Connect with us

Economy

Varcoe: New year will ring in renewed optimism for Alberta economy – Calgary Herald

Published

 on



Sunrise lights up the towers of the downtown Calgary skyline on Monday, December 16, 2019. Gavin Young/Postmedia


Here’s a small pick-me-up heading into a new year — two banks are projecting modest economic growth returning to Alberta in 2020 after a lethargic performance this year.

The improved outlook comes as oil prices have broken through US$60 a barrel in recent days, their highest point in three months.

TD Economics released a report this week forecasting Alberta’s gross domestic product will expand by 1.8 per cent next year, more than double the tepid rate over the past 12 months.

Similarly, a new RBC outlook projects the provincial economy will increase by 1.7 per cent in 2020 after “puny” growth this year.

“A good part of it is the fact 2019 was so sluggish. It’s a little bit of a comeback story,” RBC senior economist Robert Hogue said in an interview.

“By no means are we saying Alberta is out of the woods, but I think (there) will be more incremental improvements.”

There are still plenty of reasons to be cautious, however. The latest employment report saw 18,200 fewer jobs in November and the unemployment rate jumped up to 7.2 per cent.

Investment levels remain low, retail spending is down from a year earlier and drilling activity is off from 2018 levels.

But there have been recent improvements in areas such as energy prices and the outlook for global trade in 2020. While some local businesses have been cutting staff, other firms — such as in the technology area — are thriving and hiring.

Benevity, a Calgary-based firm that provides clients around the world with employee engagement software that facilitates giving and volunteering, is expanding quickly and will exit the year with about 650 employees.

“We continue to be quite bullish on our prospects,” CEO Bryan de Lottinville said Thursday.

“For us, a lot of the challenge is hiring people. I think we hired 240 people this year and are looking for probably another 175 or so next year.”


Bryan de Lottinville, president and CEO of Benevity, in the firm’s Calgary office.

Ted Rhodes /

Calgary Herald

In its economic outlook, TD said the province’s steps to ease government-mandated oil production quotas, “alongside a modest rebound in investment, are expected to underpin growth” next year.

As well, oil prices are headed in the right direction for the province.

Since OPEC and its partners decided earlier this month to deepen production cuts, crude prices have increased, with West Texas Intermediate crude for January delivery closing Thursday above US$61 a barrel on the New York Mercantile Exchange.

TD expects benchmark U.S. oil prices will keep trading in the range of $55 to $60 a barrel next year.

While the jobless rate remains high and employment gains will be modest in Alberta — at just 0.7 per cent next year, according to TD — some bright spots exist.

The construction of two massive petrochemical complexes in Alberta’s Industrial Heartland area is continuing. Housing starts are “gradually turning the corner, with modest gains in sales and prices anticipated” over the next few years, the report states.

“2019 was pretty lacklustre and we’ve seen that in a lot of indicators. Our 2020 forecast calls for a modest rebound,” TD economist Omar Abdelrahman said in an interview Thursday.

For its part, RBC predicts energy, manufacturing and construction, as well as the labour market, will improve in 2020.

Incremental gains in pipeline take-away capacity should help ease the transportation bottlenecks and see capital investment begin to pick up.

“Alberta’s recovery has been frustratingly slow, but 2020 promises to kick things into a higher gear,” the RBC forecast states.

The key test for Alberta in the coming year will be on the investment and jobs fronts.

ATB Financial is forecasting only 0.9 per cent economic growth for next year. It assumes worries about when additional pipeline capacity is built will act as a constraint, keeping investment levels soft.

Yet, as ATB economists pointed out Thursday in a blog, there are some signs headway is being made in the economy.

Progress continues on the Line 3 replacement project in the U.S. and the Trans Mountain pipeline expansion, OPEC cuts mean “the threat of another global oil glut is being held in check, at least for now,” while fears of a global recession and trade war are diminishing.

“There are some positive stories out there,” Ken Kobly of the Alberta Chambers of Commerce said last week.

“We are so used to hearing about all of the big things that are not doing well or not happening, and that sort of drowns out some of the small gains that we are making.”


An aerial view of construction progress on the terminal and tank farm on Burnaby Mountain for Trans Mountain’s pipeline expansion as of November, 2019. Handout courtesy of Trans Mountain.

PNG

Newcomers continue to move into the city and the total number of people employed in Calgary sat at 877,000 last month, up almost 34,000 from a year ago.

Some companies are succeeding in this tough environment. For example, payments technology firm Helcim expects to add about 25 people next year and is moving into a new downtown office.

“We are excited about our outlook,” said Helcim CEO Nicolas Beique.

“Next year is when some big changes are coming to our organization that we think will fuel a lot more growth.”

At Benevity, much of its work is for international clients, but de Lottinville also feels a little more optimistic than last year about the prospects for the provincial economy.

“We have to create more narrative around the successful companies that are scaling (up) in a diversified context, whether those are in the energy sector or elsewhere. If all you hear is doom and gloom, you will be communicating that,” he said.

“Our clients, some of the local ones, are optimistic that most of the real challenges are behind us and they’re trying not to look backward, but look forward.”

A new year is coming soon. Hopefully, so is a new direction for the Alberta economy.

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

What Does the Delta Variant Mean for the U.S. Economy? – The New Yorker

Published

 on


People dining in a restaurant both indoors and outdoors.
Veteran economists are optimistic yet concerned that the Delta variant could prompt new closures that might slow American economic recovery.Photograph by Andrew Lichtenstein / Corbis / Getty

What a difference a couple of months makes. “As hopes rise that the pandemic is ebbing in the United States and Europe, visions of a second ‘Roaring Twenties’ to match the last century’s post-pandemic decade have proliferated,” the Associated Press reported, in late May. “For some, it feels like party time.” That was when the daily tally of new COVID-19 cases in the United States had dipped to about twenty-two thousand and the number of people vaccinated was rising sharply. The travel-and-leisure sector appeared to be rebounding strongly. Economists were predicting that the gross domestic product would grow at an annualized rate of close to ten per cent in the second quarter, followed by continued strong growth through the rest of the year and into 2022.

Now that the spread of the Delta variant has pushed the seven-day average of new cases above fifty thousand, and the number of hospitalizations has jumped by more than fifty per cent in two weeks, economists and investors are reassessing the prospects. Last Monday, the stock market tumbled on concerns about the variant, before rebounding on Tuesday. Later this week, the Department of Commerce will publish its initial estimate of actual G.D.P. growth in the second quarter. The Federal Reserve Bank of Atlanta’s GDPNow model, which incorporates a range of recent economic releases, estimates the figure at 7.6 per cent. In normal times, that would be a blockbuster figure. However, it is significantly below some of the estimates from May, and it shows how in some regions and industries, even before the rebound in COVID cases, shortages of labor, computer chips, and other components were holding back the recovery. Now worries about the resurgent virus have been added to concerns about supply constraints. Where will the economy go from here?

On Friday, July 23rd, I spoke with two veteran economists who have been following developments closely since the start of the pandemic. They both expressed optimism that the Delta variant wouldn’t derail the recovery, but they also expressed some serious concern, especially if the spread of the variant persists into the fall. Mark Zandi, the chief economist at Moody’s Analytics, told me that he and his colleagues are still expecting a “very strong second half of the year.” More specifically, they are predicting that G.D.P. will expand at an annualized rate of about six per cent, and total employment will rise by more than five hundred thousand a month, on average. For the variant to have a major impact on G.D.P. and employment, Zandi said, businesses would have to close down again and people would need to go back to sheltering in place, both of which he considers very unlikely.

Moody’s Analytics has constructed a “Back-to-Normal Index,” which tracks real-time economic data, such as restaurant bookings, the number of people flying, and initial claims for unemployment benefits. At the national level, there is little sign that the variant is affecting these statistics, Zandi told me. However, the index has dropped in some hard-hit states, such as Florida, where case numbers are rising fast and the number of hospitalizations has returned to levels last seen in February. “Six or eight weeks ago, Florida had completely recovered from the pandemic: the index was back to one hundred,” Zandi said. “Now it’s moved back to the low nineties. That’s consistent with the idea that the Delta variant is having some impact.”

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, pointed out that many of the states where the Delta variant is spreading rapidly are low in both population and G.D.P. “To move the needle on a macro level, things will have to get a lot worse,” he said. “I’m still bullish on the second half of the year because I don’t think Delta is going to go exponential nationally. If it just moves up fairly steadily, and it doesn’t lead to a big wave in hospitalizations, I think most people will be fairly relaxed about it, and won’t change their behavior much.”

Shepherdson, who works in both the United States and Britain, pointed to the example of the United Kingdom. The number of infections has increased dramatically since the start of June, particularly among younger people, but the number of hospitalizations and deaths has remained fairly low. Last week, the British government lifted nearly all of its COVID restrictions, which led to scenes of jammed night clubs and bars. “Most people still wear masks in shops, but they go out and spend,” Shepherdson said. “The general attitude is, I might get it, but it’s not going to make me really sick. After sixeen months of this, many people have had enough.”

As the Delta variant continues to spread on this side of the Atlantic, many Americans may adopt the same attitude. But Shepherdson also noted that it’s possible to build “a more negative scenario” for the United States. In the places where Delta-variant cases are multiplying fastest, far fewer middle-aged and older people have been vaccinated than in the United Kingdom, which makes the situation potentially more dangerous. Also, there is much less testing in this country, which makes it harder to know what’s really happening. On a per-capita basis, the number of tests being carried out in the United States is one-eleventh of the figure for Britain, Shepherdson said. “I can say right now Delta isn’t a big macroeconomic issue, but it can go from zero to sixty really quick,” he added.

Both economists said that a key moment will come in a month or so, when schools are scheduled to reopen across the country. The forecasts of rapid employment growth in the second half of this year hinge on many more parents, particularly women, returning to work as child-care concerns ease. Over the past twelve months, Shepherdson pointed out, there has been virtually no change in the labor-force participation rate of females aged thirty-five to forty-four, and the participation rate of women older than fifty-four has actually fallen a bit. “The reopening of the schools potentially brings a lot of people back into the labor force,” Shepherdson said. But if a surge in COVID prompts school boards in large population centers to reintroduce remote classes, that scenario could be upended.

Zandi said that the possibility of further school closures, or partial closures, is just one example of how a COVID-19 resurgence could stunt the longer-term growth of the economy. As the Delta variant spreads in other parts of the world, particularly Asia, it could accentuate problems in the global supply chain, which are already affecting the industries behind products like cars and semiconductors. And, on the demand side of the economy, the rise in cases could undermine the confidence of consumers and business leaders, which has rebounded sharply since the depths of last year. “It puts into clear relief the fact that the pandemic is still here—is raging in some areas,” Zandi said. “And why would this be the end of it? There will likely be other variants. We are in an arms race with the virus.” For reasons of both economics and public health, he added, policymakers should take steps to arrest the rising case numbers. “I would go back to the mask mandate, particularly in urban areas, for things like ball games, mass transit, and large gatherings. It would be prudent to be cautious here.”

Over all, the message from Zandi and Shepherdson was somewhat reassuring. But both of them emphasized that the Delta variant has added a lot of uncertainty to the economic outlook, and raised the risks to the downside. The darkest economic scenario is the one that Zandi alluded to: the emergence of another highly contagious strain of the virus, one that is more deadly and resistant to vaccinations than the Delta variant. Assuming that doesn’t happen, the economic recovery seems set to continue, but talk of another “Roaring Twenties” was premature, at best. “I think the chances of the economy really taking off are fast diminishing,” Zandi said.


More on the Coronavirus

Adblock test (Why?)



Source link

Continue Reading

Economy

Action on climate change can provide a shot in the arm for the global economy, economist says – CNBC

Published

 on


An employee with Ipsun Solar installs solar panels on the roof of the Peace Lutheran Church in Alexandria, Virginia on May 17, 2021.
Andrew Caballero-Reynolds | AFP | Getty Images

Ramping up investment in policies and technologies to tackle climate change could play a significant role in the global economy’s recovery from the coronavirus pandemic.

In a recent note, Charles Dumas, chief economist at U.K.-based investment research firm TS Lombard, said that action on climate change is often criticized as moving too slowly. However, with governments increasing spending to aid their post-Covid economies, they may start catching up. 

A key tenet of this is the ever-decreasing cost of electricity per megawatt hour, according to figures from TS Lombard, with costs of solar, offshore and onshore wind dropping over the last 10 years, while gas and coal have remained largely the same.

“Effectively by 2030 the cost of renewable electricity is going to be half that of coal and gas sourced electricity,” Dumas told CNBC.

These trends will bring many of the various pledges to reach net zero more closely in sight.

The fatal floods in Germany in recent weeks have put the impacts of climate change firmly in the spotlight again but they are only the latest in a series of devastating extreme weather events of late, including the sprawling wildfires in Oregon.

COP26 priorities

Amid this backdrop, the United Nations Climate Change Conference, better known as COP26, will meet in Glasgow in November. It will mark one of the most significant multilateral meetings on climate since the Paris agreement.

Dumas said that as COP26 approaches, governments need to understand their key priorities, and among them should be infrastructure investments as numerous technological and engineering challenges continue to obstruct renewable energy.

“I think the intermittency problem is pretty serious and it’s not just that the sun goes down at night,” Dumas said.

In the case of solar power, output can be mixed depending on the location of infrastructure like solar farms.

“There’s huge variation with sunny days in winter and sunny days in the middle of summer so the intermittency takes on a very big seasonal aspect,” Dumas said.

“You can have vicious weather for a long time in the middle of December or January and lo and behold you wouldn’t want to be depending on solar power.”

Energy transmission could be another bottleneck, he said. While the developing world, including several African nations, has great potential in developing sites for generating solar power, that power needs to move easily.

“The issue of transmission technology is really major. If you want Chad to be the new Saudi Arabia, because of the Sahara Desert there’s a lot of sun there, but you want the electricity to be used in Europe then you’re talking about some expensive processes and processes needing a lot of research and a lot of further investment.”

Storage and carbon capture are all areas that require hefty investment, Dumas added, if governments are to reach their net-zero targets.

“What we need is a very clear public policy lead in order to get anywhere near these net zero promises and I suspect that actually what it’s going to be about is a carbon tax, which the Americans may resist but will be necessary,” he said.

Job creation

Paul Steele, chief economist at an independent policy research institute called the International Institute for Environment and Development, said that climate action and renewable energy investments will serve the dual purpose of tackling the climate crisis while creating jobs for the post-Covid economy.

“One of the priorities coming out of Covid is to create labor intensive employment. Both in developed and developing countries, you can provide labor intensive employment through renewable energy,” Steele said.

One example, he said, was the retrofitting of boilers in homes in the U.K., which would help push the country toward its climate targets and create new jobs while being relatively inexpensive in the grand scheme of things.

Steele said that investments to drive a climate-friendly economy cannot be short term or have quick goals.

He pointed to the various government support schemes for the airline industry, which has been battered by the pandemic. Just this week, the European courts gave the nod to a $2.9 billion bailout for Air France-KLM’s Dutch business.

Bailout funds like these should be tied to sustainability commitments by the airline industry, he said, but that can be a dicey proposition to get over the line.

“Governments aren’t making the connections enough and traditionally treasuries and particularly the ministries of transport are still dominated by road building lobbies and people who like to build highways and increase transport rather than people who want to invest in sustainable alternatives.” 

Adblock test (Why?)



Source link

Continue Reading

Economy

Labour proposes 'new deal for jobs' to transform UK economy – BBC News

Published

 on


Labour Deputy Leader, Angela Rayner

Ian Forsyth

Labour says it will “fundamentally change our economy” with a “new deal” for post-pandemic Britain.

Shadow secretary of state for the future of work Angela Rayner will kick off a summer of campaigning with a visit to a social enterprise project in London on Monday.

She says the party wants “good quality jobs” that pay a “proper wage that people can raise a family on”.

Ministers say they are “levelling up” the UK to rebuild the economy.

The lifting of Covid restrictions has sparked a debate about inequality and the future of work in the UK.

Research conducted by the TUC found one in nine workers – 3.6 million people – had no pay or job security and three quarters of those on zero-hours contracts lost shifts during the pandemic.

Labour leader Sir Keir Starmer has said the pandemic revealed that “millions of workers don’t have the dignity and security they deserve from their job”.

After the party’s poor results in the English local elections in May, Ms Rayner was appointed to the newly created future-of-work role, saying it was time for a “new deal” as people adjusted to the “new normal”.

She will be joined by Mr Starmer and and other members of the shadow cabinet over the summer on a campaigning tour to set out Labour’s vision.

It is based on five principles:

  • Security at work – outlawing fire and rehire, a new right to work flexibly and strengthened trade unions
  • Quality jobs – buy, make and sell more in Britain and invest in well-paid, high quality “green” jobs
  • A fairer economy – a level playing field on tax between the multinational giants and local businesses and tackling harassment and discrimination at work
  • Opportunity for all – A jobs-promise for young people with a guarantee of quality education, training or employment; creating tens of thousands of apprenticeships
  • Work that pays – real living wage of at least £10 an hour and more workers covered by collectively agreed deals that boost pay.

Ms Rayner said Britain was “at a fork in the road” as it rebuilt from the pandemic.

She said: “Under the Conservatives we have a broken economic model defined by insecure work, low wages and in-work poverty and a lack of opportunity for people who want to get on and find good work to support themselves and their families.”

She said Labour would “fundamentally change our economy to make it work for working people” and create jobs that were a source of “pride, security and dignity”.

Amanda Milling MP, co-chairman of the Conservative Party, said the Tory government had brought in an “unprecedented” furlough scheme which had paid the wages of 10 million workers during the pandemic; in addition to rising the National Living Wage and “taking millions of the lowest paid out of paying income tax”.

She added: “While Labour carp from the sidelines, we’re continuing to support business while taking the tough decisions needed to rebuild from the pandemic and protect people’s jobs and livelihoods.”

Earlier this month, the prime minister set out what he called the “skeleton” of a plan to “level up” the country by spreading power and opportunity more evenly.

Ministers say it involves investing in transport, skills and businesses to address regional disparities, with more details expected in September.

Adblock test (Why?)



Source link

Continue Reading

Trending