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U.S. economy faces historic shock, with 16 per cent joblessness possible: Trump adviser – The Globe and Mail

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White House economic adviser Kevin Hassett, seen here on Sept. 10, 2018, told reporters the U.S. jobless rate would likely hit 16% or more in April.

KEVIN LAMARQUE/Reuters

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.

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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.

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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.

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“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.

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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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Minimum wage to hire higher-paid temporary foreign workers set to increase

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OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

The Canadian Press. All rights reserved.

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PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

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OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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Statistics Canada says levels of food insecurity rose in 2022

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OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

The Canadian Press. All rights reserved.

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