The government’s estimate Friday that GDP grew at a 2.1% annual rate in the July-September quarter was unchanged from its previous estimate. Though the overall growth figure was unchanged, some of the individual components of GDP were revised.
Consumer spending for the quarter, for example, grew at a 3.2% annual pace, the government estimated, up from its previous estimate of 2.9% growth. The new strength was led by higher spending on personal services such as barber shops and nail salons. And housing, which had fallen for six straight quarters, posted a solid 4.6% increase in the third quarter.
On the other hand, the government revised down its estimate of business inventory restocking. Business investment was revised to show a slightly smaller 2.3% annual decline, still the second straight quarterly drop in that key category.
Economists are forecasting moderate growth in the current quarter and for at least the first three months of next year. But they say annual growth could be reduced by about one-half percentage point to 1.5% in the first quarter, reflecting Boeing’s temporary production shutdown of its troubled 737 Max jetliner, before regaining that lost output later.
Though 2% annual growth is below the gains of 3%-plus growth that Trump has pledged, it is far stronger than the recession many analysts feared just a few months ago, when concerns were escalating over the tensions in the U.S.-China trade dispute and weak growth overseas.
For all of 2019, the expectation is that GDP growth will come in at 2.3%, down from the 2.9% gain of 2018, which was the best since 2015. For next year, analysts generally think growth will slow further to 1.8% as the boost from the $1.5 trillion tax cut measure passed in 2017 fades further.
The economy may be getting some help from a preliminary trade deal announced last week that should at least cool tensions between the United States and China. That announcement, along with better economic data recently, has helped lift stock markets to new highs.
Three rate cuts by the Fed this year, partly reversing four rate increases last year, have helped fuel the rebound. And a budget agreement passed this week is expected to shower billions of dollars in increased spending on the military and domestic programs in the coming year, helping to support growth.
Yet even with those gains, analysts are forecasting that growth will slow further in 2020, hurt by continued overseas weakness.
Another headwind could be the 2020 presidential election. It is expected to raise business anxiety about the course of government policies, given the sharp differences between Trump and his Democratic challengers.
Palestinian Economy Hit Hard by Virus Needs Aid, World Bank Says – BNNBloomberg.ca
(Bloomberg) — The Palestinians will need outside help to overcome a poor economic outlook and widening budget deficit made far worse by the Covid-19 pandemic, according to a new World Bank report.
Already facing a growth slowdown and sizable deficit, the West Bank and Gaza Strip could see output shrink between 7.6% and 11%, depending on how fast the economy recovers from the virus, the World Bank said in its report published on Monday. President Mahmoud Abbas’s Palestinian Authority may watch its fiscal gap roughly double to more than $1.5 billion this year, and will need significant aid to restore growth and solve budgetary issues, the bank added.
“Several years of declining donor support and the limited economic instruments available have turned the ability of the government to protect livelihoods into a monumental task,” Kanthan Shankar, World Bank country director for the West Bank and Gaza, said in a release. “External support will be critical to help grow the economy during this unprecedented period.”
After economic expansion cooled from 8.9% in 2016 to just 0.9% last year, the pandemic forced World Bank officials to cut their 2020 expectations from a previous 2.5% increase. Restraints on movement helped to contain the spread of the disease but also hurt activity and government revenue.
In total, there have been more than 430 confirmed cases of the novel coronavirus across the West Bank and Gaza, with three deaths.
Israel, which occupies the West Bank and blockades Gaza along with Egypt, is loaning the Palestinian Authority as much as 800 million shekels ($227.8 million) over the coming four months to help make up for the loss of tax revenue. The rare deal is meant to ensure funding for hospitals and other key services.
World Bank officials focused on recommendations to upgrade the Palestinian telecommunications sector in cooperation with Israel, in order to further develop the digital economy. Israel maintains a tight grip on broad aspects of the Palestinian information and communications technology sector.
Tensions between Israelis and Palestinians are rising as Prime Minister Benjamin Netanyahu promises to move forward this summer with annexing West Bank territory viewed by Palestinians as the heart of their future state. Palestinian leaders have promised to end all forms of cooperation with Israel in protest.
Now That He Can Annex West Bank Land, Will Netanyahu Do It?
©2020 Bloomberg L.P.
People more important than the economy, pope says about Covid crisis – The Guardian
By Philip Pullella
VATICAN CITY (Reuters) – Pope Francis said on Sunday that people are more important than the economy, as countries decide how quickly to reopen their countries from coronavirus lockdowns.
Francis made his comments, departing from a prepared script, at the first noon address from his window overlooking St. Peter’s Square in three months as Italy’s lockdown drew to an end.
“Healing people, not saving (money) to help the economy (is important), healing people, who are more important than the economy,” Francis said.
“We people are temples of the Holy Spirit, the economy is not,” he said.
Francis did not mention any countries. Many governments are deciding whether to reopen their economies to save jobs and living standards, or whether to maintain lockdowns until they are sure the virus is fully under control.
The pope’s words were met with applause by hundreds of people in the square, many of whom wore masks and kept several meters from each other. The square was reopened to the public last Monday. Normally tens of thousands attend on a Sunday.
The last time the pope delivered his message and blessing from the window was March 1, before Italy, where more than 33,000 people have died from the virus, imposed a lockdown. The last restrictions will be lifted on Wednesday.
Francis led the crowd in silent prayer for medical workers who lost their lives by helping others.
He said he hoped the world would come out of the crisis more united, rather than divided.
“People do not come out of a crisis like this the same as before. We will come out either better or worse than before. Let’s have the courage to emerge better than before in order to build the post-crisis period of the pandemic positively,” he said.
(Reporting by Philip Pullella; Editing by Susan Fenton)
ANC Looks for New Levers to Boost South Africa's Economy – BNNBloomberg.ca
The head of economic transformation in South Africa’s ruling party proposed a range of measures to bolster the economy, ranging from encouraging the use of pension funds and the central bank to finance infrastructure spending to the creation of a state bank and pharmaceutical company.
Enoch Godongwana’s recommendations to the African National Congress come as the government tries to revive an economy devastated by the coronavirus pandemic.
“The Covid-19 shock is posing unprecedented challenges, the economic crisis entailed by the pandemic is unique,” Godongwana said in the May 22 document seen by Bloomberg. “Globally, central banks have reverted to their original role as bankers to their governments.”
While business and investors have been calling for strong government action to support Africa’s most-industrialized economy, the document may heighten concerns about state intervention and so-called prescribed investment — mandatory funding by private companies of certain sectors.
In the document, Godongwana proposed changing regulation 28 of the Pension Funds Act to boost the funding of infrastructure projects spearheaded by state development finance institutions using private capital. South Africa’s main state-owned DFIs are the Industrial Development Corp. and the Development Bank of Southern Africa, of which Godongwana is chairman.
He also suggested that the Reserve Bank help finance DFIs through the creation of a 500 billion-rand ($29 billion) fund. Money should also come from the Public Investment Corp., a 2.13 trillion-rand fund manager that oversees civil servants’ pensions, Godongwana said.
“While it faces increasing continental competition, the South African financial-services sector can rightly be said to endow our emerging-market nation with ‘the financial plumbing of a rich place’ with deep, liquid markets,” he said.
While the document is a break with the thinking of some ANC leaders that the state should be responsible for much of the investment in the economy, it does advocate increased government “guidance.”
“A narrow and flawed understanding of what the developmental state is has led to the erroneous conclusion that it is only about public investments and public ownership, with a related over-emphasis on the limited funds of the state,” he said. “A developmental state does not necessarily mean higher levels of state ownership, but high levels of guidance.”
In an interview with Johannesburg’s Business Times, which reported on the document earlier, Godongwana said the proposals didn’t amount to advocating for prescribed assets. They merely meant that regulations should be changed so that pension funds can invest in DFI’s if they wish to.
Godongwana didn’t answer a call to his mobile phone. Neither did Pule Mabe, the spokesman for the ANC.
The document also proposed the formation of a state bank, a pet project of Finance Minister Tito Mboweni, and a national pharmaceuticals company.
It also advocated, in contrast to the drive of some government departments, a swift move away from coal-fired energy to renewable power. The state-owned Central Energy Fund should be used to partner private investors in new projects, Godongwana said.
©2020 Bloomberg L.P.
Ex-Bloc Quebecois leader, longtime Quebec politician Michel Gauthier dead at 70 – battlefordsNOW
Canada approaches 91K coronavirus cases; sharp rise in daily deaths due to glitch – Globalnews.ca
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