Economy

White House seeks options to blunt economic fallout from coronavirus – CNN

Published

5 years ago

March 4, 2020

Even as officials insist their outlook for the economy is good — and that coronavirus will not present a serious threat — there have been continuing discussions of ways to protect against a slowdown.

Ideas being batted about inside the White House include finding a way for government to guarantee paid sick leave for workers or sending money to small businesses to avoid layoffs, people familiar with the early discussions said, cautioning the brainstorming was still loose and in its early phases.

After a rate cut by the Federal Reserve did little to calm markets, administration officials have appeared resistant to temporary fiscal steps such as a payroll tax cut, even as Trump publicly floats the idea.

Some economists and business leaders have said fiscal policy steps will be necessary on top of central bank action. But underlying concerns about supply chain interruptions and continued questions about the administration’s response to coronavirus — such as problems with testing — aren’t likely to be solved by either fiscal or monetary policy.

Though the administration says it’s not currently under consideration, the idea of a payroll tax holiday hasn’t been entirely ruled out, officials said, suggesting the full scope of the economic fallout needs to be ascertained before the President proposes steps to Congress.

“I’m focused on this. The country is in great shape. The market is in great shape. I’m focused on this. This is very important,” Trump said when questioned about another triple-digit loss in the Dow Industrial Average on Tuesday afternoon. He said he believed it would be a good time for middle-income tax cuts “if the Democrats would approve it.”

Even as Trump publicly downplays the volatile markets, and insists he remains focused on the health impact of the outbreak, he has tasked advisers with devising ways to protect the economy from lasting damage.

A White House official said the talks have included the possibility of including money for the Small Business Administration in a sweeping spending package that’s working its way through Congress now.

Officials also said there have been discussions about increasing unemployment benefits for people who might lose their jobs because of an economic slowdown and ensuring Americans have adequate sick leave so don’t feel obliged to come to work when they have potential symptoms of the disease.

Health authorities have said it is essential for sick people — or people who might have come into contact with the virus — to stay home from work to avoid spreading the disease further. Many low-wage workers and workers in service industries do not get paid if they take time off when sick.

The ideas being discussed among Trump’s advisers remain in the early stages and Trump himself hasn’t proposed new ideas to Congress meant to reinforce the economy. White House officials are skeptical that Democrats will go along with steps that would boost the economy before November’s election.

The chairman of the House Ways and Means Committee, Democratic Rep. Richard Neal, said during a hearing on Tuesday that temporary measures such as tax cuts should only come after stimulus measures that include new infrastructure funding, something Treasury Secretary Steven Mnuchin appeared to agree with.

“If there’s a need to stimulate the economy as a result of the coronavirus, I am sure that infrastructure is a priority for the President,” he said.

In the same hearing, Mnuchin said the White House was not considering suspending tariffs on Chinese or European goods, which have been a factor in global economic unease over the past year.

Trump has publicly goaded the Federal Reserve to further cut interest rates, even though a half-point cut on Tuesday did little to stabilize markets. On Twitter he called for “more easing and cutting” following the emergency rate cut.

CNN’s Sarah Westwood, Jim Acosta and John Harwood contributed to this report.

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Economy

Energy stocks help lift S&P/TSX composite, U.S. stock markets also up

Published

3 hours ago

September 17, 2024

Anne Joseph

TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.

The S&P/TSX composite index was up 34.91 points at 23,736.98.

In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.

The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.

The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.

The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.

This report by The Canadian Press was first published Sept. 17, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Canada’s inflation rate hits 2% target, reaches lowest level in more than three years

Published

4 hours ago

September 17, 2024

Anne Joseph

OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.

The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.

Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.

Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.

The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.

The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.

“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.

Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.

“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.

The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.

The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.

A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.

Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.

Its key lending rate currently stands at 4.25 per cent.

CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.

The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.

This report by The Canadian Press was first published Sept. 17, 2024.

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Economy

Federal money and sales taxes help pump up New Brunswick budget surplus

Published

1 day ago

September 16, 2024

Anne Joseph

FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.

Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.

The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.

Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.

Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.

Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.

Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.

This report by The Canadian Press was first published Sept. 16, 2024.

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