Why America's economy may still need trillions of dollars - CNN | Canada News Media
Connect with us

Economy

Why America's economy may still need trillions of dollars – CNN

Published

 on


A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

London (CNN Business)News that prices for American consumers are rising at the fastest rate in three decades has spooked investors and economists, piling pressure on President Joe Biden and the Federal Reserve to respond more aggressively.

What’s happening: Biden and his team are now steeling themselves for high inflation to persist into 2022, a problem for Democrats ahead of next November’s midterm elections. Senior Fed official Richard Clarida has indicated that if inflation stays elevated, the central bank could opt to hike interest rates next year.
Inflation is currently “much more than a moderate overshoot” of the Fed’s 2% target, he said earlier this week. “I would certainly not consider a repeat performance a policy success,” he continued.
Larry Summers, an economist who served in both the Obama and Clinton administrations, has been sounding the alarm on inflation for months.
“I think that the policymakers in Washington, unfortunately, have almost every month been behind the curve,” Summers told CNN on Wednesday.
But not everyone thinks the Fed and the Biden administration need to change course dramatically. In fact, former Fed economist Claudia Sahm, a Summers critic, believes that America’s economy still needs trillions of dollars in additional stimulus.
I asked her a few questions about this week’s inflation data and the subsequent debate. Our Q&A has been condensed and lightly edited for clarity.
What’s the big picture takeaway from the latest inflation data, in your view?
Big price increases in October, on top of higher-than-normal inflation since the summer, are unambiguously bad for consumers. But Covid, not inflation, is the problem. The rise and fall of cases throughout the pandemic has created immense disruptions in our economic and everyday lives.
What does a 6.2% annual increase in the Consumer Price Index say about the narrative that inflation is transitory?
The view that inflation would step back down this year was always based on the view that the pandemic would recede. Covid is still here, and as recently as a few months ago, it surged due to the Delta variant. Global supply chains are a mess, largely due to an insufficient global health response. There are no signs that the price increases due to Covid-related factors are spreading into other prices. Transitory means short-lived. As with the pandemic itself, we have been promised that it would get better soon, and it takes longer.
A number of other economists are pointing to rising rents as one example that price increases are broadening. Do you disagree with this assessment?
I disagree. House prices increased more slowly than usual during the pandemic due to eviction moratoriums, mortgage forbearance, and people waiting to move. The faster house price inflation now is basically a “getting back to normal.” That normal is not good, but it is what we had before Covid.
Should the Fed stay the course? Or might it need to move faster?
The Fed decided to reduce the pace of asset purchases by $15 billion in November and December and then reevaluate at their next meeting. The world is changing quickly, and it is appropriate for them to get more data before deciding on the pace after that.
What should the response be in Congress and/or from the Biden administration? What are the implications for Biden’s $1.9 trillion Build Back Better social spending package?
Congress needs to pass the Build Back Better legislation immediately. It is an investment in our children, low-wage workers, education, health care and fighting climate change. A half a year of higher-than-normal inflation is not a reason to squander this opportunity to act.

Two more big companies want to split themselves up

This week could mark the end of an era for more than one iconic conglomerate.
The latest: Japan’s Toshiba outlined plans on Friday to break up into three independent companies, a pitch that involves spinning off its energy and infrastructure business as well as its device and storage business.
The proposal follows a campaign by activist shareholders and a strategic review in the wake of a corporate governance scandal.
Toshiba (TOSBF) said Friday that it saw splitting the company as the best path forward.
“The decision allows each business to significantly increase its focus and facilitate more agile decision-making and leaner cost structures,” it said in a statement.
The move by the 146-year-old conglomerate comes just days after General Electric said it would split into three separate public companies, spinning out its aviation, healthcare and energy businesses.
Step back: What’s driving these storied conglomerates to try to dissemble themselves? One factor is the market, which currently favors streamlined operations over sprawling empires.
Another is the role of more aggressive activist shareholders, who build up stakes and then lobby for companies to make large structural changes.
There’s more: Johnson & Johnson (JNJ) announced Friday that it’s planning to split into two public companies, spinning off its division that sells Band-Aids and Tylenol. Shares are up 4% in premarket trading.
I’m also keeping an eye on Shell (RDSA), which is being lobbied by the hedge fund Third Point to separate its legacy fossil fuel business from its push into renewables. The company has rejected this proposal. But could other shareholders take Third Point’s side?

North American companies are racing to order robots

The companies rushing to meet surging demand for goods while struggling to fill open positions are in a bind. Increasingly, they’re turning to a new solution.
According to the Association for Advancing Automation, or A3, strong sales of robots over the summer brought the total number of orders in North America to 29,000 units so far this year. That’s the highest level on record.
Breaking it down: The number of units sold is up 37% from the same period in 2020 and trumps the previous high set in 2017 by nearly 6%.
“With labor shortages throughout manufacturing, logistics and virtually every industry, companies of all sizes are increasingly turning to robotics and automation to stay productive and competitive,” A3 President Jeff Burnstein said in a statement.
The group said it wasn’t just carmakers placing orders. Nearly two-thirds of sales came from non-automotive industries, including metals and food and consumer goods.
Big picture: A3 advocates for the benefits of automation, arguing it makes workplaces safer and frees up people for more rewarding roles. Even if that’s true in the long run, it could seriously shake up the job market in the immediate term — another way in which the post-pandemic economy could look very different.

Up next

Warby Parker reports results before US markets open.
Also today: The latest data on the number of Americans quitting their jobs, which has been at a record high, posts at 10 a.m. ET.
Coming next week: US President Joe Biden and Chinese President Xi Jinping are expected to hold a virtual summit on Monday, the first such meeting between the leaders of the world’s two largest economies.

Adblock test (Why?)



Source link

Continue Reading

Business

A timeline of events in the bread price-fixing scandal

Published

 on

 

Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

Published

 on

 

TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

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

The Canadian Press. All rights reserved.

Source link

Continue Reading

Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

Published

 on

 

VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version