The Administration thinks that more spending will deal with our inflation even though our federal debt-to-GDP ratio is at record high levels. The Federal Reserve thinks it can keep the economy growing while taming inflation with interest rate hikes. But the real driver of our economic outcomes will be the virus and its impact here in the U.S. and in other countries like China that are closely tied to ours. The virus will affect workers and work activity and drive government policies to deal with the outcomes. And, other major world disruptions like the war in Ukraine that are unrelated to the virus will further complicate the picture.
When millions of “little things” don’t go as they used to, that’s “sand in the gears” of growth. The inability of a firm in China, due to their zero-Covid policy, to deliver simple wire harnesses essential in car manufacturing can shut down an auto plant in another country. All companies providing inputs to that plant suddenly find they can’t sell their products and the problems spread. Such supply chain disruptions can have magnified impacts on employment, output, and prices, and are not easily repaired. The intricate network of outsourcing and trade relationships is very vulnerable to disruptions.
In the U.S., disruptions are widespread. Nearly a third (31%) of NFIB’s 300,000 member firms (approx.) report that the recent surge in Covid has had significant or moderate negative impacts on their businesses. Of those impacted by the surge, over 70% reported a negative impact on sales, and a few reported a favorable impact, the balance reporting “no impact”. For almost 40%, the impact was significant or moderate (vs mild or none).
Work attendance was also adversely impacted. Sixty-four percent of the owners reported labor problems, 45% of them reporting a serious or moderate impact (vs mild or none) on attendance. Added to all that, over 80% reported supply chain disruptions with over 50% of them reporting significant or moderate loses of sales opportunities.
Adding to all of these “direct” effects, the impact of government Covid regulations on businesses, makes it quite obvious that the virus is driving economic activity. The bug is the driving force.
Covid has hit China's economy harder than expected – CNN
Hong Kong (CNN Business)China has reported disappointing economic data for the month of April, underscoring the extensive damage Covid lockdowns have wreaked on the country.
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Rural development grants to spark Nicola Valley economy – Global News
The province announced on Friday a series of rural development grants in the Nicola Valley to support economic development and diversification.
This is the next step in the StrongerBC Economic Plan and the ongoing recovery efforts in Merritt following the floods in November last year.
“People in Merritt have been through a lot in the past year, and they know how important business recovery is for community rebuilding,” said parliamentary secretary for rural and regional development Roly Russell in a press release.
The provincial government is providing a $1-million rural development grant to the Small-Scale Meat Producers Association to build a community abattoir in the Merritt area.
This will provide meat processing and cut-and-wrap services to local farmers and ranchers.
“This project represents significant job and economic opportunities for the region, while ensuring local ranches, abattoirs and businesses are part of a strong, resilient B.C. food system,” said minister of agriculture and food Lana Popham in a press release.
“With the recent changes to B.C.’s meat-licensing system and investments in facilities like the Nicola Valley community abattoir, this revitalization of the small-scale meat industry makes it easier to produce, buy and sell B.C. meat in our rural communities, and helps strengthen our food security and food resiliency.”
The abattoir will be a government-inspected licensed facility with a full range of services to process red meat.
According to the province, local producers have been impacted by the lack of processing capacity. Julia Smith who is a pork and beef producer in Merrit is hopeful this new facility will help her business as well as other local producers.
“My partner and I moved to the Nicola Valley in 2016 planning to expand our business to meet the growing demand for well-raised, local meat. But we soon found that the processors we relied upon were not able to keep up with our production and we had to scale the business back instead of growing it.”
More than 900 people still displaced following Merritt flooding last fall
“We were on the verge of giving up. But now we are ready to press on, because this facility will allow us, and other local family farms and ranches, to grow and thrive while providing greater food security for the community.”
The province is providing a $1-million rural development grant to the Scw’exmx Tribal Council toward Gateway 286 in Merritt.
“After an unbelievable year of fires, floods, and a pandemic, we welcome the B.C. government’s $1-million grant that will bolster our rural community, support good-paying jobs and much-needed economic development,” said Spayum Holdings LP director and Scw’exmx Tribal Council Terrence (Lee) Spahan in a press release.
“The Gateway 286 project is a 30-plus-year vision of past and present Nicola Valley Indigenous Chiefs and these monies will take our commercial and tourism development one more step closer to reality. This project will enhance the experience of the [traveling] public by providing much-needed services, and it will provide good-paying jobs and entrepreneurial opportunities for the residents of the Nicola Valley.”
Meanwhile, the City of Merritt is receiving a $500,000 grant related to economic recovery for communities that were affected by the flooding. The grant will go towards completing economic development projects and initiatives to support long-term economic recovery.
This is in addition to $329,000 in provincial funding for the City of Merritt to update flood-hazard mapping and develop new flood-mitigation plans.
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