U.S. economic growth nudged up in the third quarter and the economy appears to have maintained the moderate pace of expansion as the year ended, supported by a strong labor market.
Other data on Friday showed consumer spending increased solidly in November, adding to a string of upbeat data that have helped to quell recession fears which gripped financial markets in the summer.
The longest expansion in history, now in its 11th year, remains on track thanks to the Federal Reserve cutting interest rates three times this year. The U.S. central bank last week kept rates steady and signaled borrowing costs could remain unchanged at least through 2020.
Though growth has been relatively strong, economists did not expect the economy to achieve the Trump administration’s 3.0 per cent target this year. Still, the resilient economy could offer some respite for President Donald Trump who was impeached on charges of abusing his office on Wednesday by the Democratic-led House of Representatives.
“The data will comfort the Fed that the economy is in ‘a good place’ and monetary policy is ‘appropriate’,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York.
Gross domestic product increased at a 2.1 per cent annualized rate, the Commerce Department said in its third estimate of third-quarter GDP. That was unrevised from November’s estimate. The economy grew at a 2.0 per cent pace in the April-June period.
Despite the unrevised estimate, which was in line with economists’ expectations, consumer spending was stronger than previously reported in the third quarter.
There were also upgrades to business spending on nonresidential structures such as power infrastructure, which limited the drop in overall business investment. That offset downward revisions to investment in homebuilding and inventory accumulation. Imports, which are a drag to GDP growth, were higher than previously estimated.
Growth estimates for the fourth quarter range from as low as a 1.5 per cent rate to as high as a 2.3 per cent pace. Growth has slowed from the 3.1 per cent rate notched in the first three months of the year in part because of the 17-month trade war between the United States and China and the fading stimulus from last year’s $1.5 trillion tax cut package.
When measured from the income side, the economy grew at a 2.1 per cent rate in the last quarter, rather than the 2.4 per cent pace estimated in November. Gross domestic income (GDI) increased at a rate of 0.9 per cent in the second quarter.
The revision to the income side of the growth ledger reflected a downgrade to corporate profits.
After-tax profits without inventory valuation and capital consumption adjustment, which corresponds to S&P 500 profits, were revised down to show them declining $23.1 billion, or at a rate of 1.2 per cent. Profits were previously reported to have decreased $11.3 billion, or at a rate of 0.6 per cent in the third quarter.
They were in part held down by legal settlements with Facebook and Google. Profits increased at a 3.3 per cent rate in the second quarter. The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, also increased at a 2.1 per cent rate in the July-September period.
The data boosted the dollar against a basket of currencies, while U.S. Treasury prices fell. Stocks on Wall Street were treading higher, pushing key indexes to new record highs.
MODERATE GROWTH PATH
The economy’s moderate growth speed appears to have persisted in the fourth quarter. In a second report on Friday, the Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4 per cent last month as households stepped up purchases of motor vehicles and spent more on healthcare. Consumption increased 0.3 per cent in October.
Consumer spending is being supported by the lowest unemployment rate in nearly half a century. But inflation stayed tame last month and could remain so for a while. The University of Michigan’s survey of consumers showed households’ one-year inflation expectations fell in December to 2.3 per cent, the lowest in three years, from 2.5 per cent in November.
“If this month’s drop in inflation expectations is sustained or intensifies, it would be concerning to the Fed, which is trying to lift inflation, and would suggest easier monetary policy than would prevail otherwise,” said Scott Hoyt, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Despite the economy improving prospects, risks remain. Boeing’s decision this week to suspend production of its best-selling 737 Max jetliner in January after two fatal crashes of the now-grounded aircraft means the fallout is likely to drag into 2020. That could pressure the fragile manufacturing sector, which was starting to stabilize as the U.S.-China trade tensions ebb.
Economists estimate that Boeing’s biggest assembly-line halt in more than 20 years, which is expected to wreak havoc on supply chains, could cut first-quarter 2020 gross domestic product growth by at least half a percentage point.
In the GDP report, growth in consumer spending was raised to a 3.2 per cent rate in the third quarter from the previously reported 2.9 per cent pace. Inventories rose at a $69.4 billion pace instead of the $79.8 billion rate reported last month.
Business investment dropped at a 2.3 per cent rate in the third quarter, rather than contracting at a 2.7 per cent pace as previously reported. Spending on nonresidential structures such as mining exploration, shafts and wells declined at a 9.9 per cent rate instead of the previously reported 12.0 per cent pace.
China rebounds with economic growth target above 6% – BBC News
China is aiming for an economic growth rate above 6% in 2021, after scrapping its target last year.
China’s Premier Li Keqiang announced the target on Friday at the opening of this year’s National People’s Congress.
The target marks a return to strong growth after the Covid-19 pandemic impacted the world’s second largest economy.
Although China’s economy grew last year, it only managed 2.3% growth, its weakest result in decades.
The new target highlights the Chinese economy’s strong rebound after the pandemic shutdowns led to a sharp 6.8% contraction in the first quarter of 2020.
The economy grew in the second half of 2020, and China was the only major global economy to post gains for the year, although they were slender compared to previous years.
Now the government hopes to continue that rebound.
“A target of over 6% will enable all of us to devote full energy to promoting reform, innovation, and high-quality development,” Premier Li Keqiang said.
“In setting this target, we have taken into account the recovery of economic activity.”
By some measures the target appears modest, falling well below the International Monetary Fund’s estimate of 8.1% growth for China’s economy this year.
Other analysts are also tipping stronger growth.
“The consensus for the year is about 8%-9% but this is coming from a low base. The focus is still on the quality versus the quantity of growth,” said Catherine Yeung, investment director at Fidelity International in Hong Kong.
In an analyst note, Bruce Pang from investment bank China Renaissance said the more flexible target leaves some room for structural reform and a transition to a more mature economy.
“We think it likely the target will be achieved, indicating that authorities are shifting focus to the quality of growth instead of speed,” he said.
Mr Li also set a target urban unemployment rate of around 5.5%, with a goal of more than 11 million new urban jobs, up from nine million last year.
It also set a budget deficit goal of around 3.2% of gross domestic product.
However, the finance ministry expressed concern about the state of the government budget.
“The outlook for government revenue and expenditure in 2021 appears quite grave, with even greater difficulty in balancing the budget and risks in key areas such as debt that cannot be overlooked,” it said in a report released at the start of the meeting.
China sets modest GDP growth target as economy improves – Financial Post
BEIJING — China on Friday set a modest annual economic growth target, at above 6%, and pledged to create more jobs in cities than last year, as the world’s second-biggest economy emerged from a year disrupted by the effects of COVID-19.
In 2020, China dropped a gross domestic product growth target from the premier’s work report for the first time since 2002 after the pandemic devastated its economy.
“As a general target, China’s growth rate has been set at over 6% for this year,” Premier Li Keqiang said in his 2021 work report. “In setting this target, we have taken into account the recovery of economic activity.”
China’s GDP expanded 2.3% last year, the only major economy to see growth.
But the 2021 target was significantly below the consensus of analysts, who expect growth could beat 8% this year. Chinese shares fell.
“If sequential growth averages zero from Q1 to Q4 this year, we will get around 6.1% annual growth this year,” Nomura said in a note.
“Beijing does not want to set a growth target too close to 8.0% as it does not want to slash the growth target next year.”
Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management, said the modest growth target will allow the authorities to emphasize the quality of growth rather than its quantity.
“In the aftermath of the pandemic, a low bar should allow most provinces to cross the hurdle without over-stretching themselves financially,” Mitra said.
In 2020, China will target the creation of more than 11 million new urban jobs, Li said in his report delivered at the opening of this year’s meeting of parliament.
That’s up from a goal of over 9 million new urban jobs last year, and in line with recent years.
In line with an improving economy, the government is targeting a 2021 budget deficit of around 3.2% of GDP, less than a goal of above 3.6% last year.
The quota on local government special bond issuance was set at 3.65 trillion yuan ($563.65 billion), also down from 3.75 trillion yuan last year.
China also has no plan to issue special treasury bonds this years, after issuing such bonds for the first time last year to support the virus-hit economy.
The government has set its 2021 target for consumer price inflation at around 3%, compared with a target of around 3.5% last year. ($1 = 6.4756 Chinese yuan) (Reporting by Kevin Yao, Judy Hua, Stella Qiu and Gabriel Crossley; Writing by Ryan Woo; Editing by Jacqueline Wong and Sam Holmes)
5 opportunities of a circular economy | Greenbiz – GreenBiz
More than 100 billion tons of resources enter the economy every year — everything from metals, minerals and fossil fuels to organic materials from plants and animals. Just 8.6 percent gets recycled and used again. Use of resources has tripled (automatic PDF download) since 1970 and could double again by 2050 if business continues as usual. We would need 1.5 Earths to sustainably support our current resource use.
This rampant consumption has devastating effects for humans, wildlife and the planet. It is more urgent than ever to shift from linear, use-it-up-and-throw-it-away models to a circular economy: where waste and pollution are designed out, products and materials are kept in use for longer, and natural systems can regenerate.
A circular economy isn’t just about fixing environmental wrongs, though: Evidence shows it can bring big opportunities and positive impacts across industries, sectors and lives.
A growing number of businesses, governments and civil society organizations are coming together to drive the change through the Platform for Accelerating the Circular Economy (PACE). More than 200 experts from 100 organizations helped develop the Circular Economy Action Agenda, a set of publications that analyze the potential impact and call for action across five key sectors: plastics, textiles, electronics, food and capital equipment (machinery and large tools such as medical scanners, agricultural equipment and manufacturing infrastructure). The Action Agenda demonstrates five opportunities associated with the shift to a circular economy:
1. Make better use of finite resources
The circular economy concept is all about making better use of natural resources such as forests, soil, water, air, metals and minerals.
Take the textiles industry. Each year, huge quantities of fossil fuels are used to produce clothes from synthetic fibers each year. Textile production (including cotton farming) uses almost 100 billion cubic meters of water per year, about 4 percent of global freshwater withdrawal. At the same time, people throw away still-wearable clothes worth an estimated $460 billion each year.
Creating a circular economy for textiles means shifting to recycled and recyclable materials in order to reduce the amount of land, water and fossil fuels used to produce new clothes. It means changing consumption patterns to reduce new purchases and keep clothes in use for longer, for instance by developing the second-hand and rental markets as well as changing the culture of fast fashion. Research suggests that the purchase of 100 second-hand garments can displace the production of 85 new garments. And finally, it means ensuring that clothes at the end of their life are collected and recycled or repurposed into new clothes, further reducing resource use.
2. Reduce emissions
About 45 percent of global greenhouse gas emissions come from product use and manufacturing, as well as food production. Circular economy strategies that reduce our use of resources can cut global greenhouse gas emissions by 39 percent (22.8 billion tons) and play a crucial role in averting the dangerous impacts of climate change.
For example, shifting towards recycled materials would alleviate the need to produce virgin plastics and synthetic fibers, which would significantly reduce fossil fuel use and associated emissions. Changing consumption patterns is also crucial: For example, if the average number of times a garment is worn were doubled, greenhouse gas emissions from the textiles industry would be 44 percent lower.
The world produces around 300 million tons of plastic waste every year, nearly equivalent to the weight of the entire human population.
Creating a circular economy for food by reducing loss and waste is particularly crucial to lowering emissions: If food loss and waste were a country, it would be the third-largest emitter after the United States and China.
3. Protect human health and biodiversity
Working towards a circular economy helps protect human health and biodiversity in many ways, including by making better use of natural resources (protecting water and land), and by mitigating the climate crisis. One of the clearest and most direct impacts of the shift to a circular economy will come from how we deal with products at the end of their life.
The world produces around 300 million tons of plastic waste every year, nearly equivalent to the weight of the entire human population. This is on top of 54 million tons of electronic waste (e-waste), of which just 17.4 percent gets collected and recycled. This waste becomes hazardous for human health and for biodiversity when it is mismanaged, either leaking into the natural environment or disposed of through open burning, landfills or substandard recycling.
Designing products to be kept in use for longer reduces the amount of waste produced. Creating proper collection and processing systems protects workers and the environment from hazardous materials. For instance, using existing solutions such as replacing plastic other materials, designing plastics so that they can be more easily recycled and scaling up collection and recycling could reduce the flow of plastic waste into the ocean by 80 percent in 20 years — a shift that would be enormously beneficial for human health and biodiversity.
4. Boost economies
Research shows that the circular economy offers a $4.5 trillion economic opportunity by reducing waste, stimulating innovation and creating employment. New business models focused on reuse, repair, remanufacturing and sharing models offer significant innovation opportunities.
For example, a circular economy for plastics offers considerable economic benefits. Less plastic waste in the ocean would benefit industries such as fishing and tourism, as plastic pollution leads to $13 billion in costs and economic losses per year. Reducing the pollution and toxic emissions that come from the open burning of plastic waste would lower healthcare costs, while reducing fossil fuel use for plastic production would help mitigate climate change and its associated costs.
Many of these economic benefits and opportunities are long-term, indirect and require significant investment; a long-term view is key, as are short-term incentives to drive the change. This can include policies that create more immediate financial incentives for businesses to develop innovative new business models and enable the efficient flow of reused and recycled materials across global value chains.
5. Create more and better jobs
Transitioning to a circular economy could create a net increase of 6 million jobs by 2030. Making the most of this opportunity will require a clear focus on social and environmental justice.
Jobs may be lost in more linear businesses; however, new jobs will be created in fields such as recycling, services such as repair and rental, or in new enterprises that spring up to make innovative use of secondary materials. These new jobs cannot be considered direct replacements, as they may be in different locations and require different skills. For instance, we must consider the millions of garment workers — mostly women — whose employment depends on the continuation of the fast fashion industry. Investing in a just transition via social dialogue, social protection and reskilling programs is key.
While a net increase in jobs is important, another value-add of circularity is the opportunity to provide formal work and improved working conditions for informal laborers. Around 15 million people worldwide work as “waste pickers,” salvaging reusable or recyclable materials from garbage. Bringing these informal waste pickers into formal work in collection or recycling is a major opportunity to offer safer, more secure employment.
Maximizing the impact of the circular economy
Of course, there are always trade-offs to be considered and managed when working towards large-scale, systemic change. For example, shifting to bio-based plastics and natural, recyclable textiles such as cotton will use less fossil fuels than traditional plastics or synthetic fibers, but may increase demands for land and water to grow such materials. Shifting to natural materials is a crucial part of the solution, but only if those materials are produced in a sustainable way — and only if consumption habits change, too.
A long-term view is key, as are short-term incentives to drive the change.
It’s also important to recognize the interconnected nature of the global economy. Many minerals and metals used in electronics are byproducts from the mining of aluminum, copper, lead and zinc, which are used across industries. Going circular in the electronics industry alone would not do much to reduce dependence on these resources. Multiple industries must shift to create systemic change.
Finally, it will be crucial to keep social well-being and equity top-of-mind. For example, moving to a circular economy can shift investment and employment away from production and manufacturing (which tends to happen in lower-income countries) and towards later stages of the value chain, such as repair, resale, sorting and recycling (often concentrated in wealthier countries). We’ll need to ensure that economic benefits are equitably distributed to maximize the opportunity of a circular economy.
A role for everyone
The above five impact areas exhibit some of the social, environmental and economic benefits of a circular economy, but realizing these benefits will require ambitious action. Governments, businesses, civil society, finance institutions, research organizations — everyone has a role to play. The new Circular Economy Action Agenda is a good place to start.
3 Ontario regions to pilot COVID-19 vaccines at some pharmacies next week – Yahoo News Canada
Sheldon Keefe, Maple Leafs reflect on cherished memories of Walter Gretzky – Sportsnet.ca
Redmi K40 & K40 Pro Damascus Black Hands On: 2021's Flagship Killer Duo – gizmochina
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Galaxy M31 July 2020 security update brings Glance, a content-driven lockscreen wallpaper service
Science16 hours ago
Retracing the history of the mutation that gave rise to cancer decades later – Science Daily
News21 hours ago
Coronavirus: What's happening in Canada and around the world on Thursday – CBC.ca
Health11 hours ago
Ontario to roll out next phase of COVID-19 vaccine strategy tomorrow; age and risk to be prioritized – CTV Toronto
Health22 hours ago
EU to extend vaccine export control measures to end of June, sources say – Global News
Health20 hours ago
Ontario reports 994 new coronavirus cases; 10 more deaths – CP24 Toronto's Breaking News
Media20 hours ago
10:00 ET Media Advisory: Virtual Infrastructure Announcement in Brampton – Canada NewsWire
Health16 hours ago
Ontario sees 994 new COVID-19 cases as health officials work to update vaccine rollout – CBC.ca
Sports20 hours ago
Ice Chips: Pittsburgh Penguins F Sidney Crosby remains in COVID protocol – TSN