The shuttering of the U.S. economy due to the coronavirus pandemic is a shock of historic proportions that likely will push the national unemployment rate to 16% or higher this month and require more stimulus to ensure a strong rebound, a White House economic adviser said on Sunday.
“It’s a really grave situation,” President Donald Trump’s adviser Kevin Hassett told the ABC program “This Week.”
“This is the biggest negative shock that our economy, I think, has ever seen. We’re going to be looking at an unemployment rate that approaches rates that we saw during the Great Depression” of the 1930s, Hassett added.
Lockdowns around the United States to curtail the spread of the novel coronavirus have hammered the economy, shuttering businesses and sending unemployment skyrocketing.
A record 26.5 million Americans have filed for jobless benefits since mid-March, and retail sales, home building and consumer confidence have all cratered.
The non-partisan Congressional Budget Office predicts U.S. GDP will contract at nearly a 40% annual rate in the second quarter, with unemployment cresting at 16% in the third quarter. But even next year, the CBO sees the jobless rate still averaging above 10 per cent.
“I think the unemployment rate is going to jump to a level probably around 16 per cent or even higher in the next jobs report” due on May 8 providing April employment statistics, Hassett told reporters at the White House.
Hassett added that the change in the nation’s GDP in the second quarter would be a negative “big number.”
“I think the next couple of months are going to look terrible. You’re going to see numbers as bad as anything we’ve ever seen before,” Hassett said, referring to U.S. economic data.
“We’re going to need really big thoughtful policies to put together to make it so that people are optimistic again,” Hassett added.
Trump’s advisers want to hone a list of five or six ideas to present to Congress to help clear the economic carnage, Hassett said.
“I’m sure that over the next three or four weeks, everybody’s going to pull together and come up with a plan to give us the best chance possible for a V-shaped recovery,” Hassett told ABC. “I … don’t think you get it if we don’t have another round of really solid legislation.”
A “V-shaped recovery” in one in which an economy bounces back sharply after a precipitous decline.
TENSIONS ON CAPITOL HILL
The U.S. Congress has already approved $3 trillion in coronavirus relief in a show of bipartisan support for laid off workers and an economy in free fall.
Now, lawmakers are poised for a battle over federal assistance to state and local governments whose budgets have been shattered by a plunge in tax revenue even as they have had to take extraordinary measures during a pandemic that has caused a U.S. death toll approaching 55,000.
New York City needs $7.4 billion in federal aid to offset economic losses from the coronavirus, its mayor said on Sunday.
“If New York City is not (made) whole, it will drag down the entire region, and it will hold up the entire national economic restart,” Mayor Bill de Blasio, a Democrat, said on the Fox program “Sunday Morning Futures.”
Like de Blasio, many of the nation’s governors – Democrats and Republicans alike – have pressed the Trump administration and Congress to come forward with a sizable relief package.
“We will have state and local (aid), and we will have it in a very significant way,” House of Representatives Speaker Nancy Pelosi, the top Democrat in Congress, said on CNN’s “State of the Union.”
“The governors are impatient,” Pelosi added. “Their impatience will help us get an even bigger number.”
Trump has shown a willingness to support aid for cities and states, but some fellow Republicans – including Senate Majority Leader Mitch McConnell – have voiced wariness, citing a mounting federal debt load.
McConnell, in remarks that have drawn sharp rebukes from various governors as well as Democratic lawmakers, has suggested that states should declare bankruptcy instead.
Asked whether Trump would support providing hundreds of billions of dollars to the states, Mnuchin said any further relief would have to receive support from both parties.
“This is a war. We’ll win this war. If we need to spend more money we will, and we’ll only do it with bipartisan support,” Mnuchin told “Fox News Sunday.”
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U.S., Mexico, Canada to hold ‘robust’ talks on trade deal
The United States, Mexico and Canada will next week hold their first formal talks on their continental trade deal, with particular focus on labor and environmental obligations, the U.S. government said on Friday.
“The ministers will receive updates about work already underway to advance cooperation … and will hold robust discussions about USMCA’s landmark labor and environmental obligations,” the office of U.S. Trade Representative Katherine Tai said in a statement.
The United States is also reviewing tariffs which may be leading to inflation in the country, economic adviser Cecilia Rouse told reporters at the White House on Friday, a move that could affect hundreds of billions of dollars in trade.
The United States, testing provisions in the new deal aimed at strengthening Mexican unions, this week asked Mexico to investigate alleged abuses at a General Motors Co factory.
(Reporting by David Ljunggren; Editing by Hugh Lawson and Jonathan Oatis)
The Toronto Stock Exchange rises 0.15% to 19,135.81
* The Toronto Stock Exchange’s TSX rises 0.15 percent to 19,135.81
* Leading the index were Canadian Tire Corporation Ltd <CTCa.TO>, up 10.6%, WSP Global Inc, up 9.2%, and Sunopta Inc, higher by 7.5%.
* Lagging shares were Turquoise Hill Resources Ltd, down 18.5%, AcuityAds Holdings Inc, down 17.0%, and Pan American Silver Corp, lower by 10.3%.
* On the TSX 125 issues rose and 97 fell as a 1.3-to-1 ratio favored advancers. There were 12 new highs and 2 new lows, with total volume of 239.1 million shares.
* The most heavily traded shares by volume were Enbridge Inc, Manulife Financial Corp and Suncor Energy Inc.
* The TSX’s energy group fell 2.80 points, or 2.2%, while the financials sector climbed 4.42 points, or 1.3%.
* West Texas Intermediate crude futures fell 3.47%, or $2.29, to $63.79 a barrel. Brent crude fell 3.32%, or $2.3, to $67.02 [O/R]
* The TSX is up 9.8% for the year.
This summary was machine generated May 13 at 21:03 GMT.
Rising Canadian Dollar could hit export outlook, affect monetary policy
If the buoyant Canadian dollar continues to rise it could create headwinds for exports and business investment as well as affecting monetary policy, Bank of Canada Governor Tiff Macklem said on Thursday.
The currency has jumped about 4% since the central bank updated its projections in April, driven by surging commodity prices. Canada is a major exporter of energy, lumber, minerals and agricultural products. It hit a six-year high on Wednesday.
“We’ve highlighted that a stronger dollar does create some risk,” Macklem told reporters after a speech to university students in his most detailed comments yet about the potential drawbacks of a more muscular currency.
“If it moves a lot further, that could have a material impact on our outlook and it is something we have to take into account in our setting of monetary policy.”
Further gains could drag down export projections. “If we’re less competitive, our export profile is weaker, that also probably means that our investment profile will be weaker,” he said.
The Canadian dollar was trading 0.4% lower at 1.2180 to the greenback, or 82.10 U.S. cents, pressured by a sharp decline in oil prices.
Macklem earlier said that some of the monetary policy tools the bank is using to address the COVID-19 pandemic, such as quantitative easing (QE), could widen wealth inequality and that it was looking closely at the issue.
While the QE program has stimulated demand and helped create jobs, it was is boosting wealth by inflating the value of assets that “aren’t distributed evenly across society”, he said.
The bank had been buying C$4 billion ($3.3 billion) of government bonds a week but last month cut that to C$3 billion, becoming the first major central bank to trim a pandemic-era money-printing stimulus program.
It also signaled it could start lifting interest rates in late 2022, as it hiked the outlook for the Canadian economy.
Macklem reiterated Thursday that the benchmark rate would stay at its current record low 0.25% until inflation was sustainably at the 2% target. The bank, he added, would continue to use monetary policy tools to support a “complete recovery.”
(Additional reporting by Fergal Smith in Toronto; Editing by Steve Orlofsky and John Stonestreet)
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Europe kicks off vaccination programs | All media content | DW | 27.12.2020 – Deutsche Welle
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