The pandemic is forcing America to confront its epidemic low-wage problem
- So far, the forces unleashed by the pandemic and the accompanying economic collapse have inflicted the highest level of job losses and reduced hours on those getting paid the least, although government spending under the Coronavirus Aid, Relief, and Economic Security Act has temporarily staved off some of the most dire consequences.
- In their “The Declining Worker Power” paper, Stansbury and Summers, who served as a top economic official under both President Bill Clinton and President Barack Obama, describe both how this loss of power has driven the expansion of low-wage employment and the structural problems facing those seeking to restore labor’s bargaining power.
- There may, however, be other ways to improve the income of low-wage workers without raising the already high threat level of automation.
Alberta is the first to think beyond this crisis. Now let’s see Ottawa’s recovery plan
- This news follows on the heels of IMF reports last week that the pandemic and low commodity prices are two knockout blows to the Canadian economy.
- The IMF also predicts that Canada’s consolidated government deficits will be a whopping $270 billion this year — that’s 12.6 per cent of GDP — as governments prop up businesses, households and non-profits (like the WE Charity) to bridge the economy over the pandemic.
- For 2021, the IMF expects Canada’s all-government fiscal deficits to be 5.8 per cent of GDP or roughly $130 billion.
- As a result of these deficits, the IMF expects Canada’s gross public debt to rise by 20 points of GDP to about $2.6 trillion by the end of 2021.
- It has three main parts: stimulate investment, skill training and helping people get back to work; build shovel ready — and shovel-worthy — infrastructure; and diversify the economy.
Prague celebrates end of Covid-19 lockdown with mass dinner party at 1,600-foot table
- The Czech Republic was quick to implement a lockdown at the start of the global coronavirus outbreak and became one of the first countries to tell its citizens to wear masks -- helping it avoid the worst of the pandemic and ease restrictions earlier than many other nations.
- But the World Health Organization has warned that the pandemic is not over, and the Czech Republic is still banning many foreigners from crossing its borders -- a rule that allowed the event to take place.
- Tables were adorned with white tablecloths and flowers, and locals drank and shared food as the sun set over the city.
- The European Union formally agreed a set of recommendations on Tuesday that will allow travelers from outside the bloc to visit EU countries, months after it shut its external borders in response to the pandemic.
NSW stamp duty cut would cost billions
- NSW Treasurer Dominic Perrottet will lobby the federal government for compensation of at least $1.3 billion a year to phase out economically damaging property stamp duty and to switch to a voluntary land tax for future home buyers.
- Mr Perrottet said he was prepared to “go it alone” on tax reforms – such as switching from property duty to a phased-in land tax – to drive the economic recovery from COVID-19, but more could be achieved if federal and state governments co-operated.
- He has shown little appetite to assist the states switch from stamp duty on property purchases to an annual land tax on home owners, or to increase the goods and services tax – two recommendations in the NSW Federal Financial Relations draft report released Wednesday.
RBA readies for rise in insolvencies
- He questioned the merit of negative interest rates and pointed to a lack of demand to borrow money, when asked if the central bank considering further subsidising bank lending by adjusting its $135 billion Term Funding Facility bank funding program.
- While the Reserve Bank's actions have been highly effective in stabilising bond markets and lowering borrowing costs, other central banks have taken more extreme measures- such as purchasing corporate bonds, expanding bond purchase programs and exploring negative interest rates.
- The Reserve Bank's deputy governor said liquidators are preparing for a delayed but inevitable rise in business failures in the coming months while uncertain businesses are reluctant to take advantage of historically low interest rates.
U.S. Housing Market Rebounds as Pending Home Sales Post Record Surge in May
- Having slumped by 22% in April, pending sales signal a remarkable recovery for the housing market.
- A recovering housing market will boost consumer spending and help the broader U.S. economy recover from the pandemic.
- However, a possible second wave may dampen house sales once again in the coming months, housing market analysts warn.
- The 44% rise pushed the Pending Home Sales Index to 99.6.
- According to the latest CoreLogic Home Price Index Report, U.S. house prices saw an annual increase of 5.4% in April.
- Given that pending home sales spiked by 44% in May, and that applications hit an 11-year high in June, it’s likely that home values will also rise during these months.
- However, increased spending buoyed by the housing market could lessen the longer-term impact of the pandemic.