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Economy

U.S. labour market recovery fading; housing, factories underpin economy – The Globe and Mail

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The number of Americans filing new applications for unemployment benefits decreased modestly last week as the COVID-19 pandemic tore through the U.S. Reuters

The number of Americans filing new applications for unemployment benefits decreased modestly last week as the COVID-19 pandemic tears through the country, raising the risk that the economy will shed jobs for a second straight month in January.

Despite the labour-market woes, the economy remains anchored by strong manufacturing and housing sectors. Other data on Thursday showed homebuilding and permits for future residential construction surged in December to levels last seen in 2006. Factory activity in the mid-Atlantic region accelerated this month, with manufacturers reporting a boom in new orders.

The services sector has borne the brunt of the coronavirus crisis, disproportionately affecting lower-wage earners, who tend to be women and minorities. Addressing the so-called K-shaped recovery, where better-paid workers are doing well while lower-paid workers are losing out, is one of the key challenges confronting U.S. President Joe Biden and his new administration.

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White House economic adviser Brian Deese said the fragile labour market underscored the urgency for U.S. Congress to act quickly on Mr. Biden’s US$1.9-trillion relief plan to “get this virus under control, stabilize the economy and reduce the long-term scarring that will only worsen if bold action isn’t taken.”

Initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 900,000 for the week ended Jan. 16, the Labour Department said. Economists polled by Reuters had forecast 910,000 applications in the latest week.

Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.4 million people filed claims last week.

Out-of-control coronavirus infections are disrupting operations at businesses such as restaurants, gyms and other establishments where crowds tend to gather, reducing hours for many workers and pushing others out of employment.

Consumers are also hunkering down at home, dampening demand. COVID-19 has infected more than 24 million Americans, with the death toll exceeding 400,000 since the pandemic started.

Stocks hovered near record highs on Thursday, while the U.S. dollar fell against a basket of currencies. U.S. Treasury prices were lower.

Some of the elevation in claims reflects people re-applying for benefits following the government’s recent renewal of a US$300 unemployment supplement until March 14 as part of the nearly US$900-billion in additional fiscal stimulus. Programs for the self-employed, gig workers as well as those who have exhausted their benefits were also extended.

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The claims data covered the week during which the government surveyed establishments for the non-farm payrolls component of January’s employment report. Claims were slightly higher between the December and January survey period.

“Another negative print for payrolls in January remains within the realm of possibility,” said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, N.C.

The economy shed 140,000 jobs in December, the first job losses since April when authorities throughout the country enforced stay-at-home measures to slow the spread of the virus. Retail sales fell for a third straight month in December.

Though jobless claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak during the 2007-09 Great Recession.

The claims report showed the number of people receiving benefits after an initial week of aid decreased 127,000 to 5.054 million during the week ending Jan. 9.

About 16 million people were on unemployment benefits under all programs at the start of the year. The decrease from 18.4 million at the end of 2020 reflected the temporary expiration of government-funded benefits. The economy has recovered 12.4 million of the 22.2 million jobs lost in March and April.

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But housing and manufacturing are bucking the labour-market distress. In a separate report on Thursday, the Commerce Department said housing starts jumped 5.8 per cent to a seasonally adjusted annual rate of 1.669 million units in December, the highest level since September, 2006.

Building permits for future homebuilding, which typically lead starts by one to two months, accelerated 4.5 per cent to a rate of 1.709 million units in December, the highest since August 2006. Surging lumber prices and labour and land shortages could, however, slow the housing market momentum.

“Rising material prices, including lumber, are beginning to weigh on builder confidence and reduce housing affordability,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pa.

A third report from the Philadelphia Federal Reserve showed its business conditions index soared to a reading of 26.5 this month from 9.1 in December. A measure of new orders at factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware, vaulted to a reading of 30.0 from 1.9 in December. Manufacturing is being boosted by businesses rebuilding inventories.

Factory employment measures also improved. While manufacturers reported paying more for raw materials, they were also able to increase prices for their goods. This mirrored other manufacturing surveys, suggesting inflation could pick up and remain elevated for a while this year. Manufacturers were upbeat about capital investment plans in the six months ahead.

“Inflation is likely moving up and should continue to do so, albeit slowly,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pa.

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Economy

Freeland announces 18-member task force on women and the economy ahead of 2021 budget – The Globe and Mail

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Minister of Finance Chrystia Freeland responds to a question after delivering the 2020 fiscal update in the House of Commons on Parliament Hill in Ottawa on Nov. 30, 2020.

Sean Kilpatrick/The Canadian Press

Timed to coincide with International Women’s Day, Finance Minister Chrystia Freeland has announced the creation of an 18-member Task Force on Women and the Economy.

The panel will begin meeting this month in advance of the 2021 budget, which has not yet been scheduled. The Globe and Mail reported Monday that the Liberal government has ruled out releasing a budget in March or early April, meaning more than two years will have passed since the last federal budget was released in March, 2019.

Ms. Freeland’s Monday announcement said women represented the majority of workers in industries that have been the most affected during the pandemic, such as service, hospitality and tourism.

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In the fall economic statement, Ms. Freeland said the 2021 budget will include a plan to spend up to $100-billion over three years on supporting Canada’s post-pandemic recovery.

Also on Monday, Ms. Freeland will host the opening discussion at a two-day federal conference called Canada’s Feminist Response and Recovery Summit.

The panel features Armine Yalnizyan, an economist and Atkinson Fellow who has popularized the term “she-session” to describe the fact that women are facing disproportionally negative economic consequences as a result of the pandemic. Ms. Yalnizyan is also on the new task force.

The other three summit panelists are Monique Leroux, former president and chief executive officer of Desjardins Group and chair of the federal Industry Strategy Council, which issued policy recommendations for the government in December; former Indspire CEO Roberta Jamieson; and Sarah Kaplan, Director of the Institute for Gender and the Economy at the University of Toronto.

The women on the new task force include CEOs, child care advocates, economists, academics, and labour and Indigenous leaders.

In a report this month, RBC economists Dawn Desjardins and Carrie Freestone warned that the effects of the pandemic will mean that women are more likely than men to face an extended period of joblessness this year.

The RBC report found that almost half a million Canadian women who lost their jobs during the pandemic had not returned to work as of January.

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“Women have shouldered a heavier burden when the pandemic added home-schooling to their load,” it said. “In the last year, 12 times as many mothers as fathers left their jobs to care for toddlers or school-aged children.”


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Economy

Women Will Come To The Fore In The Feeling Economy – Forbes

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A recent study from Lero, the Science Foundation Ireland Research Centre for Software, towed a familiar path.  It revealed that adding women to software development teams not only boosted team performance but also reduced workplace delinquency.

“Companies should recruit more women to their development teams not only for obvious ethical reasons but because this will improve performance. Indeed, women software engineers significantly differ from men in terms of personality traits, which are related to higher job performance, ethics, and creativity. Men, despite having lower scores on emotionality, exhibit higher scores on the psychopathy trait, which may lead to a reduced level of team performance,” the researchers argue.

The thing is, should we training girls to enter “male” occupations or should we instead be simply themselves? It’s a notion that Roland Rust and Ming-Hul Huang believe will be at the heart of what they refer to as the “feeling economy” in their eponymous book.

The feeling economy

The feeling economy marks the transition from both the physical economy, where our economies were driven largely by brute force, into the thinking economy, where brains and logic were the determining factors, and into the feeling economy that will come to be dominated more by emotional intelligence, empathy, and creativity.

It’s a transition that is largely driven by improvements in technologies, such as AI and robotics, which mean that both physical and thinking economy work can be done more effectively by machines than by humans. It also means that it’s an economy that they believe will come to be dominated by women, who tend to be stronger in the kind of traits that will come to the fore.

“In the feeling economy, we expect that females will outnumber males for higher pay feeling jobs, such as healthcare and education,” they say. “In fact, those service industries are growing much faster than manufacturing, which is stagnant or declining.”

Skills for the future of work

It’s also noticeable that in Google’s famous Project Oxygen a few years ago, they found that of the eight skills associated with Google employees’ jobs, STEM skills were bottom of the pile in terms of importance. Far more important was the kind of soft skills that humans, and especially women, excel in.

And yet, as Tomas Chamorro-Premuzic famously pointed out several years ago, we still tend to recruit and promote men who are often wholly lacking in these skills. Hence, we tend to get men who are “self-centered, overconfident and narcissistic individuals as leaders”.

Which is wholly detrimental to our organizations, and even to society more broadly. During the pandemic, the compassionate leadership of the likes of New Zealand’s Jacinda Arden and Germany’s Angela Merkel were lauded after data from the World Economic Forum showed that countries with female leaders fared better. 

Similarly, research from the University of Buffalo says that female leaders tend to fit the servant leadership mold that is so important in our current time better than their male peers.

Supporting innovation

This kind of servant leadership also plays a crucial role in supporting the kind of innovations that will be so important in the years ahead. The importance of the “pivot” has been a fundamental part of the entrepreneurial playbook for much of the near-decade it’s been since Eric Ries first published his groundbreaking The Lean Startup but the ability to adapt has been especially crucial during a pandemic in which so much of what we thought we knew has been tipped upside down.

While research suggests that we tend to think of men as more creative than women, the reality is quite the opposite. The dichotomy exists in large part because we falsely assume that innovation is simply having a “eureka” moment. A second study examined the various areas in which managers support innovation, including encouraging employees to pursue a broad range of knowledge, capturing any ideas they have, managing diverse teams, stretching employees, and providing feedback. Interestingly, across all eight of the domains, women outperform men.

The importance of psychological safety has been well documented due to the groundbreaking work of Harvard’s Amy Edmondson, but research from Cambridge’s Judge Business School shows that this is especially important during a crisis. Perhaps most importantly, the strong presence of women helped to provide the kind of psychological safety that is so important.

Holding women back

Despite the evident benefits women bring to teams and organizations, there continue to be numerous psychological biases that prevent them from contributing to their fullest.

For instance, research from Wharton’s Adam Grant revealed that it’s actually incredibly difficult for women to speak up with challenging ideas, whether involving innovations or otherwise. He reveals that when men do this, they tend to get praised in subsequent performance reviews, but for women, the reverse is true. 

A subsequent Yale study shows that this effect is not diminished when women gain leadership roles either. Indeed, the leadership capabilities of powerful women were diminished the more outspoken they were.

If, as Rust and Huang argue, we’re entering the age of the Feeling Economy, then the skills women so often bring to our organizations will be more important than ever before. It’s vital, therefore, that we find ways to remove those barriers and those biases that so often hold women back.

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Economy

Biodiversity and the circular economy | Greenbiz – GreenBiz

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Making its way to the top of global agendas and the bottom of balance sheets, biodiversity recently has risen through the ranks of planetary priorities. As a result, I’ve noticed a growing number of organizations calling to connect the dots between the circular economy and biodiversity, so I thought it worthwhile to consider their relationship — one that I instinctively felt to be a bit of a stretch. 

Although fundamentally aligned in their overlapping aims to address resource extraction, water scarcity, energy generation, toxicity and climate change, in practice circular economy strategies and biodiversity preservation seem to be one step removed. 

For example, repairing or reselling a pair of jeans does not directly preserve biodiversity. But done at scale, product life extension and keeping materials in use for as long as possible does reduce the need to extract the same quantity of natural resources, and therefore reduces the strain on our ecosystems. The same can be said for climate change mitigation, given that climate change contributes to 11 to 16 percent of biodiversity loss, and circular economy strategies can reduce carbon emissions

A central aim of the circular economy is to curb the extraction of finite resources and to regenerate living systems — two strategies that support the preservation of biological diversity, but only if they are done right. 

No one framework or priority is intended to stand alone or address every problem in the world.

As companies champion the $7.7 trillion potential of the bioeconomy by 2030, a gradual move away from nonrenewable (and often petroleum-based) inputs has made manufacturers and materials scientists alike turn to bio-based materials as ideal inputs to more circular systems.

One example is the nuances of bioplastics, which are often produced through monoculture farming in deforested areas and use synthetic fertilizer. This actively decreases biodiversity and contributes to the 90 percent of biodiversity loss created by the way that we extract and process materials, fuels and food. 

I think the Dutch consultancy Circle Economy posed the question best: “You need biodiversity for a circular economy, but do you need a circular economy for biodiversity?” 

Personally, I don’t care. Connecting the dots between biodiversity and circularity isn’t necessarily additive, although it certainly can’t hurt.

Whether a company’s primary lens is sustainability, regeneration, net-zero, biodiversity, the circular economy or something else, what matters most is an aligned orientation of these solution sets to make sure we’re moving in the right direction. Neither the circular economy nor biodiversity preservation are ends unto themselves. These are means to move us towards a clean and resilient economy, equitable and prosperous communities and a healthy planet. 

No one framework or priority is intended to stand alone or address every problem in the world. 

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