US Economy Dodges Harsher Hit on Inflation From Hurricane Ian - BNN Bloomberg | Canada News Media
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US Economy Dodges Harsher Hit on Inflation From Hurricane Ian – BNN Bloomberg

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(Bloomberg) — Hurricane Ian has left a path of destruction behind, destroying countless homes, ruining citrus crops and risking fragile supply chains, but the storm’s skirting of a key US fertilizer-production area in Florida means the broader US economy was spared from the worst.

Ian hit the coast of Fort Myers in the country’s third-largest state just shy of the most-powerful Category 5 level on Wednesday and made a second landfall in South Carolina Friday. In addition to the human tragedy, the storm is set to be one of the top-10 costliest storms in the US, resulting in about $70 billion to $120 billion in economic damage.

The impact is broad in Florida, including insured and uninsured residences, office buildings, infrastructure and a hit on the key tourism industry. The closure of southeastern distribution channels for products ranging from autos to retail goods may have a domino effect on the rest of the country. But a more lasting hit to inflation was likely avoided as the storm spared a critical production center for fertilizer used by farmers in the US and around the world. 

“The storm is devastating for some of the counties in Florida, but the macroeconomic impact is fairly minor,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics. He forecasts the resulting decline in economic output — including lower consumer spending and paused business activity — may shave a few tenths of one percentage point off third-quarter economic growth.

Alongside the devastation in some Florida counties, Ian has exposed the growing risk of climate disasters and the scale of havoc they can wreak on the economy. Scientists warn that storms are increasing in frequency and severity as global temperatures rise. In the US, that leaves coasts at particularly high risk of more flooding, property damage, and unemployment — in addition to life-threatening conditions. 

Natural disasters cost $280 billion globally last year, according to insurer Munich Re, with damage in the US accounting for about half that value. Much of it wasn’t insured, leaving the tab to consumers, governments and businesses. 

Total insured damages from Hurricane Ian could be as high as $120 billion, according to AccuWeather, whose estimates tend to be higher than other groups. Research firm Enki Holdings LLC boosted its estimated costs to about $71 billion — including lost economic output from tourism and damaged infrastructure and homes — after the storm strengthened towards South Carolina on Friday. Other estimates ranged from $40 billion to $55 billion.

The economic impact filters through damage to properties, crops and transportation infrastructure including airports and roads. After imports were increasingly diverted from clogged West Coast ports during the pandemic, Southeastern hubs including Jacksonville, Florida, and Charleston, South Carolina, now handle more diversified cargo, highlighting how Ian could eventually cause supply disruptions across industries.

Trucking rates are also likely to increase in coming months after falling this year, as tractor-trailers and flatbed trucks redeploy to hard-hit parts of Florida with loads of rebuilding materials, tarps, water and other supplies, said Robert Weist, a vice president of transportation at Crowley Maritime Corp. in Jacksonville.

“It’s going to tighten up,” said Weist, whose company employs 7,000 people and operates its own trucks, vessels and shipping terminals.

Labor markets usually suffer a blow after natural disasters, with thousands of people displaced. When Hurricane Harvey, another Category 4 storm, hit Texas in 2017, unemployment claims in the state skyrocketed by more than four times that year’s average. 

Damaged oranges in Florida have farmers preparing for major losses in the state that produces more than 70% of the country’s citrus, with orange juice futures skyrocketing in an industry already facing price crunches. 

When it comes to property, more than 7.2 million residences are at a medium-to-high flash-flood risk from the Category 4 storm, according to CoreLogic, with total potential reconstruction costs of about $1.6 trillion. 

While local damages mount, the national economy likely avoided the worst-case scenario. Florida is a major producer of phosphate fertilizer, including plants owned by Mosaic Co., which produces about half the country’s supply. A major hit to these facilities would have led to a jump in fertilizer prices and agriculture costs that would have eventually fed through to food prices for consumers.

Ian’s path skirted the area and Mosaic’s early assessments show storm water was well contained.

“We averted disaster to the fertilizer industry with the way the storm tracked,” said Alexis Maxwell, a Bloomberg Intelligence analyst. Spot prices for Florida fertilizer declined in the week leading up to the hurricane’s landing. Farmers usually buy phosphate fertilizer in November, applying the nutrients to prepare for future planting after they’ve pulled corn and soybeans out of the ground.

As of Saturday, ports had reopened, including in Jacksonville, Florida’s biggest container port and a main trade gateway for autos, and Charleston.

Distribution-center operators in parts of the Southeast felt fortunate that Hurricane Ian shifted northward. George Powers, who operates warehouses in Savannah and Charleston, saw little setback.

“We didn’t have any damage and were back up and running today,”Powers, who’s chief executive of TradePort Logistics, said on Saturday.

©2022 Bloomberg L.P.

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A timeline of events in the bread price-fixing scandal

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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)

The Canadian Press. All rights reserved.

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

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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)

The Canadian Press. All rights reserved.

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

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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.

The Canadian Press. All rights reserved.

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