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US hiring slows for 3rd month in sign of struggling economy – BayToday

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WASHINGTON — America’s employers added 661,000 jobs in September, the third straight month of slower hiring and evidence from the final jobs report before the presidential election that the economic recovery has weakened.

With September’s hiring gain, the economy has recovered only slightly more than half the 22 million jobs that were wiped out by the viral pandemic. Nearly 10 million jobs remain lost — more than were shed during the entire 2008-2009 Great Recession. And the pattern of slower hiring will delay a full recovery of jobs: Compared with September’s more modest gain, employers added nearly 1.5 million jobs in August, 1.8 million in July and 4.8 million in June.

The unemployment rate fell last month to 7.9% from 8.4% in August, the Labor Department said Friday. Since April, the rate has tumbled from 14.7%. But last month’s drop in joblessness reflected mainly a drop in the number of people seeking work, rather than a surge in hiring. The government doesn’t count people as unemployed if they aren’t actively looking for a job.

“There seems to be a worrisome loss of momentum,” said Drew Matus, an economist at MetLife Investment Management. “There’s a lot of caution on the part of employers.”

The September figures, Matus said, show that employers are working their existing employees for longer hours, particularly in services such as retail, warehousing, and restaurants and hotels, and may be reluctant to hire new people. Indeed, last month’s gains appeared to reflect mainly temporarily laid-off workers being recalled to their old jobs, continuing a trend in place since April, rather than people joining new employers. In a worrisome sign, the number of laid-off workers who say their jobs are gone for good rose from 3.4 million to 3.8 million.

The jobs report coincided with other data that suggests that while the economic picture may be improving, the gains have slowed since summer. The economy is under pressure from a range of threats. They include the expiration of federal aid programs that had fueled rehiring and sustained the economy — from a $600-a-week benefit for the unemployed to $500 billion in forgivable short-term loans to small businesses.

Friday’s numbers offered voters a final look at the most important barometer of the U.S. economy before the Nov. 3 presidential election — an election whose outcome was thrown into deeper uncertainty by the announcement early Friday that President Donald Trump has tested positive for the coronavirus.

Still-high unemployment is a potential political liability for Trump. Yet President Barack Obama was re-elected in 2012 even with unemployment at 7.8% on the eve of the election. And even as the economy has struggled to sustain a recovery, it has remained one of the few bright spots in Trump’s otherwise weak political standing. Roughly half of voters approve of his performance on the economy even though only about three in 10 voters believe the country is moving in the right direction.

But the president’s coronavirus diagnosis threatens to upend any political benefit he might derive from public views of the economy. With just a month to go before Election Day, Trump’s health status and his downplaying of a pandemic he has been accused of mishandling could overshadow almost everything else.

The September jobs report showed that women in their prime working years are quitting their jobs and leaving the workforce at much higher rates than men, a sign that remote schooling may be pushing many women to stay home.

“Women continue to bear the brunt of this recession,” said Julia Pollak, a labour economist at ZipRecruiter. “They are supervising at-home schooling.”

This is the first U.S. recession in which services jobs have been hardest hit, instead of goods-producing industries like manufacturing, and women make up a greater share of the workforce in service industries like retail and health.

And while the unemployment rate for Black workers fell sharply last month, it remained much higher than for whites. The African-American rate fell to 12.1% in September from 13% the previous month. For whites, unemployment dropped rom 7.3% to 7%. For Hispanics, the jobless rate fell from 10.5% to 10.3%.

A recent wave of layoffs by large companies has heightened fears that the viral outbreak still poses a serious threat to the economy.

Disney said this week that it’s cutting 28,000 jobs, a consequence of reduced customer traffic and capacity limits at Disney World in Florida and the ongoing closure of Disneyland in California.

Allstate said it will shed 3,800 jobs, or 7.5% of its workforce. Marathon Petroleum, the Ohio refiner, is slashing 2,000 jobs. And tens of thousands of airline workers are losing their jobs this month as federal aid to the airlines expires. The airlines had been barred from cutting jobs as long as they were receiving the government assistance.

While congressional negotiations, led by House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, continue, the prospect of a major new economic aid package before the November elections is highly uncertain.

The United States is hardly alone in struggling with a weakened job market. Unemployment has risen for a fifth straight month in Europe in August and is expected to grow further amid concern that government support programs won’t be able keep many businesses hit by coronavirus restrictions afloat indefinitely.

Until a vaccine is developed, many economists say hiring and economic growth won’t fully recover. Restaurants, for example, rehired many employees over the summer as outdoor dining picked up. But as temperatures cool, business may fall off again, which could force many restaurants to lay off workers again. One in six restaurants have shut down because of the viral pandemic, the National Restaurant Association says.

Slowing job growth has raised the spectre of a prolonged downturn that feeds on itself and becomes harder to fully reverse. Many temporary layoffs are becoming permanent as hotels, restaurants, airlines, retailers, entertainment venues and other employers anticipate a longer slump than they initially expected. There is also growing fear of a resurgence of the virus, which would compound the threat.

The longer that laid-off workers fail to find jobs, the more likely it is that they will have to look for new work with new employers or in different occupations.

___

AP National Political Writer Steve Peoples contributed to this report from New York.

Christopher Rugaber, The Associated Press



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Result of 2020 U.S. election has implications for Canadian economy – insauga.com

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Coverage of the U.S. election has split Canadians into three main camps: those who are relieved they live north of the border, those who don’t care, and those who are nervous either outcome with have consequences for us, the neighbour to the north.

A recent report from RSM Canada indicates the election outcome, combined with Canada’s reliance on the U.S. economy, might alter Canada’s recovery and longer-term outlook.

Based on the findings, Canada-China trade has been trending down since the beginning of the U.S.-China Trade War in 2018, while total trade between Canada and the United States increased during this period.

This indicates, based on the current administration’s inability to cap the domestic spread of the virus, a Donald Trump re-election could present economic risks to Canada, due to our dependence on them.

However, Trump’s protectionist tendencies suggest Canada may see further headwinds with its largest trading partner, should he be re-elected.

Additionally, Joe Biden’s proposed ‘Made in America’ tax incentive, which offers tax credits for companies in the U.S. that expand employment and salaries domestically, could potentially discourage future Canadian market expansion.

Further, Biden’s willingness to adopt Trump’s tough stance on China if elected suggests Canada will likely continue to be negatively affected by U.S.-China trade relations.

Moreover, Canadian oil pricing will be hit hard if Biden follows through on his campaign promise to cancel the Keystone XL pipeline–a critical venture for Western Canada oil producers that would provide direct access to the Gulf Coast refineries and world markets.

“Despite a rocky relationship between Canada and the current U.S. administration in recent years, it’s clear that a victory for either Trump or Biden would pose risks to Canada’s economy,” Alex Kotsopoulos, vice president of projects and economics with RSM Canada, said in a news release.

“The issue is that Canada has become increasingly dependent on its neighbour south of the border, and when you combine this with the strong ‘America First’ policies of both presidential candidates, Canada will feel the brunt of those decisions. Therefore, it’ll be important for the Canadian government to proactively engage with the new administration to shore up trade and supply chains, which will be vital in Canada’s own recovery,” he continued.

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Ottawa's economy to shrink 5.7% in 2020 before rebounding next year: Conference Board – Ottawa Business Journal

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Even the insulating effect of the federal government won’t be enough to prevent Ottawa-Gatineau’s economic output from contracting for the first time in nearly a quarter-century in 2020 as COVID-19 continues to wreak havoc with key sectors, a leading think-tank says.

The National Capital Region’s GDP is expected to shrink by nearly six per cent this year, the Conference Board of Canada predicts in its latest economic outlook released this week. To put that number in context, the city’s economy has grown by an average of 2.7 per cent annually over the last five years.

“Ottawa-Gatineau’s position as the nation’s capital and home to the federal government often insulates the city from big swings in economic growth,” said the organization, which forecast back in May that the region’s economy would contract by 2.4 per cent in 2020. “However, the city will not escape the impacts of the COVID-19 pandemic.”

It would be the first time Ottawa-Gatineau’s GDP has contracted since 1996, but the think-tank says the capital region is still in better economic shape than most other Canadian centres. 

The Conference Board forecast says Canada’s overall GDP will shrink by 6.6 per cent in 2020 as households tighten their pursestrings and many sectors struggle to recover from a devastating spring and summer. The organization paints an even grimmer long-term picture for industries such as air transportation, accommodations and food and beverage services, declaring they “might never fully return to normal.”

The organization says public administration is the only sector of the local economy that’s expected to grow in 2020. Not surprisingly, the accommodation and food services industry – which has been largely shuttered for much of the pandemic as part of public health efforts to contain the virus – is expected to take the biggest hit, with the Conference Board’s forecast calling for the sector to decline by a whopping 35.6 per cent.

Other sectors facing big declines include retail, which is expected to shrink 6.4 per cent ​– only the third time in the last two decades its output has fallen year-over-year.

Still, the think-tank says it expects both the local and national economies to bounce back in a big way in 2021, with Ottawa-Gatineau’s GDP expected to grow by 5.2 per cent and the national GDP forecast to rise by 5.6 per cent. 

The Conference Board is predicting Ottawa-Gatineau to continue on a growth path in the years ahead, albeit at a slower rate, forecasting GDP increases of 3.6 per cent in 2022 followed by consecutive 1.3 per cent bumps in 2023 and 2024.

The organization made several other economic forecasts, including:

  • Ottawa-Gatineau’s unemployment rate – which peaked at 9.5 per cent in June – will finish at 7.4 per cent for the year, compared with a mark of 4.8 per cent in 2019. Employment in accommodation services will feel the biggest impact, plummeting 34 per cent from last year;
  • Housing starts – which reached a 35-year high of 11,200 units in 2019 – will fall to 10,700 units this year before dipping below 10,000 in 2021 and the next few years ahead;
  • The region’s population will grow 1.5 per cent in 2020, its smallest annual increase in the last five years;
  • Ottawa-Gatineau’s per capita household income will rise 3.8 per cent this year, while per capita disposable income is forecast to grow 5.8 per cent.

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Why the US economy won't gain any traction until 2021 – CNN

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The economy’s travails are evident in the Back-to-Normal index (BNI) developed by Moody’s Analytics and CNN Business. The index is a compilation of a wide range of economic statistics available from the government and third-party sources. The BNI measures how the economy is performing compared to its pre-pandemic normal. Currently, the index is sitting at just over 80%. In other words, the economy is operating 20% below where it was when the pandemic hit back in March. That is a long way from normal, and only about halfway back from where the economy was at its April low.
The BNI also indicates the economic recovery has more or less stalled since the summer. The index isn’t much higher today than it was back in June when it was closer to 75%. The re-intensification of the pandemic has been a major cause of this painfully slow recovery. There is a clear relationship between the health care crisis created by the pandemic and the economic crisis: More infections result in a weaker economy.
Based on our analysis tying confirmed Covid-19 infections with unemployment rates across states and since the pandemic began, rising infections result in fewer jobs and higher unemployment one month later. This relationship is not materially different between states like New York that have aggressively shut down businesses and states like Florida that have kept businesses largely open. We also found that it isn’t true that the recession caused by the pandemic was our own doing because we shut businesses down. There would have been a recession regardless, as worried households and businesses would have pulled back on their activities whether or not businesses were shut down.
It is thus not surprising that as infections have significantly increased across Europe over the past several weeks, the European economy is faltering again. Europe had meaningfully brought down infections with its stringent lockdowns early on in the pandemic, and its economy had begun a strong comeback in the summer, but that recovery looks to be flagging with the re-intensifying pandemic. The same dynamic also appears to have begun here at home. As people start to move indoors with the colder weather, infections in recent weeks are up in much of the country. This doesn’t bode well for our economic recovery.
The impending presidential election could also weigh on our economy. The process of electing a president has historically been neither here nor there when it comes to the economy. Even the highly contentious George W. Bush vs. Al Gore election in 2000 had no meaningful impact, save perhaps for a few bad days in the stock market, which was already struggling with the dot-com stock bust. This time may be different. The nation feels like it could boil over if we have a close election and one side or the other believes that the election is being stolen.
This would be much less of a concern if the winner wins handily, making it indefensible to question the outcome. Current polling suggests this may happen. However, our election model of the state Electoral College, which takes into account a range of political factors, including previous state voting patterns and the President’s approval rating, and a range of economic factors, such as unemployment, housing and stock prices, suggests the results will be much closer. Assuming that turnout by Republicans and Democrats isn’t lopsided, then our modeling shows Biden winning the Electoral College with 279 votes. Of course, 270 votes are needed to win. If the election is this close, it seems certain to be contested, which could make the next couple of months difficult as the mess gets sorted out. There is nothing but downside to the economy in such a disquieting scenario.
But perhaps the most serious blow to the economy as this monumental year ends will be the failure of President Trump and Congress to come to terms on providing more help to those hit hardest by the pandemic. It makes economic sense for lawmakers to agree on legislation providing substantial additional fiscal support, including more aid to the unemployed, small businesses, the airlines, state and local governments and a long list of others. Without these additional funds, the already fragile recovery threatens to come undone. It also makes political sense given the approaching election and the need for lawmakers to demonstrate that they have voters’ backs. Yet a deal has not come to fruition and it appears we will have to wait until the next president and Congress take office before any real help is put in place.
Until then, much could wrong, driving the economy off the proverbial rails. It would be prudent to buckle in.

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