Washington D.C, United States of America (USA)- The US Gross Domestic Product (GDP) has shrunk by 0.9 percent on an annualized basis from April through June.
Businesses in recent quarters have tried to replenish stockpiles drawn down during the pandemic and in trying to adjust for supply chain upheaval, they have found themselves overstocked at a time when consumers have pulled back on some purchases.
The drop in the GDP reflects decreases in government spending, retail trade, and other sectors in the country.
On Wednesday, the Federal Reserve raised the benchmark interest rate by three-quarters of a percentage point in its ongoing battle to tamp down raging price pressures that are squeezing American families.
It was the second straight 75 basis point increase, and the fourth rate hike this year, as US Central Bankers move aggressively to cool the strongest surge in inflation in more than four decades, without derailing the world’s largest economy.
Although Thursday’s initial estimate marked a sharp drop from the 6.7 percent expansion the economy underwent in the second quarter of 2021, the White House has been adamant that the world’s largest economy, despite being buffeted by decades-high inflation and a cascade of supply shocks, remains fundamentally sound.
“It’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation but even as we face historic global challenges, we are on the right path,” said President Joe Biden.
At the same time, Federal Reserve chairperson, Jerome Powell, said he does not think the country is currently in a recession but cited that an even bigger rate hike is possible.
Powell reiterated the importance of considering various key economic measures as the Central Bank determines future rate moves. However, Powell said the first read of a GDP report should be taken with a pinch of salt.
“Inflation is much too high. An unusually large increase could be appropriate but we are trying to do just the right amount. We are not trying to have a recession and we don’t think we have to because there are too many areas of the economy that are performing too well.
It’s necessary to have growth slow down. We think that there’s a path for us to be able to bring inflation down while sustaining a strong labour market,” said Powell.
Inflation in the US rose to 9.1 percent last month, the fastest rate since 1981, driven mainly by higher prices for fuel and food.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.
She says the changes will come into force in December and better reflect the housing market.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
