City of Surrey 2020-2024 Financial Plan

ECONOMIC OVERVIEW

UNITED STATES The US has reported 3.5 million infections and more than 137,000 deaths attributable to COVID-19. The country makes up 4% of the world’s population yet accounts for 26% of the world’s COVID-19 cases. Different states reopened their economies in May with varying degrees of limitations. Recently, the US surpassed the unenviable milestone of more than 65,000 COVID-19 cases reported in a single day. Health officials are now warning that a daily case count of 100,000 is possible if citizens do not follow physical distancing and mask-wearing recommendations. The recent surge in COVID-19 cases has caused many states to pause or reverse their restart plans. Some states have reintroduced lockdown measures and restrictions as infections continue to climb. The Federal Reserve (“Fed”) cut its key interest rate by 1.50% in March, effectively taking its policy rate down to zero. The central bank also announced unlimited purchases of bonds, including corporate and municipal issues, as well as various emergency lending programs to support the economy. The US federal government has provided various aid packages to support the economy. Income support and enhanced unemployment benefits were provided to individuals and families. Businesses are receiving support through loan programs and income tax cuts. The US unemployment rate in June dropped to 11.1%, a stark reversal from an April high of 14.7%. With a second round of lockdown and restrictions coming into place, many businesses are forced to operate at reduced capacity or temporarily close. Some companies are expected to succumb to the mounting economic pressure and cease operations permanently. Enhanced unemployment benefits are set to end in July. If new funding is not provided, consumer spending will fall further. More layoffs are expected as firms exhaust the federal funding that is currently propping up payrolls. Negotiations have already started on a second-round stimulus package which will likely include further income support and enhancement of unemployment benefits.

Source: Bank of Canada

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