, he deserves solid marks for its performance during his first three years — and much worse marks for his long-term economic legacy.

For more: My colleague Patricia Cohen looked at Trump’s economic legacy in a story this weekend. The Wall Street Journal’s Jon Hilsenrath has also done so.

The 2020 Campaign

Credit…Erin Schaff/The New York Times
  • Biden will campaign in Georgia tomorrow, and Kamala Harris will visit Texas on Friday. Polls show a close race in both these states, which no Democratic presidential candidate has won in decades.

  • Trump plans to hold rallies in Pennsylvania today, and in Wisconsin and Michigan tomorrow. He won all three narrowly in 2016, but is now trailing in each.

  • The New Hampshire Union Leader endorsed Biden, the first time the newspaper has backed a Democrat for president in more than a century.

  • Fights broke out during a “Jews for Trump” rally in Manhattan. Seven people were arrested, and protesters screamed at Rudy Giuliani.

  • Among the revelations in a Times analysis of fund-raising data: In wealthier ZIP codes, Biden has raised nearly triple what Trump has; in less wealthy areas, they’re almost tied.

  • Daily polling diary: Research has suggested that local coronavirus deaths lead to a decline in voter support for Trump. And Wisconsin — a battleground state — is now in the midst of one of the nation’s worst outbreaks, The Times’s Nate Cohn notes.


Credit…Stefani Reynolds for The New York Times

other big stories

Credit…Hilary Swift for The New York Times
  • The Senate voted yesterday to limit debate on Amy Coney Barrett’s nomination and is expected to confirm her to the Supreme Court tonight. Every Democratic senator is set to vote against, as is Susan Collins of Maine, a Republican who is up for re-election.

  • Pope Francis named Wilton Gregory, the archbishop of Washington, a cardinal, making him the first Black American to achieve that rank.

  • Chileans overwhelmingly voted to scrap the country’s constitution — a dictatorship-era document — and create a new one.

  • The Los Angeles Dodgers beat the Tampa Bay Rays in Game 5 of the World Series, moving to within one win of a championship. One key play: a rare and unsuccessful attempted steal of home.

  • A Morning read: As protests raged in Minneapolis, Charles Adams, a police officer and high school football coach, called some of the players on his team. “Before I hit the streets, I have to tell you guys something,” he said. “Just know that I care.”

  • Lives Lived: Edith O’Hara founded the 13th Street Repertory Company, a mainstay of the Off Off Broadway scene, after leaving northwestern Pennsylvania for New York City in her 50s. She died at 103.

The Times can help you navigate the election — to separate fact from fiction, make sense of the polls and be sure your ballot counts. To support our efforts, please consider subscribing today.

Seven states have already passed laws that will eventually raise the minimum wage to $15. All seven are heavily Democratic: California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey and New York.

This year, a more conservative state — Florida — will be voting on the policy. If the referendum passes, Florida’s minimum wage would gradually rise from its current level of $8.46 an hour to $15 an hour in 2026. After that, it would rise with inflation. Currently, no southeastern state has a minimum wage above $10, and most defer to the federal level of $7.25.

Credit…Wilfredo Lee/Associated Press

But progressive economic policies, like minimum-wage increases, tend to be popular even in red states. Ballot initiatives to expand Medicaid, for example, have passed in several red states, including Missouri, Oklahoma and Utah. And polling shows that a majority of Americans support expanding Medicare, spending more money on clean energy, increasing taxes on the wealthy — and raising the minimum wage.

If the Florida initiative passes, it will add to the momentum toward a higher minimum wage, through either ballot initiatives in other states or through federal policy. Biden favors a $15 federal minimum wage. Trump has said states should decide.

For more: The Times’s editorial board has made the case for a $15 minimum wage, and Michael Strain of Bloomberg Opinion has made the case against it.

Credit…Wesley White/Ocean Spray, via Associated Press

More than four decades after its release, Fleetwood Mac’s album “Rumours” returned to the Top 10 of the Billboard chart last week. Its resurgence was spurred by a viral TikTok video of a man named Nathan Apodaca, a potato worker in Idaho, longboarding along to the band’s song “Dreams” as he drank from a bottle of Cran-Raspberry juice.

It’s the latest example of TikTok’s influence on the music industry. “TikTok is an early indicator and trendsetter as far as seeding music, new and old,” the Times music reporter Joe Coscarelli said. “You might have a song like ‘Dreams’ that goes viral on TikTok, then the TikTok goes viral on Twitter and Instagram, then Spotify puts the song higher up on more playlists.”

From there, morning shows and local news may note the phenomenon, and it all leads to more people watching the music video or streaming the song. The effect can give old songs a second life, or jump-start new songs by relative unknowns, like Lil Nas X’s “Old Town Road” last year.

The dynamic is changing the music industry as well. Artists like Drake are teasing their music early on TikTok, and record labels pay TikTok stars to promote their songs.

On a recent episode of Popcast, the Times pop music critic Jon Caramanica went into more detail.

Credit…David Malosh for The New York Times

Roasted fish with sweet bell peppers comes together quickly for a healthy weeknight dinner. Mild, flaky fish like hake, cod or flounder are ideal to go with the garlicky parsley dressing.

The pangram from Friday’s Spelling Bee was toothpick. Today’s puzzle is above — or you can play online if you have a Games subscription.

Here’s today’s Mini Crossword, and a clue: Big drop of water? (five letters).

Thanks for spending part of your morning with The Times. See you tomorrow. — David

Correction: Friday’s newsletter switched the order of a couple of Trump’s sentences about the virus during the debate. The correct order is: “I take full responsibility. It’s not my fault that it came here. It’s China’s fault.”

P.S. The word “mouneh” appeared for the first time in The Times this weekend, as noted by the Twitter bot @NYT_first_said.

You can see today’s print front page here.

Today’s episode of “The Daily” is about suburban women voters. And I made a guest appearance on this week’s episode of “The Argument,” to talk about the 2020 campaign — and also about “Jeopardy!”

Lalena Fisher, Claire Moses, Ian Prasad Philbrick and Sanam Yar contributed to The Morning. You can reach the team at

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