The Economy Under COVID-19: Notes From the Trenches - May 20, 2020

There are currently two crises underway simultaneously. The advance of the novel coronavirus is taking a terrible toll in terms of physical and emotional well-being. At the same time, job losses resulting from ‘social distancing’ are sending the economy into a tailspin. To fight on both fronts, governments are advancing rescue packages of never-seen-before dimensions. Every day, the tremendous number of factors in play reconfigure in a new way. These ‘from the trenches’ notes attempt to shed some light along a murky pathway.

• Canada has been announcing its economic support measures piecemeal. First up was the Canada Emergency Response Benefit (CERB) to provide income aid for individuals newly laid off or unable to find employment for a variety of reasons, including a need to stay home and look after children released from school attendance. Following in short order have been payroll supplements to help businesses survive, measures to assist students who won’t be able to find summer jobs, rent relief for commercial tenants in danger of defaulting and extra cash to be sent to seniors.

• Most recently, there has been the LEEFF (Large Employer Emergency Financing Facility) initiative, providing bridge financing for some of the nation’s largest corporations. To qualify, companies must agree to conditions placed on dividend payouts and executive compensation and to be on board with environmental cleanup goals. There’s also expansion of BCAP (the Business Credit Availability Program) to include more mid-sized firms. Canada’s fiscal deficit this year (April 1, 2020 to March 31, 2021) is expected to be -$250 billion.

• There may be shortages of some grocery items, but the same sure can’t be said for acronyms. The U.S. is a player too, with its $2 trillion CARES (Coronavirus Aid, Relief and Economic Stimulus) Act. Washington’s fiscal deficit is headed towards -$4 trillion in this budget year (October 1, 2019 to September 30, 2020).

• Really good acronyms don’t just come out of thin air. For those in the know, there’s a gnome living at the North Pole (he’s a notary public for the elves), who sits in a high-backed chair at a roll-top desk and writes out hundreds of possibilities until he finds just the right one. He’s a little prickly, so I was hesitant to phone him, but last week I got up the nerve and gave him a call. After exchanging perfunctory pleasantries, I asked if he could come up with something to make us all feel better.
       Yesterday, he called back, and with no preamble, said, “What everyone needs is a love cure.”
  “That goes without saying,” I responded, “but how is that relevant?”
  “L O V E,” he shouted over the line, “a Licensed Official Virus Exterminator.”
  “Oh! Okay. Yes, that’s not bad. Maybe a little clunky,” I said. There was a specific reason I didn’t want to sound too enthusiastic.
  A long silence ensued, originating from the other end of our connection. “How much do I owe you?” I finally asked.

Read the previous article here: The Economy Under COVID-19: Notes from the Trenches – May 19, 2020.

Alex Carrick is Chief Economist for ConstructConnect. He has delivered presentations throughout North America on the U.S., Canadian and world construction outlooks. Mr. Carrick has been with the company since 1985. Links to his numerous articles are featured on Twitter @ConstructConnx, which has 50,000 followers.