People walk through Times Square, in New York, on July 29.
ED JONES/AFP
The promise of a “normal” U.S. economy this summer, which kicked off with the June revival of restaurants, air travel and baseball games, is transforming into an uncertain fall of rising health and economic risks.
Labor Day weekend, the traditional end of the U.S. summer season, was pegged as the moment when the economy would finally transition out of the pandemic slump, with private sector jobs and wages replacing unemployment benefits.
Instead, the summer is closing with rising COVID-19 case counts, hospitals bulging with patients, a sharp slowdown in jobs and dark predictions. Most startling – the University of Washington’s Institute for Health Metrics and Evaluation projects that between now and Dec. 1 there will be 100,000 COVID deaths, more than in the same period last year, when a wave of winter infections took hold and vaccines were not yet available.
“I don’t think fall 2021 is going to give us the catharsis we were waiting for,” said Nick Bunker, economic research director for hiring site Indeed, or provide a clear view of how fast U.S. job markets can recover the 5.3 million jobs missing from before the pandemic. “The transition is going to be longer than expected. The issue is, is it a stumble or does the baton get dropped?”
Nonfarm payrolls increased by 235,000 jobs last month after surging 1.053 million in July, the Labor Department said Friday. Economists had expected 728,000 new jobs.
Special $300-per-week unemployment benefits end on Saturday. While employers hope that will usher new job applicants into a labour-starved market, there are signs the pandemic may have begun to curb their hiring plans instead.
The reopening of schools, far from smoothing the way for parents to return to full-time jobs, has been marked by erratic outbreaks, quarantines and closures, as school boards battle over masking students.
The manager at The Irish Whisper, a pub near the Gaylord National Resort and Convention Center in Oxon Hill, Maryland, said that business has fallen off since an initial summertime rush.
“It’s not as great as pre-COVID, but it’s better than not having anything,” said the manager, who only gave his first name Andrew. “I thought we were in the clear and then this variant emerged.”
After a strong start early this summer, attendance is dropping in baseball stadiums.
BIDEN’S VIRUS OVERSHADOWED
It is a particularly sensitive moment for U.S. President Joe Biden.
The Democratic president has taken a hit in the polls from the resurgent virus, faces criticism over the Afghanistan withdrawal and must deal with the aftermath of Hurricane Ida and a gauntlet of deadlines in Congress in coming weeks to keep the government funded and his economic agenda on track.
“There’s a lot more work to do,” to fix the U.S economy, Biden said Friday, addressing the weak jobs numbers. “”We need to make more progress in fighting the Delta variant,” he said, repeating that it was a pandemic of the unvaccinated.
Biden’s strategy of wiping out COVID by getting all of the United States vaccinated was hindered by a politically charged antivaccination movement this summer, and the pace of vaccinations has slowed since peaking in April.
A run of higher-than-expected inflation due to supply chain woes and labour shortages consumed what would otherwise have been healthy wage gains. A closely watched index of consumer confidence, which can influence spending, tumbled in August to a six-month low.
Progress on the virus “is (Biden’s) No. 1 advantage, but people are discouraged and frustrated and it’s also interacting with the economy,” said one Biden adviser not authorized to speak on the record.
Administration officials believe the recovery largely remains on track, and infrastructure and spending plans may partly make up for the lapsed weekly unemployment insurance payments.
Democrats are hoping to finalize a $1-trillion bipartisan infrastructure bill as soon as this month while also working on a $3.5-trillion bill that could only secure party-line support.
“This bill is going to end years of gridlock,” Biden said of the smaller infrastructure bill. “Both literally and figuratively it’s going to change things,” he said.
Republicans are fighting the administration’s most ambitious spending plans. Goldman Sachs economists now estimate the “fiscal cliff,” as spending rotates away from the record government transfers of the past 18 months, will be a noticeable drag on growth by late 2022.
Oxford Economics economists expect to trim their outlook for 2021 gross domestic product growth to 5.5 per cent, down from 7 per cent in early August.
The reduction reflects “the deteriorating health situation weighing on optimism and spending, lingering capital and labour supply constraints and a slower inventory rebuild,” Oxford chief U.S. economist Gregory Daco said in an e-mail.
DELTA WEIGHS ON HIRING
The August jobs data released Friday showed the current surge of infections, which drove the number of new cases from around 11,000 a day in mid-June to almost 150,000 daily this week, slowed hiring and the broader recovery.
“Today’s report has the Delta variant written all over it,” Indeed’s Bunker said. “It is clear that the recent surge in COVID-19 cases is a strong headwind to the labour market.”
Economists are not expecting the sort of collapse in demand for restaurants, travel and other services seen in earlier virus waves. Many Federal Reserve officials feel businesses and families have learned to navigate the situation, either finding ways to lower the risk of infection as they resume work and business, or worrying less about infection because they’re vaccinated.
The disappointing 235,000 in new jobs comes as the unemployment rate fell to 5.2 per cent from 5.4 per cent in July. It has, however, been understated by people misclassifying themselves as being “employed but absent from work.”
Some employers argue that job growth figures could be much higher, given the record number of openings, if they had not had to compete with unemployment benefits. That hasn’t been borne out in states that ended the federal benefits early over the summer, where there’s little evidence more people went back to work.
Instead, employers seem to be pulling back on hiring themselves.
Hiring at around 50,000 small businesses has fallen since midsummer, data from time manager Homebase shows, while a work force recovery index from time management firm UKG, which analyzes time card punches, fell 2.4 per cent from July to August.
It was sharpest in the southeast, where the spread of the virus was most intense.
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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
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