Economy

US economy to grow faster than forecast, says Federal Reserve – BBC News

Published

4 years ago

March 17, 2021

A worker carries a ladder into a home under construction at the planned community at River Islands in Lathrop, California Thursday, Mar. 4, 2021.

The US central bank expects much stronger growth this year than previously forecast, as vaccination rates rise and government relief funds start flowing into the economy.

The Federal Reserve forecast average growth of 6.5% this year – up from 4.2% it predicted in December.

The outlook for recovery in the jobs markets has also brightened, the Fed said.

Despite the upgrade, officials did not move to raise interest rates.

And most members expect to keep borrowing costs near zero until after 2023, according to the projections released by the Fed after its regular meeting.

Federal Reserve Chair Jerome Powell said the bank wanted to see proof of a more complete recovery before altering its policies, which are focused on stimulating economic activity.

Inflation

Millions of people remain out of work and the parts of the economy most affected by the pandemic – such as leisure and hospitality – remain weak, he said. The damage has disproportionately affected minority and low-wage workers, who are often the last to benefit from an economic rebound, he added.

“The recovery has progressed more quickly than generally expected,” he said at a press conference after the meeting. “While we welcome these positive developments, no one should be complacent.”

The improved outlook – a compilation of independent forecasts by the bank’s board members – includes projections that inflation could heat up later this year, reaching 2.4%, above the bank’s historic 2% target. But Mr Powell said such a move was likely to be “transient”.

Share prices on Wall Street jumped after the announcement.

“With the Fed keen not to tighten policy until it sees inflation on track to moderately exceed its 2% goal on a sustained basis, and also emphasising that any increase in inflation should be transitory, we expect the Fed will follow through on its commitment not to raise rates for a while yet,” said Michael Pearce, senior US economist at Capital Economics.

“The key risk is that the rise in inflation that most forecasters anticipate this year proves more enduring than Fed officials currently expect.”

The economic recovery anticipated in the US is more robust than that in Europe.

But Mr Powell said he was not worried that weak growth abroad would hurt the US, the main focus of the bank. “When the US economy is strong, that strength tends to support global activity as well,” he said.

“I’d love to see Europe growing faster, I’d love to see vaccination rollout going more smoothly but I don’t worry too much about us in the near term,” he said. “I think we’re in a good place. It’s all ahead of us but the data should get stronger fairly quickly and remain strong for some time.”

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Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

2 days ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

3 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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Economy

Statistics Canada says manufacturing sales fell 1.3% to $69.4B in August

Published

3 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.

The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.

The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.

Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.

Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.

Overall manufacturing sales in constant dollars fell 0.8 per cent in August.

This report by The Canadian Press was first published Oct. 16, 2024.

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