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GOLDSTEIN: Record low business investment threatens our standard of living, says report – Toronto Sun

Published

3 years ago

 on


Author of the article:

Lorrie Goldstein

Canadian currency Photo by Getty Images /Toronto Sun

The growth rate of business investment in Canada from 2015-2019 — before the COVID-19 pandemic hit — was lower than in almost every other period since 1970, according to a new study by the Fraser Institute.

Canada’s growth rate of 11.6% from 2015-19, was well below the average achieved by comparable industrialized countries belonging to the Organization for Economic Co-operation and Development, which averaged 19.6%, and the United States at 19.7%, according to the study, An International Comparison of Capital Expenditures.

“Business investment is critically important because of its effects on economic growth and higher living standards for workers, but lately, Canada has experienced some of the lowest growth rates in 50 years,” said study co-author Steven Globerman, in a release accompanying the report.

“Given how important business investment is to increase productivity and raise living standards, the slow growth rate Canada is experiencing is alarming, particularly now as Canada emerges from the COVID recession. Improving the conditions that encourage more business investment should be a priority for policymakers across the country.”

The study says that in contrast to the anemic growth rate in business investment in Canada from 2015-19, from 2000-05, it was at 44.8%, almost double the average 22.8% increase for comparable OECD countries, and substantially ahead of the U.S. rate of 26%.

Globerman, an economics professor, said it’s particularly worrisome that Canada’s decline in business investment is evident in two important categories examined by the study — machinery and equipment, and intellectual property products such as software — because both significantly affect productivity and living standards for Canadian workers.

The latest decline in the growth rate of business investment from 2015-19 coincides with the election of the Trudeau government in 2015, a year after the global crash of oil prices in 2014, which created a great deal of business uncertainty in Canada.

But the study by the fiscally-conservative think tank says the situation has been deteriorating for years, during periods presided over by Conservative governments as well as Liberal ones.

It says the growth rate of overall business investment in Canada slowed dramatically from 2005-19, falling from 44.8% in the period from 2000-05 (Chretien/Martin Liberal government) to 25.1% from 2005-10 (Martin Liberal and Harper Conservative governments); 18.9% from 2010-15 (Harper government); to 11.6% from 2015-19, (Trudeau government), among the lowest levels in five decades.

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Canada’s 18.9% growth rate in business investment from 2010-15 (Harper government) was below the OECD’s 27.3% average increase and the U.S. rate of 35.1%.

Similarly, Canada underperformed for the most recent period of 2015-19 (Trudeau government), recording a growth in business investment of just 11.6% compared to the OECD’s average of 19.6% and the U.S. rate of 19.7%.

The study says its findings lend weight to similar conclusions by many other reports in recent years, concerned “about the future competitiveness and productivity performance of Canada’s business sector compared to other developed countries.

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“Against this background, improvements to the environment for business investment in Canada should be a priority for federal and provincial governments …

“Certainly more favourable tax treatment of business income and capital gains is a priority for policymakers to consider against a backdrop of a slower-growing and aging workforce with the (associated) need for faster rates of labour productivity growth in order to accelerate real economic growth, as well as raise the standards of living of individual Canadians.”

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

2 days ago

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November 6, 2024

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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3 weeks ago

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October 16, 2024

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

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October 11, 2024

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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