GDP Sets Record for Growth During Q3

Economy, , ,

The annualized rate for the growth of the Gross Domestic Product (GDP) reached a record of 33.1% during July, August, and September. The historic growth came immediately after one of the worst slumps in history, the second quarter’s annualized shrinkage of 33.4%.

The see-saw like behavior of the US economy can be accounted for by the ravages of the coronavirus pandemic, which forced a lockdown during the second quarter which shuttered many businesses, causing widespread job loss and business closures. In June stay-at-home orders lifted and the economy began to re-open, accounting for the rapid rebound of the economy in Q3.

Yet, even such a strong rebound has not resulted in a full recovery, which some analysts believe could take years, especially since the rate of GDP growth is expected to significantly slow down during Q4 of 2020.

Much of the growth is attributed to money set loose into the economy via the CARES Act, which distributed $2.2 trillion to every eligible American.

“Not only was the US economy enjoying the immediate bounce as a result of economic re-openings, but it was basking in significant fiscal stimulus support schemes,” said Seema Shah, the chief strategist at Principal Global Investors. “Now, the path forward will inevitably be an uphill struggle.”

US Business Sees Fastest Growth Since February 2019

Economy, , ,

According to IHS Markit’s business growth saw a significant uptick in October, the best its seen since February 2019.

The IHS Markit composite output index registered at 55.5, up from 54.3, the best number it has produced in almost 9 months. The index of service industry activity also gained from 54.6 to 56, and the purchasing manager’s index for the manufacturing sector rose from 53.2 to 53.3.

The index is a gauge of month-over-month changes in activity, not a summary of overall output. A reading of 50 indicates no change in business activity, while anything above 50 is a positive change and numbers below 50 indicate an economic contraction.

Chris Williamson, HIS Markit chief business economist said that last week’s report indicates that the US economy “started the fourth quarter on a strong footing.”

Markit is almost unique in showing a V-shaped economic bounce-back due to the trend being fueled by the rebound in output. Most of the other indices of business activity indicate that economic output still remains significantly under the pre-pandemic levels.

China Joins International Effort to Bring COVID Vaccine to World’s Neediest

Health Care, Politics, , , ,

China is the latest country to add its signature to a global effort to make sure that when a coronavirus vaccine is finally developed and ready for distribution, it will be given to the neediest people around the world.

Know as the COVAX initiative, it is sponsored by the World Health Organization and has signed up 157 countries. The WHO hopes the program will ensure that 2 billion doses of this life-saving vaccine will be made available to those most in need, no matter where they live, by the end of 2021.

“We have solemnly pledged to make vaccines developed and deployed by China a global public good, which will be provided to developing countries as a priority,” Hua Chunying, a spokeswoman for China’s foreign ministry, wrote on Twitter.

This is an about-face for China, which originally bowed out from joining COVAX. China is currently developing four vaccines that are in clinical trials. One of them, according to Wu Guizhen, chief biosafety expert at the Chinese Center for Disease Control and Prevention, should be ready to be used on the general population sometime in November. President of China, Xi Jinping promised back in May that he would make any Chinese vaccine available for “the global good.” At that time Xi also pledged $2 billion to WHO, making China the organization’s largest donor.

In early September, the United States announced its decision to stay away from the COVAX initiative, stating that:

“We will not be constrained by multilateral organizations influenced by the corrupt World Health Organization and China,” White House spokesman Judd Deere said at the time.

ArcelorMittal Sells US Business to Cleveland-Cliffs for $1.4 Billion

Companies, , ,
Steel being rolled at an ArcelorMittal facility in Brazil.

Cleveland-Cliffs, the Cleveland-based iron ore mining company, signed a deal to acquire six steelmaking factories, eight finishing facilities, two iron ore mining and pelletizing operations, and three coal and coke making factories in exchange for an upfront cash payment of close to $505 million and Cleveland-Cliffs stock worth about $873 million.

The payments and stock will go to Luxembourg-based ArcelorMittal in exchange for their facilities as outlined above. The deal is expected to close at the end of this year. When the deal is finalized Cleveland-Cliffs will be the largest producer of flat-rolled steel and iron ore pellets in all North America, according to the company.

“The acquisition of ArcelorMittal USA amplifies our position in the discerning automotive steel marketplace, and further improves our position in important U.S. markets such as construction, appliances, infrastructure, machinery and equipment,” said CEO Lourenco Goncalves.

In 2018 and 2019 ArcelorMittal USA had revenue of over $10 billion on average. Cleveland-Cliffs has an average of $2 billion in revenue per year. The companies said that the merger will save about $150 million per year.

This acquisition was the second for Cleveland-Cliffs worth over $1 billion this year. At the end of 2019, the company paid $1.1 billion for AK Steel Corp.

Biden Reaches Out to Small Businesses

Economy, Politics, , , , , ,
Joe Biden courtesy of Gage Skidmore

The campaign for the Democratic nominee for president of the United States, Joe Biden, will create an initiative to deploy an advisory council on small businesses and entrepreneurship. The initiative includes John Hickenlooper, who is running for the Senate in Colorado; Andrew Yang, who, along with Hickenlooper, participated in the Democratic primaries; and the owner of a Miami-based empanada company.

Biden’s campaign will also place a group of four advertisements throughout Arizona, North Carolina, and Pennsylvania that will focus on business owners who have been hurt and are struggling due to the coronavirus pandemic.

The initiative and the ads are designed to contrast Biden’s concern with the actions of the Trump administration which the campaign believes did not do enough to help small business and handled the Covid-19 pandemic poorly.

Biden has often pointed to Trump’s mishandling of the pandemic and brought attention to the difficulties small businesses are facing with an emphasis on the challenges procuring Paycheck Protection Program loans.

“The fact is that we’re in a situation where right now an awful lot of small businesses, 50 or fewer employees, are going out of business because the $2 trillion in the acts that are passed by the Congress aren’t getting to them at all,” Biden explained at a fundraiser.