Tag: economic

The bad economic times have only just started

The Canadian economy is headed for a rough patch. Growth has already slowed considerably. Job growth has moderated. Inflation remains stubbornly high. But the pain households are feeling today is only going to get worse.

“The path forward looks bleak,” Tiago Figueiredo, a macro strategy associate with Desjardins, said in a note.

For a while there, the economy proved more resilient than expected. The Bank of Canada’s interest rate hikes piled up one after another. Even so, the jobs market boomed, GDP continued to expand.

But economic pain was inevitable. Soaring inflation has eroded purchasing power, and climbing interest rates have clobbered households. Now, cracks have begun to appear in the data, and economists expect those cracks to grow. GDP contracted in the second quarter of this year.

Next week, new data is expected to show economic growth flat-lined in July and perhaps contracted again in August. Some of that can be chalked up to specific factors, including labour actions like the port strike in B.C. or wildfires.

But before any of that, momentum was clearing being sapped out of the Canadian economy.


That would put Canada on track for two consecutive quarters of negative growth, which would meet the technical definition of a recession.

Frances Donald, the global chief economist and strategist at Manulife Investment Management, says we should spend less time debating what to call this downturn and focus more on how it will impact people.

“Even if there are technical factors that avert two quarters of negative GDP, this economy will feel like a recession to most Canadians, for the next year,” she told CBC News.

How bad are things, really?

Experts say there are several factors masking just how bad the economy really is. The first is that it usually takes about a year and a

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India’s economic boom is obscuring pressures on smaller businesses

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At a recent Mumbai conference about India’s small and medium-sized enterprises, there was much talk over the buffet lunch of pulao and gulab jamun on their prospects.

It did not always match the tone of earlier upbeat speeches at the Confederation of Indian Industries’ summit that praised government initiatives to help small business maximise India’s moment as the world’s fastest-growing major economy.

“For India to grow exponentially, we need more and more of our [small businesses] to mature into large firms in the decade to come,” said Sunil Kant Munjal, president of the confederation and chair of two-wheeler company Hero. But some summit attendees endorsed the view of those economists who say India’s growth and the rapid expansion of the country’s biggest conglomerates has obscured the pressures on smaller businesses.

The IMF is forecasting 6.1 per cent gross domestic product growth this year. But the nation of 1.4bn emerged from the pandemic with a K-shaped recovery: rich people’s incomes and spending has risen while those with fewer resources have struggled. And against that backdrop, some economists worry that behemoth business houses — from Mukesh Ambani’s Reliance Industries to the storied Tata Group — have gained market share and pricing power that could make it harder for smaller groups to compete.

Just 20 companies took 80 per cent of the profits generated by the Indian economy in the 2022 business year, double the profit percentage 10 years earlier, according to analysis by Mumbai-based fund manager Marcellus of data for listed businesses. By contrast, in a February survey of more than 100,000 small business owners by the Consortium of Indian Associations, three-quarters of respondents reported they were not profitable, and one-third claimed

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The state of global business activity and other economic news

  • This weekly round-up brings you the latest stories from the world of economics and finance.
  • Top economy stories: Economic opportunities for LatAm; Global business activity slows; Food commodity prices fall.

1. Economic opportunities for LatAm new report

A new G30 report has highlighted the potential economic opportunities for Latin America from climate finance and supply chain changes, should it get the correct policies in place.

The report identified the benefits to the region of getting its macroeconomic framework in shape and investing in infrastructure. Produced by the Group of 30’s think tank working group on Latin America, the report also called for political reforms to build trust in institutions.

Andres Velasco, project director of the working group, said “the opportunities are obvious” for the region as it can help provide the world with water, food and clean energy.

“The West needs countries with which they can build supply chains that are not politically contentious and Latin America – or much of the region at least – has a historic closeness with the West,” he told Reuters.

“The opportunities are there. The question is, are we going to seize them? The evidence so far is that we’re not doing everything we need to seize them.”

Annual GDP growth, major Latin Amercian countries, 2000-22.

GDP growth in Latin America.

Image: Group of 30

2. Global business activity shows sign of August slowdown

A series of surveys released this week showed global business activity generally slowed in August. This comes as service firms continue to struggle in the face of weak demand as a result of higher prices and borrowing costs, reports Reuters.

In the Eurozone, the services industry fell into contractionary territory, prompting concerns of a recession in the bloc. Elsewhere in Europe, the UK’s survey showed its sharpest business slowdown in seven months.

Meanwhile, in Asia, China saw

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Premarket stocks: How China’s economic turmoil could hurt your portfolio

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China’s economy is in trouble. That’s bad news for US stocks, and potentially for your portfolio.

What’s happening: Chinese consumer spending, factory production and investment in long-term assets (such as property, machinery or other goods) all slowed further in July from a year ago, according to the country’s National Bureau of Statistics.

Youth unemployment in the world’s second largest economy has repeatedly hit record highs. Earlier this week Beijing decided to suspend the release of that monthly data altogether.

Tensions between the US and China, meanwhile, have been on the rise as the world’s two largest economies clash over issues ranging from trade policy and technology, to Russia’s invasion of Ukraine.

Last week, President Joe Biden announced an executive order limiting US investments in advanced technology industries in China. The order prompted fund managers to worry about how they should be investing in the country.

Separately, a Congressional committee announced earlier this month that it is investigating BlackRock, the world’s largest asset manager, and MSCI, one of the biggest providers of index funds, to determine whether they are investing in Chinese companies blacklisted by the US government for security and human rights issues.

Why it matters: “For most of the last two decades, China’s economic growth has been a major driver of the global economy,” said Alex Etra, a strategist at data analytics firm Exante. That means that if China’s economy slows down, global economic growth slows down.

“When global economic growth slows down, that tends to be negative US equities. And some of that has to

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US Lawmakers Say China Using Coercive Business Practices for Economic Advantage

U.S. lawmakers Thursday charged the Chinese Communist Party is using coercive economic practices to achieve worldwide dominance over the United States.

The accusations came at a hearing of the House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party days after U.S. Treasury Secretary Janet Yellen met with Chinese officials in Beijing to discuss the nations’ economic relationship.

Yellen said that while the United States was taking targeted national security actions, “a decoupling of the world’s two largest economies would be disastrous for interests for both countries and destabilizing for the world, and it would be virtually impossible to undertake. We want a dynamic and healthy global economy that is open, free and fair.”

Diplomatic relations between the two countries have been tense since the U.S. downed a Chinese spy balloon earlier this year. Witnesses told the House panel Thursday U.S. companies are facing increasing threats operating inside China.

“There’s no such thing as a private company in China, a raft of legislation like the updated counterespionage law, the data security law, the anti-foreign sanctions law has codified what was always true. China reserves the right to swipe any data, to seize any assets and take IP that it wishes,” committee Chairman Mike Gallagher said.

According to committee members, China’s restrictive environment is resulting in a so-called “brain-drain” of its own business people, turning China into the top country in the world for the departure of wealthy individuals, fleeing what they fear is the Communist Party’s ability to arbitrarily seize assets.

Witnesses testified the environment in China is becoming increasingly restrictive for American companies and individuals.

“In the last few months, PRC authorities are now charging any domestic or foreign businessperson with espionage simply for providing any services using PRC information to grant

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Uh-oh. More good news that may be bad for your economic health

At first glance, the reappearance of “sold over asking” real estate signs may seem like an encouraging signal for the Canadian economy, especially for highly invested homeowners who have watched prices fall from last year’s highs.

But a growing number of economists worry that a series of recent indicators, the latest being Wednesday’s rise in Canadian retail sales, may instead be a red flag for central bankers, goading them into more rate hikes that could ultimately make many Canadians feel miserable.

With each new smidgen of optimistic data, money market traders point to a rising chance that central bankers will raise rates again. A growing number of Canadian bank economists agree there will be another rise in interest rates when the Bank of Canada’s Tiff Macklem announces his rate decision on July 12.

Rate hike ‘baked in’

“We expect that there is a 25-basis-point hike baked in for July,” said RBC economist Carrie Freestone on Wednesday, using economist-speak for a quarter percentage point, shortly after the retail figures came out.

That will mean more pain for short-term and floating-rate borrowers, whose interest costs rise with the Bank of Canada overnight rate.

Borrowers looking for longer-term fixed-rate loans are more directly affected by the Federal Reserve, the U.S. central bank that paused last week after 10 consecutive rate increases while warning that two more quarter-point rises are likely before the year is out.

Fed chair Jerome Powell reiterated that warning in front of a hostile U.S. congressional committee on Wednesday.

Prices keep rising but shoppers keep shopping
Prices are still surging but shoppers are still shopping, one more sign of an economic boom that repeated interest rate hikes just can’t seem to quell. (Andy Hincenbergs/CBC)

“Inflation pressures continue to run high and the process of getting inflation back down to two per cent has a long way

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Global Weekly Economic Update | Deloitte Insights

  • Another bit of good news concerns inflation. The US government reported that, in March, consumer prices were up only 5% from a year earlier, the lowest reading since May 2021. Recall that inflation peaked at 9.1% in June 2022. Thus, inflation has receded quite quickly. However, the bad news is that core inflation remains more persistent. That is, when volatile energy and food prices are excluded, core prices were up 5.6% from a year earlier, slightly higher than in the previous month. Still, core inflation is down from a peak of 6.6% in September 2022. Core inflation is being sustained, in part, by the lagged effect of rising home prices. The shelter component of the consumer price index was up 8.2% in March from a year earlier. It is expected that, later this year, the recent decline in home prices will help to dampen core inflation. Meanwhile, a debate rages about the persistence of inflation and whether the Federal Reserve should retain a tight monetary policy. 
  • Also on the positive side is the condition of financial markets. Recall that the Federal Reserve spent much of 2022 tightening monetary policy with the intention of weakening credit markets in order to fight inflation. For much of 2022, credit market conditions did, in fact, worsen. Risk spreads rose and financial market indicators worsened. Yet starting in October 2022, things reversed. Measures of financial-market stress improved while risk spreads fell sharply—at least until the banking crisis that began when Silicon Valley Bank failed. Then, risk spreads rose sharply. However, the successful intervention by the Fed and the US Treasury stabilized the banking sector and led to a quick decline in risk spreads to the precrisis level. Thus, a Lehman Brothers–type event was averted and markets appear to be in reasonably good shape. The perceived
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These students are facing real-world economic pressures. Mandatory financial literacy classes may help

November is financial literacy month and there was no hiding from scary economic news, even for high school students.

“I can see the prices going up in terms of the food that I buy, the clothing that I buy and just regular student finances,” said Anand Desaigoudar, a Grade 12 student at Old Scona Academic high school in Edmonton. 

Inflation, rising interest rates and fears of a recession are worrisome, even for kids who say they feel fortunate. Desaigoudar’s classmate, Aurora Shi, is worried about university and beyond.

“There’s not really a buffer between the stage where my parents pay for everything and where I pay for everything,” said Shi. “So I think that learning about money is important so that I can prepare for my future.”

WATCH | Financial literacy courses give students tools for the real world: 

Experts say financial literacy should be mandatory in schools

With the cost of living rising, experts say schools should do more to help young people learn how to manage their money, and even make financial literacy classes mandatory to graduate.

Roughly 30 students attended the optional financial literacy lesson over their lunch break last week. The class, which focuses on frauds and scams, is an example of how financial education is evolving.     

Whether it’s delivered in math class or other courses, several provinces have recently revised what financial literacy classes are being offered to students from elementary through high school. 

Gary Rabbior is the president of the Canadian Foundation for Economic Education (CFEE) in Toronto, a non-profit that develops financial literacy programs and tools for schools.

He says financial matters — from online shopping, to investing, to managing debt — have become much more complex than they used to be and believes there should be a mandatory financial literacy course taught

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What Can make To start with Business Economic Providers (FBIZ) a New Strong Purchase Inventory

First Business enterprise Financial Solutions (FBIZ) could be a sound addition to your portfolio offered its current update to a Zacks Rank #1 (Sturdy Get). An upward craze in earnings estimates — a person of the most impressive forces impacting inventory prices — has induced this score improve.

The sole determinant of the Zacks rating is a company’s altering earnings image. The Zacks Consensus Estimate — the consensus of EPS estimates from the offer-aspect analysts masking the stock — for the recent and subsequent decades is tracked by the process.

The energy of a shifting earnings picture in figuring out close to-term inventory price actions tends to make the Zacks rating method remarkably beneficial for individual traders, because it can be complicated to make decisions based on rating updates by Wall Road analysts. These are typically pushed by subjective factors that are tough to see and evaluate in serious time.

As these types of, the Zacks score improve for Initial Business Fiscal Companies is effectively a good comment on its earnings outlook that could have a favorable effect on its stock cost.

Most Impressive Power Impacting Stock Prices

The modify in a company’s long run earnings potential, as reflected in earnings estimate revisions, and the in close proximity to-term price motion of its stock are established to be strongly correlated. The affect of institutional buyers has a partial contribution to this connection, as these major professionals use earnings and earnings estimates to estimate the reasonable value of a firm’s shares. An raise or decrease in earnings estimates in their valuation versions basically results in increased or reduce honest worth for a stock, and institutional traders ordinarily invest in or offer it. Their bulk expenditure action then potential customers to cost motion for the inventory.

For First Business Financial Companies, rising

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Beyond ‘Where’s the beef?’ Older people, especially women, have economic power.

Stephanie O’Dell was working as a fashion stylist about six years ago when she noticed the huge void in advertising and marketing aimed toward older women.

Driven by her own curiosity, she started a blog and talked to 100 women about their lives, fashion and everything in between. 

“I knew if I saw these women in advertising, I would feel differently about aging,” said O’Dell, now 60.

When she saw the purchasing power behind the demographic, she knew she was onto something. She started her own modeling agency for women over 50, called Celebrate the Gray, which now boasts more than 200 models and works with hundreds of social-media influencers.

While O’Dell applauds some national brands such as Target
TGT,
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and the Gap-owned Athleta
GPS,
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for their inclusive advertising campaigns, she said many brands use younger models with unlined faces to sell products like anti-aging creams, which she said reinforces negative stereotypes about aging.

“The big brands I talked to want an immediate return on their investment. But the 50-plus woman isn’t going to buy something because of one model in one ad,” O’Dell said. 

According to AARP, consumers age 50 and older contribute $8.3 trillion to the U.S. economy, or 40% of the gross domestic product, each year. In 2030, when the first of the millennial generation will turn 50, that age group will contribute $12.6 trillion to the economy. 

And in terms of direct spending, 56 cents of every dollar spent in the U.S in 2018 was attributable to the 50-plus population, and this share is set to increase to 61 cents by 2050, AARP said.

“The decision makers have this perception of age, but the 50-year-old in their head isn’t the 50-year-old in real life. There’s a lot of education that needs to be done,”

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