Economy

Unrealistic economic cheerleading is no solution to a lingering COVID-19 crisis: Don Pittis – CBC.ca

Published

4 years ago

August 4, 2020

Pessimism does not come naturally to the world of business, which may be why there was so much early enthusiasm for the idea of a V-shaped recovery.

Based on a graphic portrayal of the economy’s initial sharp decline, the V-shape, as opposed to W, U or L, was seen as the most optimistic path.

The concept was that after a steep plunge down to the bottom of the V caused by the novel coronavirus and lockdown, economic activity would rebound right away as everyone went back to their old jobs and resumed their spending.

Even with the wisdom of hindsight, it is not entirely clear that governments could have orchestrated that perfect recovery. Clearly some — including our southern neighbour — could have done a much better job.

Economic chain reaction

As we wait for the latest numbers on Canadian trade and fresh jobs data for both the U.S. and Canada this week, a sharp revival seems ever more unlikely, as a chain reaction of grim events echoes through the Canadian and global economies.

And while Canadian leaders can be congratulated for getting COVID-19 under control and patching some of the worst cracks with bailouts, it is becoming increasingly clear that the outbreak is inflicting longer-term damage — damage we may begin to see in trade figures on Wednesday.

Early evidence of a decline in trade was pointed out by David Parkinson in the Globe and Mail last week, when he drew attention to the fact that revenue ton-miles — a potential proxy for trade — at CN and CP Rail were down 16 per cent and 12 per cent, respectively.

In a globalized economy, no country stands alone. And with the U.S. our biggest trade partner, it is hard not to blame — as U.S. Federal Reserve chair Jerome Powell did last week — the failure of the United States to stop the spreading outbreak of the disease.

50 years of US GDP <a href=”https://t.co/nEoYUuHk3C”>https://t.co/nEoYUuHk3C</a> <a href=”https://t.co/xQcheqAeap”>pic.twitter.com/xQcheqAeap</a>

—@TheStalwart

The Fed chair warned that the renewed U.S. flareup, now seen moving from Sunbelt states to the Midwest, would continue to be a drag on the economy. While the central bank would “plan for the worst,” Powell said, eventually businesses would reopen.

“But there’s probably going to be a long tail where a large number of people are struggling to get back to work,” he said.

That is one of the reasons economic forecasters are not predicting the same large rebound in jobs for July that we saw in the June data.

But even as Canadian economic growth snapped back in May, regaining almost half its losses, there are increasing signs the second half of the year will be much harder. A predicted second wave of the disease in Canada will not be the only thing putting the brakes on a recovery.

Pandemic led to falling dominoes

The day after Powell’s gloomy outlook, news came that the U.S. economy had contracted by 33 per cent, the biggest reduction on record, making it increasingly clear that the dominoes had started to fall and that Powell’s long tail would apply to more than just jobs.

Just like the viral contagion that began the process, parts of the economy that we see as quite disparate have linkages that lead to transmission in a vicious circle. What we have seen is that government attempts to stem the tide by flooding cash into markets, businesses and housing — and into the pockets of the unemployed — simply cannot fill all the gaps.

Six months ago, back when we thought the novel coronavirus could largely be contained to China, economists were already warning that the severity of its impact would depend on how long the epidemic ― it had yet to be labelled a pandemic — lasted.

Masked Brazilians play dominoes last month in the capital, Brasilia. Economic downturns in countries hard hit by the virus have led to a contagion of reduced global trade. (Adriano Machado/Reuters)

Three months ago, independent real estate analyst Ben Rabidoux suggested house prices would suffer very little if the crisis ended quickly — a time frame he put at less than six months. Meeting that deadline now seems unlikely.

In May, tax historian Shirley Tillotson remarked on how previous crises that governments expected would soon be over had a way of extending or even worsening. And while acknowledging excessive pessimism could make things worse, the U.S. response to the pandemic has been a lesson that unrealistic cheerleading can have a more dire effect.

The end, or the scaling back, of income support programs in the U.S. may be intended to force people back to work. But as Powell implied, those jobs no longer exist.

The list of bankruptcies is long, including in retail, a big employer on both sides of the border. And even if creditor protection allows some of those businesses to resume operations, as DavidsTea announced it would last week, creditors will be out of pocket.

The tea shop’s 18 Canadian stores, downsizing from nearly 200 before the pandemic, will mean jobs will disappear and the rest of the storefronts will be looking for new tenants.

Situation far from hopeless

The purchase by Canadian construction giant Bird Construction of the No. 3 builder, Stuart Olson, may keep its projects alive, but it will almost inevitably lead to a reduction in jobs since most of the cash went to paying off accumulated debt. Stuart Olson and DavidsTea are just two recent examples of the way one thing has led to another during this economic decline.

A fall in oil exploration, a decline in immigration and perhaps worse — the danger of growing political divisions in the U.S. — will compound themselves into damage to other parts of the economy.

In Canada, it seems outrageous that the WE Charity controversy has diverted so much focus away from the essential task of developing long-term strategies to rebuild a broken economy.

But the problem is far from hopeless. Before the pandemic, full employment and, in many sectors, an output glut were challenges to new businesses and new growth.

Wiser governments around the world are now setting aside political squabbling and — while temporarily shoring up the economy — are devising strategies to employ unused economic capacity as the raw material for the next recovery.

Follow Don on Twitter @don_pittis

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Business

A timeline of events in the bread price-fixing scandal

Published

9 hours ago

September 19, 2024

Anne Joseph

Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

9 hours ago

September 19, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

23 hours ago

September 18, 2024

Anne Joseph

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

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