Business

The Bad Economic Times Have Only Just Started for Canada

Published

8 months ago

2023-09-24

The Bad Economic Times Have Only Just Started for Canada

Canada’s economic woes have only just begun, despite recent signs of moderation in both GDP and job growth. The agony that Canadians are currently facing due to inflation is only going to intensify, thanks to Trudeau.

There will be a tough spell in the Canadian economy. The rate of expansion has slowed dramatically. Job creation has slowed down. The rate of inflation has not decreased. However, the suffering that families are experiencing now will only intensify.

In a note, Desjardins associate in macro strategy Tiago Figueiredo expressed pessimism about the future.

The economy held up better than predicted for a time there. The interest rate increases from the Bank of Canada accumulated. The economy and the number of available employment both improved even so.

The economy was bound to suffer, though. Rising loan rates and skyrocketing inflation have been devastating to families. Now, economists are seeing signs of instability in the data, and they anticipate this to worsen. the second quarter of this year saw a decline in GDP.

This week, economists will have a better idea of whether or not the economy shrank further in August after showing no growth in July. Reasons for this include natural disasters and labour disputes like the B.C. port strike.

Canada’s economy had already lost steam before that happened.

If that happens, Canada will officially be in a recession because the official definition requires two consecutive quarters of negative growth.

Manulife Investment Management’s global head economist and strategist Frances Donald has argued that we should stop discussing the name of this economic downturn and instead concentrate on how it will affect individuals.

“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 said to CBC News.

Several variables, according to experts, are hiding the true severity of the economic downturn. As a first point, it takes the economy around a year and a half to fully reflect the effects of changes in interest rates.

Seventeen months ago, the Bank of Canada started its cycle of rate increases. That implies we haven’t seen the full effect of Canada’s fastest, most aggressive interest rate increasing cycle yet.

Second, the pandemic altered consumption habits, which have yet to return to pre-pandemic levels of predictability. Canadians made significant purchases during lockdowns due to pandemic fears. We scooped up exercise tools, televisions and hoover cleaners. These same families are now investing mostly on activities rather than material goods.

New data on retail sales shows an increase in July and a decline in August. When so many external forces are tugging at and pushing on consumers, it can be difficult to tell how much of what’s happening is cyclical or seasonal.

Inflation and rising borrowing costs are dampening discretionary consumer spending. Another evidence of slow growth for the Canadian economy at a time when the Bank of Canada is dealing with inflation that’s higher than expected, BMO senior economist Robert Kavcic Said.

An extraordinary increase in immigration looms over all the data and shifts. In just the past year, Canada has seen an influx of over a million new residents. This has boosted consumption, but it has also hidden some structural flaws.

According to Donald, those things have helped make the economy look better than it is.

We are in the time just after the Titanic struck the iceberg, but before it sank. When we’ve had a shock, but it hasn’t been too bad,” Donald explained.

The Bank of Canada has temporarily stopped raising interest rates. The central bank, however, cautioned that this would be conditional on continued inflation reduction efforts.

Fortunately, the Titanic economy isn’t the only one we can save by cutting interest rates.

Since then, inflation has surged to unprecedented heights. The price of everything went up, not just petrol and mortgage rates this time. All of the so-called core measures of inflation, which exclude more erratic factors like the cost of petrol, increased or remained stable.

Scotiabank’s vice president and head of Capital Markets Economics, Derek Holt, calls the breadth of August’s pricing pressures “astounding.” He claims that 52 percent of the items in the consumer price index basket are increasing by four percent on an annualised basis from one month to the next. Almost two-thirds have seen gains of more than 3%.

According to him, the most recent numbers cast doubt on the foundational beliefs individuals have held about the economy.

As the saying goes, “inflation is cooling.” They attribute it entirely to increases in the price of petrol and mortgage interest rates. They say the government’s (fuzzy) “plan” is successful.

They claim that it’s clear the Bank of Canada will not raise rates again. In a note to customers, he called it all “complete, utter, rubbish.”

According to Holt, “definitely ups the odds of a rate hike” at the next FOMC meeting in October because of the recent acceleration in inflation readings.

Sharon Kozicki, the Bank of Canada’s deputy governor, spoke publicly this week and described the central bank’s predicament.
“Rate reductions are still a ways off.”

If we don’t take action now, we’ll have to take even more action later. She warned attendees at a Regina luncheon that excessive austerity could have unintended consequences for the economy.

Some inflationary swings, she added, were “not uncommon,” and that previous rate hikes “will continue to weigh” on economic growth.

Nothing of it is novel. The central bank has spent the better part of the last year and a half discussing the trade-offs involved in preventing inflation from becoming entrenched, while also avoiding doing too much and creating more pain than is required.

Economists like Donald, though, argue that things have changed as the central bank considers when and how it will have to look at bringing rates back down to lessen the burden on people.

“Rate reductions are still quite a ways off,” she said. However, the exit ramp was seen far off in the distance. And the Bank of Canada is working to broaden that exit ramp so they have some leeway if they ever need it.

In her opinion, rates will begin to drop again in the first half of 2019.

“But for a lot of Canadians, there’s… a lot of pain to get through,” Donald remarked.

Business

Facebook And Instagram Face Fresh EU Digital Scrutiny Over Child Safety Measures

Published

14 hours ago

2024-05-16

Kiara Grace

VOR News Image

LONDON — The European Union started new investigations into Facebook and Instagram on Thursday, alleging that they are failing to protect youngsters online, in contravention of the bloc’s rigorous digital standards for social media companies.

It’s the latest wave of investigation for parent business Meta Platforms under the 27-nation EU’s Digital Services Act, a broad set of regulations enacted last year to clean up online platforms and protect internet users.

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Facebook And Instagram Face Fresh EU Digital Scrutiny Over Child Safety Measures

The European Commission, the bloc’s executive arm, expressed worry that the algorithmic algorithms used by Facebook and Instagram to propose content such as movies and postings could “exploit the weaknesses and inexperience” of minors and encourage “addictive behavior.” It’s concerned that these methods would exacerbate the so-called “rabbit hole” effect, which drives consumers to more distressing content.

The commission is also investigating Meta’s use of age-verification technologies to prevent youngsters from accessing Facebook or Instagram or viewing inappropriate information. Users must be at least 13 years old to create an account on these networks. It also investigates whether the corporation complies with DSA regulations demanding high privacy, safety, and security for children.

“We want young people to have safe, age-appropriate experiences online and have spent a decade developing more than 50 tools and policies designed to protect them,” Meta stated earlier. “This is a challenge the whole industry is facing, and we look forward to sharing details of our work with the European Commission.”

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Facebook And Instagram Face Fresh EU Digital Scrutiny Over Child Safety Measures

The most recent DSA lawsuits center on child safety under the DSA, which mandates platforms to implement strict procedures to protect children. Earlier this year, the commission started two separate investigations into TikTok due to concerns about potential hazards to children.

“We are not convinced that Meta has done enough to comply with the DSA obligations — to mitigate the risks of negative effects on the physical and mental health of young Europeans on its platforms Facebook and Instagram,” European Commissioner Thierry Breton stated on social media.

The cases announced on Thursday are not the first for Facebook and Instagram. The DSA is already investigating them over worries that they are not doing enough to combat foreign disinformation ahead of the EU elections next month.

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Facebook And Instagram Face Fresh EU Digital Scrutiny Over Child Safety Measures

X, a social media platform, and AliExpress, an ecommerce site, are under investigation for violating EU regulations.

There is no timeframe for the investigations to conclude. Violations may result in fines of up to 6% of a company’s annual global revenue.

SOURCE – (AP)

Business

Microsoft Asks Some Employees In China To Move To Other Countries

Published

14 hours ago

2024-05-16

Kiara Grace

CNN - VOR news Image

According to Chinese official media, Microsoft has asked at least 100 employees in China to consider migrating to other nations.

The reports come as tensions between Beijing and Washington deteriorate over technology such as artificial intelligence (AI) and renewable energy.

Microsoft personnel, particularly involved in cloud computing, were recently offered opportunities to work in the United States, Australia, or Ireland, among other nations, according to a report published Wednesday by state-run media The Paper, citing an unnamed source.

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Microsoft Asks Some Employees In China To Move To Other Countries

According to the Wall Street Journal, Microsoft has urged up to 800 employees, most Chinese engineers working on cloud computing and artificial intelligence, to consider relocating. Last year, the Journal reported, citing anonymous sources, that the Biden administration was planning to restrict Chinese corporations’ access to US cloud services.

CNN has contacted Microsoft for comment.

According to a statement from Microsoft (MSFT) that Reuters cited, the company was still committed to China and that giving some employees internal opportunities was part of its regular business.

The business first entered China in 1992, and for decades, it relied on its influential Beijing-based research lab, Microsoft Research Lab Asia, to gain influence.

“Everyone is confused,” an employee told the paper, noting that the impacted employees have less than a month to decide.

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Microsoft Asks Some Employees In China To Move To Other Countries

Yicai, a Chinese state-owned financial media site, reported that over 100 staff were affected. It also said that residents had the option not to move.

The reports come the same week President Joe Biden proposed duties on $18 billion in Chinese electric vehicle imports and other products. Biden stated that he was working to prevent unfair competition from China and the US industry from being decimated.

The two economic superpowers have been at odds in the technological realm for years. In October, the Biden administration restricted the semiconductors that American companies may export to China.

In recent months, the United States has joined with its European and Asian partners to block China’s supplies of advanced chipmaking equipment.

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Microsoft Asks Some Employees In China To Move To Other Countries

Beijing has responded by setting its restrictions on shipments of germanium and gallium, two materials required for semiconductor manufacturing.

SOURCE – (CNN)

Business

Walmart’s Business Surges As Shoppers Hunt For Low Prices

Published

14 hours ago

2024-05-16

Kiara Grace

Businesses ranging from McDonald’s to Home Depot are battling to attract financially challenged customers. However, Walmart is expanding as customers seek low-cost groceries, necessities, and other items.

Walmart reported Thursday that sales at locations open for at least a year grew 3.8% over the previous year. The company upped its sales and profit guidance for the year, indicating that it expects growth to continue.

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Walmart’s Business Surges As Shoppers Hunt For Low Prices

According to retail analysts, the largest retailer in the United States has leveraged its size and purchasing power to keep prices lower than competitors despite rising inflation since the outbreak.

Groceries account for more than half of Walmart’s sales, and analysts at Evercore IRI say the company has profited from its pricing advantage, with prices that are approximately 25% lower than traditional supermarkets.

While low—and middle-income customers have traditionally made up the majority of Walmart’s customer base, the company has expanded to include people earning more than $100,000 per year. It stated that its growth last quarter was “primarily driven by upper-income households.”

Walmart is also seeing growth online. Its digital sales, which included in-store pickup and delivery, increased by 22% last quarter

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Walmart’s Business Surges As Shoppers Hunt For Low Prices

“Most Americans remain uncomfortable with food prices and are still actively looking for ways to keep their spending in check,” Neil Saunders, an analyst at GlobalData Retail, said in a note to clients Thursday. This has benefited “Walmart’s favor and has allowed the chain to continue to acquire new customers.”

Meanwhile, department stores, home improvement retailers, and other retail groups have suffered as buyers tighten their belts. Fast-food restaurants have also struggled.

Retail sales have declined overall in recent months.

The business stated this week that Home Depot’s sales at locations operating for at least a year declined 2.8% last quarter. McDonald’s reports that some lower-income Americans are eschewing the restaurant in favor of cooking at home.

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Walmart’s Business Surges As Shoppers Hunt For Low Prices

“It’s a challenging consumer environment,” said Ian Borden, McDonald’s CFO, stressing that many people are struggling with inflation, rising interest rates, and shrinking savings.

SOURCE – (CNN)