Colorful child’s riding toys are displayed at the 116th Annual North American International Toy Fair at the Jacob K. Javits Convention Center in New York, the United States, Feb. 16, 2019. (Xinhua/Wang Ying)
The U.S. economy has maintained a moderate pace of growth, but it faces a thorny path ahead.
WASHINGTON, Dec. 24 (Xinhua) — The U.S. economy, supported by robust consumer spending and a strong job market, has maintained a moderate pace of growth as 2019 draws to a close. While worries about an immediate recession have abated, its economy still shows signs of slowing down.
With business investment falling and manufacturing sector contracting, the U.S. economic recovery has hit a lot of bumps over the past few months. It faces a thorny path ahead amid lingering trade uncertainty and a synchronized global slowdown.
U.S. economic growth in the third quarter expanded at an annual rate of 2.1 percent, which is slightly up from the 2 percent in the second quarter and marks a sharp deceleration from the 3.1 percent in the first quarter, according to data from the U.S. Commerce Department.
A panel of professional forecasters recently surveyed by the National Association for Business Economics (NABE) anticipated the U.S. Gross Domestic Product growth would slow from 2.9 percent in 2018 to 2.3 percent this year.
After the central bank’s latest policy meeting earlier this month, U.S. Federal Reserve Chairman Jerome Powell described the mixed picture in his words: “Household spending has been strong, supported by a healthy job market, rising incomes, and solid consumer confidence. In contrast, business investment and exports remain weak, and manufacturing output has declined over the past year.”
Personal consumption expenditures, which account for roughly 70 percent of U.S. economic output, have seen robust growth during the first three quarters — rising by 1.1 percent, 4.6 percent, and 3.2 percent respectively — partly soothing fears over the health of the world’s largest economy.
The unemployment rate, which has remained below 4 percent since the beginning of the year, dropped slightly to 3.5 percent in November, again hitting the lowest in nearly five decades. Job gains have averaged 205,000 from September to November.
Despite resilient consumer spending and a strong labor market, business investment has declined for two straight quarters — dropping by 1 percent in the second quarter and 2.3 percent in the third — acting as a drag on the overall economy.
Economic activity in the manufacturing sector, meanwhile, contracted for a fourth consecutive month in November, according to the Institute for Supply Management. The Purchasing Managers’ Index registered 47.8 percent in September, the lowest in a decade.
The Fed chairman, along with many economists, has repeatedly cited trade tensions as one of the factors that have been weighing on the U.S. economy.
Noting that the economy faced some “important challenges” from weaker global growth and trade uncertainty over the past year, Powell said the central bank adjusted the stance of monetary policy to “cushion” the economy from these developments and “provide some insurance against the associated risks.”
The Fed has lowered interest rates three times since July, amid growing uncertainty stemming from trade tensions, weakness in global growth and muted inflation pressures. These policy adjustments put the current federal funds rate target range at 1.5 percent to 1.75 percent.
U.S. Federal Reserve Chairman Jerome Powell speaks during a press conference in Washington D.C., the United States, on Dec. 11, 2019. (Xinhua/Sarah Silbiger)
The Business Roundtable, an association of CEOs for some of the largest companies in the United States, recently said its index of the CEOs’ economic outlook in the fourth quarter dropped to 76.7, which remains below the historical average and marks the seventh consecutive quarterly decline.
“CEOs are justified in their caution about the state of the U.S. economy. While we have achieved a competitive tax environment, uncertainty surrounding trade policy and slowing global growth are creating headwinds for business,” said Joshua Bolten, president and CEO of the Business Roundtable.
According to the NABE survey released earlier this month, trade policy continues to be the “most widely cited” dominant downside risk to the U.S. economy through 2020, with half of respondents citing it as the “greatest” downside risk.
U.S.-initiated trade tensions have taken a toll on the global economy. The World Trade Organization recently said that world merchandise trade volumes are expected to rise by only 1.2 percent in 2019, substantially slower than the 2.6 percent growth forecast in April.
In its latest World Economic Outlook report released in October, the International Monetary Fund lowered its global growth forecast for 2019 to 3 percent, warning that growth continues to be weakened by rising trade barriers and growing geopolitical tensions.
THORNY ROAD AHEAD
The U.S. economy is expected to further slow down next year against the backdrop of persistent trade policy uncertainty and a labor market that could be losing momentum, as well as a precarious global outlook.
Official data showed that job gains have averaged 180,000 per month so far in 2019, compared with an average monthly gain of 223,000 in 2018, indicating that the overall level of hiring has been slowing down over the past few months. Meanwhile, the pace of payroll growth has remained weak.
According to the CNBC Global CFO Council survey for the fourth quarter, 60 percent of chief financial officers expect their company’s head count to decrease over the next 12 months.
The NABE survey panelists believed the U.S. economy would slow to 1.8 percent in 2020. “The consensus forecast calls for a pickup in housing, but slower growth in business investment and consumer spending, along with larger deficits in trade and the federal budget,” said NABE President Constance Hunter, chief economist at KPMG.
The federal budget deficit, which ballooned rapidly during the Trump administration, has drawn concern from many. Powell, the Fed chairman, recently stressed the urgency for the U.S. Congress to address the issue, noting that there would otherwise be less fiscal space to support the economy in a downturn.
On the trade front, uncertainty has been the only certainty. Despite progress with Canada, Mexico and China, the United States has proposed tariffs on French products in retaliation for digital service tax, and its Boeing-Airbus aircraft subsidy dispute with the European Union has been escalating.
A worker milks a cow at a dairy farm run by Kelly D. Cunningham in rural Cass County of the U.S. state of Iowa, Oct. 16, 2019. (Xinhua/Wang Ying)
“The administration’s trade policies have left little room to maneuver,” Diane Swonk, chief economist at Grant Thornton, a major accounting firm, wrote in an analysis.
“Either the president backs off his campaign promises, holds the line on tariffs and the economy slows. Or, he risks a recession by doubling down on trade wars and heightening uncertainty,” Swonk wrote. ■
China's economy remains resilient despite external risks, says Xi – SaltWire Network
BEIJING (Reuters) – China’s economy remains resilient and there are ample policy tools at Beijing’s disposal despite rising external risks, President Xi Jinping said in remarks published on Saturday.
The world’s second-largest economy has steadily recovered from a virus-induced slump, but analysts say policymakers face a tough job to maintain stable expansion over the next several years to turn China into a high-income nation.
“The basic characteristics of China’s economy with sufficient potential, great resilience, strong vitality, large space for manoeuvre and many policy instruments have not changed,” Xinhua news agency quoted Xi as saying.
China has strong manufacturing capacity, very large domestic markets and huge investment potentials, Xi said.
Xi reaffirmed a “dual circulation” strategy that would help steer the economy towards greater self-reliance, as U.S. hostility and a global pandemic increase external risks.
China still enjoyed “strategic opportunities” in its development, although the coronavirus pandemic has exacerbated global challenges as globalisation slows and unilateralism and protectionism are rising, Xi was quoted as saying at a meeting on the country’s 14th five-year plan (2021-2025).
“We must seek our development in a more unstable and uncertain world,” he said.
Xi urged calmness amid rising difficulties and challenges.
“The great rejuvenation of the Chinese nation can never be achieved easily with the beating of gongs and drums,” he said.
(Reporting by Kevin Yao; Editing by Alex Richardson)
Fonds de solidarité FTQ is Solid and Committed to Supporting the Economy and Jobs – Canada NewsWire
“It’s up to us to build the future we believe in
and to invest in a better society.”
– Gaétan Morin
Highlights as at May 31, 2020:
- $1.4 billion invested in Québec economy (40% more than projected);
- Share value at $44.24 (down $1.96 from December 31, 2019, and up $0.34 over July 5, 2019);
- Annual return of 0.8%;
- Six-month return of -4.2%;
- Comprehensive annual income of $230 million (profit);
- Net assets of $13.8 billion;
- $3 billion in redemption requests;
- 707,935 shareholders-savers.
MONTRÉAL, Sept. 19, 2020 /CNW Telbec/ – At the Annual General Meeting of Fonds de solidarité FTQ shareholders, management reported on the year ended May 31, 2020. The AGM was held virtually for the first time due to the COVID-19 pandemic and public health directives aimed at limiting its spread.
“The Fonds’ last financial year was marked by two diametrically opposed periods. During the first nine months, the economy was in full swing and Québec continued to build on the momentum of recent years. This boom then came to a screeching halt when COVID-19 hit. But this is not the first time the Fonds has had to deal with a crisis. Throughout the year, before and after the start of the pandemic, the Fonds has shown that it plays a key role in the Québec economy,” said Fonds Chairman Claude Séguin at the start of the AGM.
“Overnight, the economy came to a stop, weakening many companies and their workers. We quickly adjusted to meet the needs of our savers and to support our partner companies,” said Gaétan Morin, President and Chief Executive Officer of the Fonds.
“These are tough times, to say the least. But Québec has many strengths to help it meet the challenges that lie ahead. It’s up to us to build the future we believe in and to invest in a better society. The Fonds will be there to help Québec realize its dreams of an ever more prosperous, greener society. With assets of nearly $13.8 billion as of May 31, the Fonds is solid and committed to supporting the economy and jobs,” added Mr. Morin.
Taking into account the additional financing provided to companies in response to the pandemic, the Fonds invested a total of $1.4 billion in the Québec economy during the fiscal year ended May 31, 2020, or 40% more than originally planned.
The Fonds also acted quickly to ensure that its partner companies had the financial leeway they needed to get through the crisis and save jobs. More than 1,300 of them have taken advantage of the offer to defer their loan payment for six months.
Share issues and redemptions
During the year, the Fonds issued $961 million in Class A shares, a new record. The organization welcomed more than 46,000 new shareholders, of which 61% are under age 40 and 18% under age 25. Automatic saving through payroll deduction or automatic bank withdrawals accounted for 79% of inflows ($759 million).
During the same period, the Fonds received $3 billion in redemption requests. Thanks to its solid financial position and prudent liquidity management, the Fonds can meet the needs of its shareholders in difficult times. The decrease in assets under management in the second half of the year is explained primarily by the sharp increase in redemption requests.
“We would like to express our gratitude to all the people who have placed their trust in the Fonds over the years. Thanks to their support, we’ve been able to deliver on our mission, and we’re proud to give them back their savings along with the gains they’ve realized over the years,” said Gaétan Morin.
The 2020 Operations and Sustainability Report is available on the Fonds’ website here.
About the Fonds de solidarité FTQ
The Fonds de solidarité FTQ is a capital development fund that channels the savings of Quebecers into investments. With net assets of $13.8 billion as at May 31, 2020, the Fonds has helped create and protect 221,267 jobs. The Fonds has 3,329 partner companies and 707,935 shareholders-savers.
SOURCE Fonds de solidarité FTQ
For further information: For media representatives only: Patrick McQuilken, Senior Advisor, Media Relations and Communications, Fonds de solidarité FTQ, Mobile: 514 703-5587, Email: [email protected]
Hungary extends loan moratorium as economy struggles to recover from pandemic – TheChronicleHerald.ca
By Krisztina Than
BUDAPEST (Reuters) – Hungary will extend a moratorium on loan repayments for some households and companies until the middle of 2021, as its finance minister warned the economy could struggle to grow next year unless a coronavirus vaccine is found.
Prime Minister Viktor Orban introduced the moratorium for all companies and private borrowers in March as one of his government’s key measures to help reduce the economic fallout from the pandemic. It was due to expire at the end of the year.
In a video posted on his official Facebook page on Saturday, Orban said the moratorium would be extended by six months for families with children, the retired, unemployed and those in public works programmes.
The extension until the middle of 2021 will also apply to companies that have seen revenues drop by at least 25%.
Orban also said loan contracts for all households and companies agreed before the pandemic could not be terminated for six months.
The moves come as the government prepares to announce more steps to try to revive growth, after the economy plunged more than expected in the second quarter and prospects for a recovery next year have worsened.
The weak economic outlook could represent the biggest threat to nationalist Orban’s decade-long rule as he prepares to face parliamentary elections in the first half of 2022.
Finance minister Mihaly Varga said in an interview published earlier on Saturday that if a coronavirus vaccine was not available by the middle of 2021 the economy might struggle to grow next year, based on a pessimistic scenario.
Under an optimistic scenario, the economy could grow by 4-5% if a vaccine was available in the second quarter, he told newspaper Magyar Nemzet.
A third scenario was for a protracted recovery with 3%-4% growth, also conditional on a vaccine being available, he added.
Hungary’s economy is expected to shrink by 5%-6% this year.
Varga said the government was working on new stimulus measures that could include targeted tax cuts for crisis-hit sectors.
After a spike in new cases in recent weeks, Hungary reported 809 new coronavirus infections on Saturday, bringing the total to 16,920, with 675 deaths.
(Reporting by Krisztina Than; Editing by David Clarke and Mark Potter)
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