Sep 21, 2020 10:06 AM
WASHINGTON — Americans’ household wealth rebounded last quarter to a record high as the stock market quickly recovered from a pandemic-induced plunge in March. Yet the gains flowed mainly to the most affluent households even as tens of millions of people endured job losses and shrunken incomes.
The Federal Reserve said Monday that American households’ net worth jumped nearly 7% in the April-June quarter to $119 trillion. That figure had sunk to $111.3 trillion in the first quarter, when the coronavirus battered the economy and sent stock prices tumbling.
Since then, the S&P 500 stock index has regained its record high before losing some ground this month. It was up 2.8% for this year as of Friday. The tech-heavy Nasdaq has soared more than 20% this year.
The full recovery of wealth even while the economy has recovered only about half the jobs lost to the pandemic recession underscores what many economists see as America’s widening economic inequality. Data compiled by Opportunity Insights, a research group, show that the highest-paying one-third of jobs have almost fully recovered from the recession, while the lowest-paying one-third of jobs remain 16% below pre-pandemic levels.
ADRIAN WHITE: Underground economy is thriving – TheChronicleHerald.ca
There is no doubt that COVID-19 has changed the way businesses function in Cape Breton. The pandemic has forced many entrepreneurs to reshape operating strategies for financial survival.
Think of the new safety protocols for restaurants to protect staff and customers from virus transmission. Think sporting events playing out before near-empty stadiums and instead focused heavily on revenues generated from media broadcast of the event.
There are just too many changes to business practices to list here in this column including the growth of digitization in our economy but I wanted to single out a few examples to illustrate some telling impacts.
One major impact comes from folks not feeling safe to travel outside the province or eat out in restaurants due to the pandemic. Instead, they are using some of those cash savings to fund home improvement projects right here in the Cape Breton economy. That is a good thing for our community and our workers and it supports the “Shop Local-Buy Local” mantra being promoted by the local business community.
Demand in the home improvement sector has soared and is so strong that it has led to a shortage of building materials, a rapid rise in material costs and a shortage of skilled labour to take on those home improvement projects.
Many new contractors have entered the home improvement business in 2020 and many anxious homeowners are in hot pursuit of their services. Sometimes these contractors show up when expected to do a job and sometimes not. This has been a long-standing problem with small contractors in Cape Breton.
Some contractors present an official written quote including HST for the project leaving a paper trail to follow while other contractors are quite prepared to take cash from the customer thereby avoiding HST. Cash leaves little trail for CRA to follow when it comes to reporting taxable income.
This practice leads me to shed some light on the underground economy and its impact on our well-being as a province. Statistics Canada defines the underground economy as “consisting of market-based activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature.”
I use the construction industry as an easy-to-understand example but you can imagine other opportunities for tax avoidance including buying illegal cigarettes, street sold cannabis, cash tips, paying cash for services, Airbnb cash rentals, or offshore bank accounts not being reported to CRA.
In Nova Scotia, according to Statistics Canada, the underground economy was estimated to be $1.28 billion in 2018. That is near 3 per cent of provincial GDP. This is revenue that escapes government taxation. Nova Scotia’s underground economy as a share of GDP is higher than the national average which is troubling. Taxes on $1.28 billion would go a long way to offset the forecasted 2020 Nova Scotia budget deficit of $853 million due to the pandemic.
Some of the underground economy is driven by the fact Nova Scotia has the second-highest personal income tax rates in the country. It remains one of three remaining provinces in the country that still practices “bracket creep” on your personal income tax deduction by not adjusting it to CPI on your annual income tax return.
The higher the taxes the more incentive it provides for individuals and companies to embrace tax avoidance. Alberta has one of the lowest personal income tax rates in Canada and no provincial sales tax. It abandoned “bracket creep” on its residents decades ago. It also has one of the lowest underground economy as a share of GDP rates in the country running at 1.8 percent of provincial GDP.
British Columbia has the highest ratio at 3.7 percent of GDP. In Canada, the underground economy was valued at a whopping $61 billion in 2018 amounting to 2.7 per cent of national GDP.
I can only imagine with the increased demand for home improvement projects in Canada due to the pandemic that underground economic activity will likely increase 50 per cent rising close to $90 billion for 2020.
In Nova Scotia, residential construction accounts for over 25 percent of the estimated underground economy GDP. The next six largest contributors to the underground economy amount to about 50 per cent of Nova Scotia’s underground economy. They are retail trade, accommodation/food services, finance/insurance/real estate, manufacturing, professional/technical services and health care/social assistance.
If we want to grow the Nova Scotia economy and thereby increase tax revenues to pay for the services we all expect, we are going to have to rethink the tax burden on individuals and businesses to bring balance and fairness to the tax environment. It is one of the reasons we struggle to recruit doctors to Cape Breton. Above-average taxes in Nova Scotia hinder economic expansion. High taxes will continue to drive the underground economy and tax avoidance until we address them.
Adrian White is CEO of NNF Inc, Business Consultants. He resides Sydney & Baddeck and can be contacted at email@example.com.
The Trump Economy – The New York Times
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Good morning. Spain orders a curfew. The Senate prepares to confirm Amy Coney Barrett. And we look at the good and bad of Trump’s economy.
President Trump is not running a re-election campaign based mostly on policy. He has released no agenda for a second term, and the Republican Party did not publish a new platform at its convention.
But when Trump tells voters why he deserves to win re-election, he tends to focus on the economy. He created a prosperous economy, he says, and will do so again — better than Joe Biden would — once the coronavirus passes. I want to devote today’s newsletter to explaining the Trump economy, through four key points:
1. The economy was strong before the virus hit. Trump inherited a growing economy, and it kept growing on his watch. It accelerated a bit in his first two years in office, before slowing down again in 2019.
2. Perhaps the best news: Wages were rising, even for lower-income workers. After more than a decade of economic growth, the labor market had become tight enough that employers were increasing pay more quickly than inflation was rising. The trend began under President Barack Obama and continued under Trump.
3. Trump deserves some credit. Josh Barro of New York magazine has argued that Trump’s overall economic record is problematic, partly because his tax cuts were so skewed to the rich — but also that Trump got some big decisions right. Most important, he appointed a Federal Reserve chairman, Jerome Powell, who focused on growth (rather than wrongly thinking inflation was a threat) and kept interest rates low.
4. But Trump also deserves some blame — including for the virus and the recession it caused. Trump’s economic policy geared almost completely toward lifting growth in the short term, while largely ignoring long-term dangers.
He increased the deficit, mostly to give wealthy households big tax cuts. He scrapped environment regulations, which increases the likelihood of costly climate destruction. And he hollowed out parts of the government, including its ability to respond to a pandemic.
(One year ago yesterday, Biden tweeted: “We are not prepared for a pandemic. Trump has rolled back progress President Obama and I made to strengthen global health security.”)
The bottom line: Much of the economy’s performance is beyond the control of a president. Trump had the good luck to take office with a far stronger economy than either of his predecessors — Obama and George W. Bush — enjoyed. Just look at the start of each president’s lines in this chart on job growth:
Later, of course, Trump had the bad luck to have a global pandemic arrive during his re-election campaign.
He has tried to claim full credit for his good luck and deflect all blame for the bad news. But that’s not the fairest way to evaluate the Trump economy. Ultimately, he deserves solid marks for its performance during his first three years — and much worse marks for his long-term economic legacy.
THE LATEST NEWS
The 2020 Campaign
Biden will campaign in Georgia tomorrow, and Kamala Harris will visit Texas on Friday. Polls show a close race in both these states, which no Democratic presidential candidate has won in decades.
Trump plans to hold rallies in Pennsylvania today, and in Wisconsin and Michigan tomorrow. He won all three narrowly in 2016, but is now trailing in each.
The New Hampshire Union Leader endorsed Biden, the first time the newspaper has backed a Democrat for president in more than a century.
Fights broke out during a “Jews for Trump” rally in Manhattan. Seven people were arrested, and protesters screamed at Rudy Giuliani.
Among the revelations in a Times analysis of fund-raising data: In wealthier ZIP codes, Biden has raised nearly triple what Trump has; in less wealthy areas, they’re almost tied.
Daily polling diary: Research has suggested that local coronavirus deaths lead to a decline in voter support for Trump. And Wisconsin — a battleground state — is now in the midst of one of the nation’s worst outbreaks, The Times’s Nate Cohn notes.
“We’re not going to control the pandemic,” Mark Meadows, the White House chief of staff, told CNN when asked about the lack of mask wearing at Trump rallies.
Vice President Mike Pence said he would not quarantine after his chief of staff and four other top aides tested positive for the virus.
The president of Fox News and several of the network’s stars were exposed to the virus on a private flight.
With one of the world’s highest infection rates, Spain declared a state of emergency and ordered a nationwide 11 p.m. curfew.
other big stories
The Senate voted yesterday to limit debate on Amy Coney Barrett’s nomination and is expected to confirm her to the Supreme Court tonight. Every Democratic senator is set to vote against, as is Susan Collins of Maine, a Republican who is up for re-election.
Pope Francis named Wilton Gregory, the archbishop of Washington, a cardinal, making him the first Black American to achieve that rank.
Chileans overwhelmingly voted to scrap the country’s constitution — a dictatorship-era document — and create a new one.
The Los Angeles Dodgers beat the Tampa Bay Rays in Game 5 of the World Series, moving to within one win of a championship. One key play: a rare and unsuccessful attempted steal of home.
A Morning read: As protests raged in Minneapolis, Charles Adams, a police officer and high school football coach, called some of the players on his team. “Before I hit the streets, I have to tell you guys something,” he said. “Just know that I care.”
Lives Lived: Edith O’Hara founded the 13th Street Repertory Company, a mainstay of the Off Off Broadway scene, after leaving northwestern Pennsylvania for New York City in her 50s. She died at 103.
The Times can help you navigate the election — to separate fact from fiction, make sense of the polls and be sure your ballot counts. To support our efforts, please consider subscribing today.
IDEA OF THE DAY: Red-state populism
Seven states have already passed laws that will eventually raise the minimum wage to $15. All seven are heavily Democratic: California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey and New York.
This year, a more conservative state — Florida — will be voting on the policy. If the referendum passes, Florida’s minimum wage would gradually rise from its current level of $8.46 an hour to $15 an hour in 2026. After that, it would rise with inflation. Currently, no southeastern state has a minimum wage above $10, and most defer to the federal level of $7.25.
But progressive economic policies, like minimum-wage increases, tend to be popular even in red states. Ballot initiatives to expand Medicaid, for example, have passed in several red states, including Missouri, Oklahoma and Utah. And polling shows that a majority of Americans support expanding Medicare, spending more money on clean energy, increasing taxes on the wealthy — and raising the minimum wage.
If the Florida initiative passes, it will add to the momentum toward a higher minimum wage, through either ballot initiatives in other states or through federal policy. Biden favors a $15 federal minimum wage. Trump has said states should decide.
PLAY, WATCH, EAT, TIKTOK
The TikTok effect
More than four decades after its release, Fleetwood Mac’s album “Rumours” returned to the Top 10 of the Billboard chart last week. Its resurgence was spurred by a viral TikTok video of a man named Nathan Apodaca, a potato worker in Idaho, longboarding along to the band’s song “Dreams” as he drank from a bottle of Cran-Raspberry juice.
It’s the latest example of TikTok’s influence on the music industry. “TikTok is an early indicator and trendsetter as far as seeding music, new and old,” the Times music reporter Joe Coscarelli said. “You might have a song like ‘Dreams’ that goes viral on TikTok, then the TikTok goes viral on Twitter and Instagram, then Spotify puts the song higher up on more playlists.”
From there, morning shows and local news may note the phenomenon, and it all leads to more people watching the music video or streaming the song. The effect can give old songs a second life, or jump-start new songs by relative unknowns, like Lil Nas X’s “Old Town Road” last year.
On a recent episode of Popcast, the Times pop music critic Jon Caramanica went into more detail.
Make some fish
Roasted fish with sweet bell peppers comes together quickly for a healthy weeknight dinner. Mild, flaky fish like hake, cod or flounder are ideal to go with the garlicky parsley dressing.
The pangram from Friday’s Spelling Bee was toothpick. Today’s puzzle is above — or you can play online if you have a Games subscription.
Here’s today’s Mini Crossword, and a clue: Big drop of water? (five letters).
Thanks for spending part of your morning with The Times. See you tomorrow. — David
Correction: Friday’s newsletter switched the order of a couple of Trump’s sentences about the virus during the debate. The correct order is: “I take full responsibility. It’s not my fault that it came here. It’s China’s fault.”
You can see today’s print front page here.
Cleantech considerations for the evolving Canadian economy – Business in Vancouver
Canada is poised to become a world leader in exporting clean technology by 2025.
Here in British Columbia, one of Vancouver’s top intellectual property lawyers thinks we could see a cleantech boom following the global COVID-19 pandemic.
“I think we’re going to see a lot of investment interest in cleantech as a consequence of COVID-19,” says Roch Ripley, partner and Head of the Intellectual Property Group in Gowling WLG’s Vancouver office.
Paired with the ongoing smoke in B.C. due to wildfires, which are becoming more frequent, climate change is staying top of mind.
“It has made people really think about the adaptation that they will have to make to deal with climate change. And because to actually deal with climate change successfully, we will need a lot of international cooperation that will be complex and expensive to fight something that is invisible, which is analogous to COVID-19.”
Over and above climate change in particular, the recession caused by the global pandemic will prompt the government to jumpstart the economy by investing in cleantech more generally, Ripley adds.
In September’s throne speech delivered by the Governor General, the federal government announced their support for a fund to spur jobs and investments in green technology in support of reaching the goal of net-zero carbon emissions by 2050. In addition, the CleanBC Industry Fund is already investing millions of dollars of carbon tax revenue into projects across the province.
“All of these reasons are going to point us towards a big surge in interest and investment in cleantech,” says Ripley, who has been monitoring the number of patent filings related to cleantech.
While there were a flurry of filings 6 to 7 years ago, generally speaking the rate of filing has decreased from that peak, with certain exceptions such as in electric vehicle and battery-related sectors.
Patent applications related to clean technology, renewable energy, and sustainable development will likely be on the rise in the years ahead. “The last cleantech-wide burst of activity we saw was related to government spending in 2008. If we’re starting the cycle, I would expect to see an increase in activity soon.”
Gowling WLG is one of the largest and most respected law firms in Canada, with a reputation for innovative, client-focused service. It offers a diverse suite of business law, litigation and intellectual property services in all of Canada’s key industries, and has a reputation for excellence in client advocacy before courts, tribunals, regulatory bodies and governments in Canada.
“What I’m most interested in is intellectual property and patents,” Ripley says.
“Successful cleantech companies almost without exception invest in patenting.”
Intellectual property and patent filings are crucial to cleantech companies for several reasons, Ripley says.
The first is the sheer cost of developing cleantech. The research, development and capital costs alone can reach into the millions of dollars to create the technology.
“In terms of the cost to protect your R&D investment, it makes sense to patent in the cleantech space,” Ripley says.
There is also the international aspect. With its position as a strategic gateway to Asia, Vancouver is quickly becoming known as a global cleantech hub.
“Considering international IP is a must. Because a lot of foreign markets are interested in cleantech, you want to ensure that you’re protected with international patent filings,” Ripley says.
Lastly, innovations in cleantech usually result in creating tangible equipment that can be sold and inspected.
“Generally speaking, if you’re selling in the market you can’t keep things a trade secret,” Ripley says. “The tangible nature of many cleantech products also means you don’t need to deal with issues that arise when trying to patent more abstract innovations, such as those based in software.”
“For those reasons, developing an innovation protection plan for your cleantech IP is crucial.”
Gowling WLG protects and enforces its clients’ intellectual property assets and helps them maximise their value at every stage of the business lifecycle
“The firm provides everything a company needs to succeed in terms of business-related legal needs,” Ripley says. “From starting your company to growing it, to getting acquired, to international expansion, all while keeping the strategic considerations that affect your business and your technology top-of-mind.”
To learn more about the services offered by Gowling WLG, visit the law firm online at gowlingwlg.com/cleantech.
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