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Why does it feel like the world economy is out of whack? – CNN

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(CNN)The supply chain is persistently clogged. There’s a full-on energy crisis spreading around the world. Prices for everyday goods are rising. And there aren’t enough workers to go around.

The global economy is out of whack and governments aren’t sure what to do.
The evidence is in a daily churn of headlines that lend themselves to alarming pronouncements.

Prices are rising. Inflation doesn’t seem to be going anywhere.

On Wednesday, the government’s Consumer Price Index confirmed what anybody who has been to the grocery store already knew: US prices are up.
“Rising prices for food and shelter contributed more than half of this increase, while prices for new cars, household furnishings and car insurance also climbed,” writes CNN’s Anneken Tappe, adding that new car prices had their biggest one-year jump since 1980. The price of gas is up more than 40% in a year.
Read more
The roughly 70 million US Social Security recipients will get their largest cost of living adjustment since 1982, the government announced Wednesday — a $92 per month boost next year to an estimated average of $1,657 to help cover the rising costs.
Not everything is more expensive. Plane tickets have dipped a bit.
But everyday costs like rents are rising. Home prices are expected to continue to go up, according to Goldman Sachs. The investment bank projects more and more people will be forced out of the home market by high prices only to be pressured by high rents.
What’s the fix for high home prices? Perhaps relaxed zoning laws. Goldman Sachs noted that California has abolished single-family zoning in the state, which could add housing units. Read more on housing from CNN’s Anna Bahney.

Workers are quitting their jobs

A record number of Americans — 4.3 million workers, or nearly 3% of the total workforce — quit their jobs in August. That’s the highest quit rate in the history of the government survey that tracks the data, which has been around since 2000.
CNN’s Matt Egan writes that workers want higher pay, better conditions and more flexibility. And companies are so desperate for workers that people aren’t worried about seeing what else is available.
This is not the sappy hyperdrama of disillusioned hard workers all giving up and moving away that Ayn Rand wrote about in “Atlas Shrugged.”
It’s a problem for companies grappling with a worker shortage.
But it’s also a potential “golden age” for American workers, writes Egan. He talked to Joe Brusuelas, the chief economist at the consulting firm RSM, who said we’re in the midst of a pivotal moment as the US and the rest of the world overcome Covid-19.
“This is what happens after great wars or depressions,” Brusuelas said. “It’s hard to spot while you’re in it, but we’ve gone through a shock that has elicited an unexpected change upon the population. And it will take some time to sort through.”
“People are making different decisions, they’ve moved to different places,” JPMorgan Chase CEO Jamie Dimon said Wednesday. “Covid has affected their mindset. There’s more churn. That’s OK and that will normalize over time,” Dimon said.
But it’s not all tales of worker empowerment. And it’s not just American workers that matter to the US economy. Read this report on an open letter from transportation industry groups calling for more freedom of movement in the world for transportation workers and access to Covid-19 vaccines to avoid a transportation industry collapse.
We’ve all seen photos of container ships in lines. The story describes seafarers on cargo ships who haven’t been allowed to go on shore in 18 months. It also outlines how a truck driver shortage in Europe has been complicated by mandatory Covid-19 testing in some countries there.

The supply chain is not unclogging

In an effort to clear those container ships crowded off US shores, President Joe Biden announced Wednesday that certain US ports would operate 24/7 to begin to alleviate supply chain issues. That won’t fix the capacity problems at US ports and on interior transportation routes. Meanwhile, the bill to increase infrastructure spending can’t quite get over the finish line on Capitol Hill.
Separately, the US will slowly end some restrictions at US borders and allow fully vaccinated travelers into the country.
So much of the preceding elements — the worker shortage and inflation — are also tied to the supply chain.
The International Monetary Fund on Tuesday downgraded its growth forecast for the US, citing the supply chain. Egan writes about a Moody’s report suggesting the supply chain will impede the economy’s recovery. Other analysts are not as worried and think companies will adjust and the supply chain will eventually begin working again.

The energy crisis is real

Energy problems are more focused in Europe, where the price of natural gas is through the roof, and in China, where it’s the increasing expense of coal. There’s a spillover that has US gas prices at a seven-year high.
A spike in fossil fuel prices should be just the right thing to convince more people that now is the time to transition toward greener and renewable energy sources needed to combat climate change — but the Democrats’ proposals to do just that are looking less and less likely in Washington. The real-world effect of higher fossil fuel prices could be to hit people and businesses in the wallet and drive inflation even higher.
Bottom line: “I think it’s about how all of this shows just how big of a shock Covid delivered to the whole planet,” said Egan. “Entire systems that we all used to take for granted, like a supply chain that works behind the scenes to get goods from factories to our front doorsteps, have broken down. Our assumption that there are always enough workers to drive trucks and work at ports have been thrown into disarray. And while the pandemic happened quickly, there is no reason to think these problems will go away overnight. It’s going to take time to sort through them all.”

In-depth: Which workers are quitting and why?

Which workers are quitting, exactly?
I asked CNN’s Tami Luhby what we know about who is quitting and why. Here’s what she said:
More than half of that jump came from the lodging and food services sector, which saw 157,000 people leave … These jobs tend to be lower wage so some workers may be lured away by the signing bonuses, pay increases and other incentives that businesses are offering to fill their openings.
Also, 26,000 people in the wholesale trade sector, which includes truck drivers and sales representatives, quit their jobs, as did 25,000 people in local government education.
The number of quits increased in the South and Midwest.
But a couple of sectors saw reductions in the number and rates of people quitting. Fewer workers in the real estate/rental/leasing sector said goodbye to their jobs, for instance. Quits fell by 23,000.
Are unemployment benefits to blame? And is it still possible to argue, as many Republican governors and business owners previously did, that expanded unemployment benefits — which have now expired — are to blame for the worker shortage?
Luhby: It’s becoming increasingly clear that the end of pandemic unemployment benefits is not prompting the jobless to rush back to work. The labor force shrank last month for the first time since May, signaling that more people were opting to sit on the sidelines and not actively look for jobs.
Also, employment did not grow substantially faster in the two dozen states (all but one led by Republicans) that opted to terminate benefits in June or July, previous studies and government data have found.
The enhanced unemployment benefits may have had a small negative impact on people’s interest in looking for work, but other factors — including child care issues, virus fears and workers’ reevaluation of their life goals — played a major role.
That said, experts caution against drawing firm conclusions on just one or two months of data.
The jobless typically have to apply to positions on a regular basis to qualify for unemployment payments, so ending the benefits may prompt some to stop looking, at least temporarily. And others may be searching for new employment, but it takes time to find the right match.

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Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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