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Canada’s economy endured an historic collapse in 2020, but surged into 2021 faster than most expected

Canada’s economy surged into 2021 with more momentum than most expected, as companies restocked in anticipation of future demand and those Canadians left relatively unscathed by the COVID-19 crisis continued to plow money into real estate.
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Investment in real estate increased 3.9 per cent in 2020.

Canada’s economy surged into 2021 with more momentum than most expected, as companies restocked in anticipation of future demand and those Canadians left relatively unscathed by the COVID-19 crisis continued to plow money into real estate.

Statistics Canada on March 2 reported that gross domestic product (GDP) grew at an annual rate of 9.6 per cent in the fourth quarter, about twice as fast as the Bank of Canada predicted in its latest economic outlook in January.

The miss probably won’t significantly alter the central bank’s plans, at least not until a critical mass of the population is vaccinated and it becomes clear that COVID-19 variants don’t pose a significant danger. The rebuilding of stockpiles accounted for about 75 per cent of the growth in the fourth quarter, and economists tend to distrust inventories as a predictor of underlying demand. Household spending dropped at an annual rate of 0.4 per cent, reflecting stricter pandemic controls and elevated unemployment levels.

Weak employment swamps all other concerns in Ottawa right now. Bank of Canada governor Tiff Macklem last week reiterated that he intends to keep interest rates extremely low for at least a couple of years, telling the Calgary Herald’s Chris Varcoe that “we are losing productive workers, we are losing productive capacity in our economy.”

Statistics Canada’s preliminary accounting of economic output in 2020 makes Macklem’s case. The hole left by the COVID-19 crisis is immense: GDP contracted by 5.4 per cent in 2020, the biggest collapse since 1961, when the agency began tallying quarterly economic output. By comparison, GDP dropped 2.9 per cent in 2009 in the wake of the Great Recession, and decreased 3.2 per cent in 1982, when many of the world’s richest countries were grappling with high interest, inflation and unemployment rates.

The 2020 recession was unusual because service providers took the biggest hit. Many of those companies remain the most vulnerable to the virus and the approaches governments take to managing the pandemic. Output by the food, beverage and accommodation industry dropped 11 per cent in the four quarter from the third quarter, Statistics Canada said.

“We have started laying off people now permanently,” Charles Khabouth, chief executive of Ink Entertainment, a Toronto-based owner of bars and restaurants, told the Financial Post’s Larysa Harapyn on Feb. 25. “We will probably be 25 (per cent) to a third less employees than before the pandemic.”

Still, for many investors, the economic destruction of 2020 is last year’s story. Financial markets have grown edgy about inflation, and evidence of faster-than-expected growth could exacerbate such worries. Statistics Canada in a separate report on March 2 said GDP likely increased 0.5 per cent in January from the previous month, suggesting the first-quarter contraction that the Bank of Canada and others anticipated will be avoided.

Housing is the controversial star of the recovery story, albeit with substantial support from the federal government and central bank.

Investment in real estate increased 3.9 per cent in 2020, defying early warnings from Canada Mortgage and Housing Corp. (CMHC) that the recession could crush our insatiable demand for houses. Instead, spending patterns shifted, as professionals bet on a future in which they would be working from home, rather than making daily commutes to the office.

Buyers sought bigger properties in suburbs and smaller cities, spreading the mania that has long gripped Vancouver and Toronto to places such as Ottawa and Moncton, N.B. They were able to do so because they were either among the lucky ones who kept working, or because they benefited from generous emergency assistance.

Disposable income increased 10 per cent from 2019 because the federal government opted for emergency benefits that erred on the side of too much, rather than too little. The savings rate surged to 15.1 per cent in 2020, as households hoarded salaries and benefit payments equivalent to the previous seven years combined, Statistics Canada said.

The combination left many households primed to take advantage of near-zero interest rates, which the Bank of Canada would have anticipated, although perhaps not to the extent that ultimately transpired. Macklem last week said he was seeing early signs of “excess exuberance” in the housing market.

In the short term, the housing boom has lessened the economic pain of the recession, but at the expense of deepening vulnerabilities that existed before the pandemic.

“We never pretended to have a crystal ball,” Evan Siddall, the head of CMHC, tweeted on March 1. “We remain very concerned about even a partial reversal” of the factors driving demand, he said in a separate tweet , adding a list of negative side effects that include increased debt, the diversion of capital to an unproductive investment, and increasing inequality between owners and renters.

An unambiguously positive surprise has been the rebound in exports. Canadian governments were unwilling to impose the same strict lockdown measures that allowed Asian economies to crush the virus, nor were they willing to tolerate the death toll that came with the laxer approach to social distancing in the United States. But exporters are benefiting from resurgent demand from both of those places, especially Asia, which is driving commodity prices higher.

Cargo through the Port of Vancouver increased one per cent last year, despite an epic recession, led by record shipments of grain and potash. “We’ve been very fortunate,” Robin Silvester, chief executive of the Vancouver Fraser Port Authority, said in an interview on March 1. “We’re seeing a really strong start to the year, continuing the trend that we saw toward the end of 2020.”

That’s good, because Canada’s economy will need ballast for a while yet. “Nobody is going to book anything now until 2022,” Khabouth said. “In my opinion, 2021, on a large scale, is a writeoff for primarily all of Canada.”

Financial Post

• Email: kcarmichael@postmedia.com | Twitter:

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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3 hours ago

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March 9, 2024

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

“When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

“It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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Walmart joins Costco in sharing key pricing news

The massive retailers have both shared information that some retailers keep very close to the vest.

Published

6 hours ago

on

March 9, 2024

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As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters. 

The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.

The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.

Related: Popular mall retailer shuts down abruptly after bankruptcy filing

It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.

You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.

Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.

However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.

Walmart has seen inflation drop in many key areas.

Image source: Joe Raedle/Getty Images

Walmart sees lower prices

McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.

During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.

"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.

He was specific about where the chain has seen prices go down.

"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."

McMillon said that in other areas prices were still up but have been falling.

"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.

Costco sees almost no inflation impact

McMillon avoided the word inflation in his comments. Costco  (COST)  Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.

The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.

"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.

Galanti made clear that inflation (and even deflation) varied by category.

"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.

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Walmart has really good news for shoppers (and Joe Biden)

The giant retailer joins Costco in making a statement that has political overtones, even if that’s not the intent.

Published

7 hours ago

on

March 9, 2024

By

As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters. 

The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.

The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.

Related: Popular mall retailer shuts down abruptly after bankruptcy filing

It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.

You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.

Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.

However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.

Walmart has seen inflation drop in many key areas.

Image source: Joe Raedle/Getty Images

Walmart sees lower prices

McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.

During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.

"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.

He was specific about where the chain has seen prices go down.

"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."

McMillon said that in other areas prices were still up but have been falling.

"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.

Costco sees almost no inflation impact

McMillon avoided the word inflation in his comments. Costco  (COST)  Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.

The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.

"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.

Galanti made clear that inflation (and even deflation) varied by category.

"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.

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