Economy

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

Published

4 years ago

March 17, 2021

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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.”

Reuters

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

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

21 hours ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

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Economy

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

Published

5 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

6 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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