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Welcome to the worst economy ever – CNN

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Welcome to the worst economy ever – CNN


This is the worst economy ever. That’s according to Federal Reserve Chairman Jerome Powell, who previewed some truly awful economic data headed our way when he spoke to reporters Wednesday.
“We are going to see economic data for the second quarter that is worse than any data we have seen for the economy,” Powell said. “There are direct consequences of the disease and measures we are taking to protect ourselves from it.”
It’s worse for minorities than for white Americans. Powell noted that a few months ago, the US labor market was the best ever for minorities. But as stay-at-home orders have shuttered restaurants, movie theaters, retailers and many other businesses, a disproportionate number of non-white Americans have lost their jobs.
“It is heartbreaking, frankly, to see that all threatened now,” Powell said of previous gains in non-white unemployment.
Read a deep dive into the economic data for the first part of the year, when the coronavirus stopped a booming economy in its tracks.
Health care hurt the economy. But not for the reason you think. Incredibly, one of the biggest drivers of decline was the health care industry. As hundreds of thousands of Americans contracted a deadly virus, overwhelming hospitals in New York especially, it was the suspension of money-making elective procedures that created one of the biggest hits to the economy.
Nonessential health care, essential meat processing. While much of the economy remains shut by the government, President Donald Trump essentially deemed meat processors essential to national security and has said, despite safety concerns, that they must stay open.
Tyson Foods, one of the largest meat processors, has promised two $500 bonuses for some workers. And they are ramping up safety in their plants.
It’s notable, however, that a good portion of the workers in meat processing plants are immigrants and minorities.
Read this story from CNN Business, which quotes a meat plant worker who tested positive for Covid-19 and doesn’t think many of his coworkers will return to the shuttered plant at the moment:
“I’m still trying to figure out: What is he going to do, force them to stay open? Force people to go to work?” he asked.
Human sacrifice zones. David Michaels was the Assistant Secretary of Labor for Occupational Safety and Health during the Obama administration. He slammed Trump’s executive order during an appearance on CNN.
“What President Trump has done is said, ‘We solved the bottleneck, we’re going to make you stay open,'” Michaels said. “It is a disaster for workers. We’re making these workplaces, these meat packing plants into human sacrifice zones.”

Very good news

There’s great hope about a drug called remdesivir to treat Covid-19. And the government broke normal protocol to tell us all about it.
Recovering more quickly — New data suggests patients with severe Covid-19 who took remdesivir could recover faster than patients who didn’t take it, the National Institute of Allergy and Infectious Diseases said Wednesday.
Fauci feels good — “The data shows that remdesivir has a clear-cut, significant, positive effect in diminishing the time to recovery,” said the institute’s director, Dr. Anthony Fauci.
It’s not a 100% recovery rate, but… — “Although a 31% improvement doesn’t seem like a knockout 100%, it is very important proof of concept,” Fauci said. “What it has proven is that a drug can block this virus.”
Telling us early — Normally, data about a drug’s efficacy wouldn’t be released this early from a preliminary trial.
But “whenever you have clear-cut evidence that a drug works, you have an ethical obligation to immediately let the people in the placebo group know so that they can have access,” Fauci said.

‘Operation Warp Speed’

The Trump administration is launching a project to accelerate the development of a potential coronavirus vaccine, a senior administration official told CNN’s Jim Acosta. The project, called “Operation Warp Speed,” has the goal of manufacturing hundreds of millions of doses that can be made available to Americans by the end of the year, the official said. Read more here.
This is great! And I don’t want to complain about it (I suggested a real-deal Manhattan Project in this newsletter this week). But why are they just now doing this? Why didn’t they do this months ago, before tens of thousands of Americans died?

Trump and Kushner have their own reality

On Tuesday, Trump told a reporter the US would soon be able to meet a Harvard-researcher-recommended benchmark of 5 million tests per day.
That same day Trump’s person in charge of testing said that would never happen.
“There is absolutely no way on Earth, on this planet or any other planet, that we can do 20 million tests a day, or even 5 million tests a day,” Adm. Brett Giroir, the assistant secretary of health, told Time Magazine.
He called the Harvard recommendation an “Ivory Tower, unreasonable benchmark.”
A great success? Really? Presidential adviser and son-in-law Jared Kushner bragged about the level of testing in the US during an interview on Fox News. He predicted much of the country would essentially be back to normal in June, and called the whole thing a success.
“Now that the tests are out there, it’s really about scaling supply chain, really in a historic manner and pace. So somebody asked me why it took so long, you should look at how did we do this so quickly? What’s really happened, it’s really extraordinary. So we don’t want to let Dr. Fauci down and we will make sure we get enough tests into the market,” he said.

Data vs. decisionmaking

It does not appear any states have met the vague White House-endorsed benchmark of 14 days of downward virus trajectory. About half are starting to open up anyway.
Among the notable openers — Georgia and Texas — there has certainly not been a decrease.
We’ve actually got a chart for new infections in every US state. See them here.
And while anyone looking objectively at the curve of infections and deaths might wonder why things have plateaued, Kushner says that “we are on the other side of the medical aspect of this.”
State of denial still. CNN’s Stephen Collinson put it extremely well (as he always does), when he stated the clear fact that Trump still doesn’t grasp the enormity of this:
Humanity is facing three crises at the very least — medical, economic and social — that will cause financial and geopolitical reverberations for years. The grim state of the economy was underscored Wednesday morning when it was reported that first-quarter GDP fell 4.8%, the worst contraction since the Great Recession.
Yet Trump says he sees “light at the end of the tunnel” and acts as if America is nearly home free.

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Economy

Canadian regulator lifts banks’ capital buffer to record, priming for post-pandemic world

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Banks in Canada

Canada‘s financial regulator raised the amount of capital the country’s biggest lenders must hold to guard against risks to a record 2.5% of risk-weighted assets, from 1% currently, in a surprise move that could pave the way for them to resume dividend increases and share buybacks.

The new measures, which take effect on Oct. 31, is a sign that the economic and market disruptions stemming from the coronavirus pandemic have abated and banks’ capital levels have been resilient, the Office of the Superintendent of Financial Institutions (OSFI) said in a statement.

But the regulator acknowledged that key vulnerabilities, including household and corporate debt levels, as well as asset imbalances caused by steep increase in home prices over the past year, remain.

In a sign of concern about the housing market, OSFI and the Canadian government raised the benchmark to determine the minimum qualifying rate for mortgages, starting June 1.

The increase in the Domestic Stability Buffer (DSB) to the highest possible level raises the Common Equity Tier 1 (CET1) capital – the core bank capital measure – to 10.5% of risk-weighted assets; a 4.5% base level, a “capital conservation buffer” of 2.5%, and a 1% surcharge for systemically important banks, plus the DSB.

The change “gives OSFI more leeway to loosen a restriction down the road, namely the freeze on buybacks and dividend increases,” National Bank Financial Analyst Gabriel Dechaine said.

OSFI felt it was “useful for the banks to understand what our minimal capital expectations are and to give them time to adjust to that… ahead of any lifting of the temporary capital distribution restrictions,” Assistant Superintendent Jamey Hubbs said on a media call.

Even with the higher requirement, Canada‘s six biggest banks would have excess capital of about C$51 billion, dropping from C$82 billion as of April 30, according to Reuters calculations.

That was driven in part by a moratorium on dividend increases and share buybacks imposed by OSFI in March 2020, although a pandemic-driven surge in loan losses has so far failed to materialize.

The Canadian banks index slipped 0.25% in morning trading in Toronto, while the Toronto stock benchmark fell 0.1%.

The increase is the first since the last one announced in December 2019, which did not come into effect as planned in April 2020, as OSFI made an out-of-schedule change https://www.reuters.com/article/canada-mortgages-regulation-idUSL1N2B636J that dropped the rate to 1% in March. It has maintained that level at its twice yearly reviews.

Prior to that, OSFI had raised the required level by 25 basis points at every twice yearly review since it was introduced at 1.5% in June 2018.

($1 = 1.2326 Canadian dollars)

 

(Reporting By Nichola Saminather; Editing by Marguerita Choy and Jonathan Oatis)

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Economy

Canada Economic Indicators

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Fed to focus on next steps to save economy – BNNBloomberg.ca

The economic indicators used to gauge the performance of an economy and its outlook are the same across most nations. What differs is the relative importance of certain indicators to a specific economy at various points in time (for instance, housing indicators are closely watched when the housing market is booming or slumping), and the bodies or organizations compiling and disseminating these indicators in each nation.

Here are the 12 key economic indicators for Canada, the world’s 10th-largest economy:1

GDP Growth

Canada's GDP grew by 3% in July as more sectors reopened – CBC.ca

Statistics Canada, a national agency, publishes growth statistics on the Canadian economy on monthly and quarterly bases. The report shows the real gross domestic product (GDP) for the overall economy and broken down by industry. It is an accurate monthly/quarterly status report on the Canadian economy and each industry within it.2

 

Employment Change and Unemployment

Key data on the Canadian employment market, such as the net change in employment, the unemployment rate, and participation rate, is contained in the monthly Labour Force Survey, released by Statistics Canada. The report contains a wealth of information about the Canadian job market, categorized by the demographic, class of worker (private sector employee, public sector employee, self-employed), industry, and province.3

Consumer Price Index

Statistics Canada releases a monthly report on the consumer price index (CPI) that measures inflation at the consumer level. The index is constructed by comparing changes over time in a fixed basket of goods and services purchased by consumers. The report shows the change in CPI monthly and over the past 12 months, on an overall and core (excluding food and energy prices) basis.4

International Merchandise Trade

This monthly report from Statistics Canada shows the nation’s imports and exports, as well as the net merchandise trade surplus or deficit. The report also compares the most current data with that for the preceding month. Exports and imports are shown by product category, and also for Canada’s top ten trading partners.5

Teranet – National Bank House Price Index

This composite index of house prices across Canada was developed by Teranet and the National Bank of Canada and represents average home prices in Canada’s six largest metropolitan areas. A monthly report shows the change in the index monthly and over the past 12 months, as well as monthly and 12-month changes in Canada’s six and 11 largest metropolitan areas.6

RBC Manufacturing Purchasing Managers’ Index – PMI

Released on the first business day of each month, this indicator of trends in the Canadian manufacturing sector was launched in June 2011 by Royal Bank of Canada, in association with Markit and the Purchasing Management Association of Canada. RBC PMI readings above 50 signal expansion as compared to the previous month, while readings below 50 signal contraction. The monthly survey also tracks other information pertinent to the manufacturing sector, such as changes in output, new orders, employment, inventories, prices, and supplier delivery times.7

The Conference Board’s Consumer Confidence Index

The Conference Board of Canada’s Index of Consumer Confidence measures consumers’ levels of optimism in the state of the economy. It is a crucial indicator of near-term sales for consumer product companies in Canada, as well as an indicator of the outlook for the broad economy since consumer demand comprises such a significant part of it. The index is constructed on the basis of responses to four questions by a random sampling of Canadian households. Survey participants are asked how they view their households’ current and expected financial positions, their short-term employment outlook, and whether now is a good time to make a major purchase.8

Ivey Purchasing Managers Index – PMI

 An index prepared by the Ivey Business School at Western University, the Ivey PMI measures the monthly variation in economic activity, as indicated by a panel of purchasing managers across Canada. It is based on responses by these purchasing managers to a single question: “Were your purchases last month in dollars higher, the same, or lower than in the previous month?” An index reading below 50 shows a decrease; a reading above 50 shows an increase. Panel members indicate changes in their organization’s activity over five broad categories: purchases, employment, inventories, supplier deliveries, and prices.9

Housing Starts

Canada Mortgage and Housing Corporation (CMHC) issues a monthly report on the sixth working day of every month, showing the previous month’s new residential construction activity. The data is presented by region, province, census metropolitan area, and dwelling type (single-detached or multiple-unit). The indicator is an important gauge of the state of the Canadian housing market.10

Home Sales

This key indicator of housing activity is compiled by the Canadian Real Estate Association (CREA) and is based on the number of home sales processed through the MLS (Multiple Listing Service) Systems of real estate boards and associations in Canada. The monthly report from the CREA shows the change in home sales across Canada, as well as for major markets, from month to month. The report also includes other important housing-related information, such as the change (as a percentage) in newly listed homes, the national sales-to-new listings ratio, months of housing inventory, the change in the MLS Home Price Index, and the national average price for homes sold within the month.11

Retail Sales

Statistics Canada releases a monthly report on retail sales activity across Canada, with changes shown on month-over-month and year-over-year bases. The headline number shows the percentage change in national retail sales on a dollar basis; the percentage change in volume terms is also shown. The retail sales figures are shown by industry and for each province or territory, and provide insights into Canadian consumer spending.12

Building Permits 

The building permits survey conducted monthly by Statistics Canada collects data on the value of permits issued by Canadian municipalities for residential and non-residential buildings, as well as the number of residential dwellings authorized. Since building permit issuance is one of the very first steps in the process of construction, the aggregate building permits data are very useful as a leading indicator for assessing the state of the construction industry.13

The Bottom Line

The 12 economic indicators briefly described above show the health of key aspects of Canada’s economy: consumer spending, housing, manufacturing, employment, inflation, external trade, and economic growth. Taken together, they provide a comprehensive picture of the state of the Canadian economy.

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Economy

Canada adds jobs for fourth straight month in May

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B.C. saw close to 55000 new jobs in Septmber

Canada added 101,600 jobs in May, the fourth consecutive month of gains, led by hiring in the education and health services sector as well as in professional and business services, a report from payroll services provider ADP showed on Thursday.

The April data was revised to show 101,300 jobs were gained, rather than an increase of 351,300. The report, which is derived from ADP’s payrolls data, measures the change in total nonfarm payroll employment each month on a seasonally-adjusted basis.

 

(Reporting by Fergal Smith; Editing by Alex Richardson)

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