U.S. Highlights
- One year after the start of global lockdowns, it is starting to feel like the end is finally approaching. The new fiscal package signed into the law will continue to support a stronger economic recovery and the financial resilience of American households.
- The Consumer Price Index (CPI) came in on market expectations, while core CPI edged lower in February, giving inflation anxiety a short break.
- The 10-year U.S. Treasury yield is on the upward trend again, but the Fed’s primary concern remains a sustained labor recovery. With the virus still spreading, the recovery remains fragile and unequal, requiring policy to remain accommodative.
Canadian Highlights
- The Canadian economy continues to show its resiliency in the face of the pandemic. In February, the economy added 259 thousand jobs, nearly replacing all the jobs lost to lockdowns in December and January.
- The robust pace of job growth pushed the unemployment rate down 1.2 percentage points to 8.2%, the lowest since March of last year.
- The Bank of Canada left policy unchanged this week. Deputy Governor Schembri explained the decision, noting solid economic data and upside risks to the Bank’s outlook, but also uncertainties around the course of the virus and labor market scarring.
U.S. – A Year of COVID
This week marks one year since the start of global lockdowns and economic disruptions due to the coronavirus pandemic. And while no one can say that the crisis is over, it is starting to feel like the end is finally approaching. Thanks to unprecedented policy support, the economic slump has been short-lived, and prospects for recovery look much brighter than initially predicted. We expect that the American Rescue Plan, signed into effect on Thursday, will lift economic growth to roughly 6% this year, the highest rate since 1984.
The new fiscal package is huge. It provides a fresh round of $1,400 checks starting as early as this weekend, extends unemployment benefits of $300 per week until September, increases the child tax credit (and makes it fully refundable), provides aid to states and local governments, supports schools and expands vaccination efforts.
Substantial income supports have enabled Americans to maintain strong balance sheets through this crisis. According to the Fed’s data released yesterday, U.S. households’ and non -profit organizations’ net worth reached a record high of $130 trillion, growing 10% in the last quarter of 2020. (Chart 1). Nevertheless, income and wealth disparities, exacerbated by the crisis, continue to pose risks to the recovery.
On the economic front, data was scarce this week. A highly anticipated Consumer Price Index (CPI) report came in on market expectations. Gasoline and food prices continued to rise, driving the headline index 1.7% higher over the past year. Still, core inflation (excluding these volatile categories)…
Read More: The Weekly Bottom Line: Economic Resiliency On Display Again