Chances of another federal stimulus package got a boost as Democrats swept this week’s Senate runoff elections in Georgia, offering the prospect of more support for people and businesses hammered by the pandemic.
With Raphael Warnock defeating Kelly Loeffler, and Jon Ossoff prevailing over David Perdue, the result creates a 50-50 split between Republicans and Democrats in the Senate for two years. But since Vice President-elect Kamala Harris votes in the case of a tie, the victories mean Democrats will effectively control both the presidency and Congress.
And that has important implications for the nation’s economic recovery.
In the near term, that could result in a US$750 billion to US$1 trillion pandemic relief package this year on top of the US$900 billion in aid signed into law last month, Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG, said earlier this week. The precise impact of a package on economic growth would depend on the details, but it presents “a sizable upside risk to our growth forecast” in 2021, currently 4.3 per cent.
Economists predict additional aid could include support for state and local governments, another extension of enhanced jobless benefits and more stimulus payments like the US$2,000 direct payments supported by both President-elect Joe Biden and President Donald Trump.
What Bloomberg’s Economists Say…
“We think additional near-term pandemic relief and accompanying stimulus could stretch into the US$600 billion to US$800 billion range. Subject to details and the course of the pandemic, the high end could be sufficient to lift growth by roughly 1.7 percentage points in 2021, to 5.2 per cent year-over-year, with a faster pace continuing into 2022.”
— Andrew Husby, economist
Jefferies LLC economists said in a note that they see Democratic victories in both seats spurring an additional US$1 trillion of stimulus in the next few months, adding about two percentage points to economic growth over the next two years.
U.S. stocks and long-term Treasury yields jumped Wednesday with the vote count nearly complete, though the S&P 500 Index gave up more than half its gain after Trump supporters stormed the Capitol building and disrupted the process for finalizing Biden’s victory in the Electoral College. Traders also boosted expectations for inflation in coming years, as five-year breakeven rates steadied around a two-year high.
The unemployment rate, which many economists are already expecting to come down substantially this year amid widespread vaccinations and a snapback in activity, could be slightly lower at the end of the year — maybe 0.2 or 0.3 percentage points — as a result of a Democratic sweep compared with Republican control of the Senate, said Lewis Alexander, chief U.S. economist at Nomura Securities International Inc.
Additional stimulus would also accelerate the nation’s return to pre-pandemic gross domestic product and unemployment levels, Luzzetti said.
But in the longer term, a razor-thin majority in both the House of Representatives and the Senate will make it tough to get agreement among Democrats on bigger policy shifts, Luzzetti said.
The need to get consensus among senators ranging from Bernie Sanders on the left to moderate Joe Manchin will likely constrain Biden’s policy goals. Biden, for example, pledged to raise taxes on corporations and people earning more than US$400,000 a year during his campaign.
With a 50-50 split, Goldman Sachs Group Inc. analyst Alec Phillips expects tax increases to be around a quarter of what the campaign proposed.
One potential area for bipartisan compromise is infrastructure, which could have a positive impact on the economy in several ways including job creation. If passed later this year, it could support the economy in 2022.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
