L1.2.

A LPHABET SOUP T HE SHAPE OF THE COVID-19 R ECESSION – F ORBES

A DVISOR .PDF

The measures taken to manage the COVID-19 pandemic have had severe economic consequences.
The National Bureau of Economic Research has officially declared a recession, and nearly 22
million Americans are receiving unemployment benefits. The total number of unemployed could
be nearly double that figure. April retail sales fell nearly 22% year over year, by far the biggest
monthly decline in the index. The duration of the coronavirus recession will only be obvious in
hindsight, and past recessions and recoveries have followed four common shapes: V, U, W and L.
The best-case scenario for the COVID crisis is a V-shaped recession, where the economy will
rebound as quickly as it has declined, with minimal long-lasting financial damage. However, the
timing of the recovery depends on how the virus is managed over the next few months.

L2.1. ‘ECONOMIC AND FISCAL FOG,’ NEEDS REAL DEBATE ON FUTURE PATH | C.D.

HOWE INSTITUTE | C ANADA .PDF

Don Drummond, former chief economist for TD Bank, calls for a national debate in Canada over
its economic and fiscal future in his article "Canada's Foggy Economic and Fiscal Future." He
presents four scenarios for Canada's fiscal future, each targeting a deficit and debt track into the
2030s and calls for fiscal restraint. The first scenario outlines a return to pre-pandemic goals and
the 30 percent target for the debt-to-GDP ratio, while the second scenario accepts the fiscal hit
from the pandemic and returns to a target of $25 billion for annual deficits as of 2022-23. The
final two scenarios track annual deficits of $50 and $100 billion, revealing a debt burden of 49.5
and 62.9 percent respectively by 2030-31, and violating most prudent fiscal parameters.
Drummond's scenarios illustrate that restoring and then maintaining fiscal stability calls for some
degree of fiscal restraint once the pandemic subsides.

C URRENT ACCOUNT DEFICITS- IS T HERE A PROBLEM ? - BACK TO B ASICS : FINANCE &

D EVELOPMENT .PDF

The current account balance is the difference between a country's exports and imports of goods
and services, as well as net income and transfers from abroad. A deficit means that a country is
importing more than it is exporting. However, the current account can also be measured by the
difference between national savings and investment. A deficit may reflect low national savings or
a high rate of investment. Protectionist policies are unlikely to improve the current account
balance as there is no connection between protectionism and savings or investment. Additionally,
a country may run a current account deficit in order to spread out the effects of a temporary shock,
such as a natural disaster. However, if a country runs a persistent current account deficit, it may
become unsustainable if it is unable to secure the necessary financing.
L3.1 H OW CAN INFLATION BE GOOD FOR YOU? - BBC N EWS.PDF

The article discusses the benefits of inflation and why it can be good for the economy and
individuals. It explains how inflation can stimulate the economy by encouraging people to buy
sooner and how it can benefit borrowers by eroding debt. The article also discusses how inflation
can affect wages and why the government likes it. However, the article also mentions that too
much inflation can be bad for the economy and individuals, as it can lead to boom and bust and
can erode competitiveness. The article concludes by stating that most central banks favor an
inflation target between 2% to 2.5%. It also notes that some economists argue for higher inflation
targets in times of recession to promote higher growth and keep interest rates lower for longer.

L3.2. Why Are Middle-Aged Men Missing From the Labor Market? - The New York Times.pdf

Hundreds of thousands of men in their late 30s and early 40s stopped working during the
pandemic and have lingered on the labor market’s sidelines since. While employment rates have
rebounded more fully for women of the same age and for both younger and older men, the decline
in labor force participation among middle-aged men has spanned racial groups, but it has been
most heavily concentrated among men who do not have a four-year college degree. The trend is
attributed to a cocktail of changing social norms around parenthood and marriage, shifting
opportunities, and lingering scars of the 2008 to 2009 downturn.

L3.3. How many jobs is the US likely to add this year?.pdf

Economic forecasters expect strong GDP growth in 2021 as the $1.9-trillion American Rescue
Plan works its way through the economy and more people are vaccinated. The consensus is that
real GDP will increase about 6% between the fourth quarter of 2020 and the fourth quarter of
2021. This is expected to lead to job growth, with estimates of monthly payroll employment gains
over the next 10 months averaging between 700,000 and 1 million per month. The pandemic
recession was unlike any previous recession, and the post-COVID recovery is also expected to be
different. Factors that will determine the pace of employment gains include the possibility of jobs
being lost permanently due to changes in how firms operate and the potential for some restrictions
to remain in place.

L3.extraCPI Report Live Updates: Annual Inflation Slowed to 6.5% in December - The New York

Times.pdf

Inflation continued to slow on an annual basis in December, providing relief for American
households and a positive development for policymakers at the Federal Reserve and White House.
The Consumer Price Index climbed by 6.5 percent in the year through last month, down from 7.1
percent in the November reading, as prices declined slightly on a monthly basis. The annual
inflation rate was the slowest since October 2021, a pullback that came as gas prices dropped and
airfares declined. Economists and Fed officials are closely watching what is happening with prices
for services, which include things like hotel rooms, sporting event tickets and health care. They
worry that services inflation, which is unusually rapid, could keep prices increasing faster than the
central bank's target. The Fed aims for 2 percent inflation on average, defining that goal using a
price measure that is different from but related to the Consumer Price Index. The Fed has slowed
interest rate increases after a series of rapid moves in 2022, and officials have suggested they
could slow them down further at their Feb. 1 rate decision.

L4.1. Why Nations Fail - The New York Times.pdf

"Why Nations Fail" is a book written by M.I.T. economist Daron Acemoglu and Harvard political
scientist James A. Robinson, which argues that the key differentiator between countries is
"institutions." The book argues that nations thrive when they develop "inclusive" political and
economic institutions, and they fail when those institutions become "extractive" and concentrate
power and opportunity in the hands of only a few. The authors suggest that countries thrive when
they build political and economic institutions that "unleash," empower and protect the full
potential of each citizen to innovate, invest and develop. They also argue that sustained economic
growth requires innovation, and innovation cannot be decoupled from creative destruction, which
replaces the old with the new in the economic realm and also destabilizes established power
relations in politics. The authors suggest that instead of giving foreign aid to countries that
reinforces part of the elite, we should insist that they establish a committee representing all sectors
of its society that would tell us which institutions they want foreign aid to go to, and have to
develop appropriate proposals.

L4.2. Imagining a World Without Growth - The New York Times.pdf

The question of whether civilization as we know it could survive without economic growth is
being raised as world leaders gather in Paris to discuss ways to hold down and ultimately stop the
emissions of heat-trapping greenhouse gases that threaten to make Earth increasingly inhospitable
for humanity. Economic growth took off consistently around the world only some 200 years ago,
and it was powered by innovation and lots of carbon-based energy, most of it derived from fossil
fuels like coal and petroleum. Environmental advocates, scientists, and political leaders have
suggested that world consumption must stop growing in order to slow climactic upheaval.
However, the proposal that growth must stop has little chance of success as modern civilization
could not survive without growth.