At any other recent time, our economic indices would be considered enviable.
We live amid full employment, with more jobs than pre-pandemic, as evidenced by a labour shortage. We are flush with investment capital. Gross domestic product has rebounded. A looming 2020 recession was punted to the curb. British Columbia leads the country. Consumer spending continues to grow, in spite of …
Yes, yes, in spite of …
So, for how long?
There are strong indications a recession cannot be prevented as central banks try to tamp down inflation, their having waited months for the opportunity to tackle rising prices by raising the cost of borrowing.
It is one of the stranger looming recessions – quite different than the last significant one in 2008 across many economies – because we have high inflation, a hot housing market and price-to-earning ratios on stocks that pervade just about every category.
In taking time to tackle inflation, in their quick dismissal of fears that it might be more than transitory, the central banks permitted inflation expectation to arise and take on a life cycle of its own across products, services and, before long, wages.
It is also a strange recession in that our political leaders and even their opponents are disengaged and so far discounting it, although Pierre Poilievre has stirred the pot in a particularly naughty way. More on him in a minute.
With so many serious clouds gathering, we must soon be upon a storm. Let’s tally:
1. The 6.8 per cent inflation reading for April, the highest in 31 years, is not the worst of it nor near the last of it. Food prices are rising at such a clip that many consumers are for the first time in a decade making food choices to steer from steep increases. Gas prices in B.C., highest in North America, are not even entirely evident yet in their impact on product prices, much less in the cost to businesses that depend on transport and services they provide.
2. The stock market is not everyone’s direct play. But it is most everyone’s indirect source of wealth through pension funds and RSPs, and it has suddenly veered on to the shoals after years of outperforming the economy.
3. Nearly everyone into cryptocurrency investment is experiencing a bursting of the bubble. Bitcoin is the new Nortel. Celebrities who endorse it now ghost us. Politicians who endorse it now scare us. Hundreds of billions of dollars in investments from the low-interest-rate economy have vaporized.
4. We have saved cash in the pandemic, in part because we didn’t travel and party and in part out of apprehension. How it is expended may determine the depth of a recession; too little and it will fail to stimulate the economy, too much and it will fail to thwart inflation. It might revive the hospitality and tourism industries, and there is evidence this will be a travelling summer. Even so, along with any spending is bound to come further interest rate increases to try to put the lid on inflation, and wages are not likely to keep pace, so it does not produce a happy place.
5. Many effective measures are entering the Canadian housing market to build a broader supply that meets varying income needs, but their glacial advance will not change the prospects of ownership for many any time soon. The rise in interest rates ought to balance the market between buyers and sellers and cool the prices this year, but in B.C., and particularly in the Lower Mainland, that only sustains one of the world’s least affordable ownership climates, and many owners will experience a new world of pain when mortgages renew.
6. We have focused on China as the starting point of the pandemic, but it is actually the starting point of our economic woes. Perhaps we have forgotten too quickly the massive real estate investment meltdown of only months ago, but its economy hasn’t. Its new wave of sudden lockdowns as a zero-tolerance policy of coronavirus has staggered economic activity, cut the crucial circuitry of supply chains and undercut globalization’s Exhibit A. The world cannot afford its second-largest economy to be anything but robust. Right now, it ain’t.
7. The European economy is heading into stagflation, in part because the Russian invasion of Ukraine has prompted energy prices to soar. The continental economy looks like it will shrink this year, not all of it attributable to Russia.
8. The political climate in America is poisonous and problematic. The Democrats in power will not collaborate and the Republicans in opposition will not break ranks. Time is running out on a threadbare edge for the Joe Biden administration, and even if the spectre of a return to Donald Trump or his acolytes does not buckle the American economy, it sends other worrisome signals to much of the free world.
9. Our national political climate is itself agitated. A pact between the federal Liberals and NDP has been greeted cynically. The public sector has not been anywhere as adaptable, nimble, economical and efficient as the private sector in the last two years. Poilievre, the perceived Conservative leadership front-runner, has been shambolic by lavishing praise on crypto and threatening to fire the Bank of Canada governor and interfere in the institution’s important independence if he becomes prime minister. Last week’s resignation of the Albertan premier, Jason Kenney, has thrown a wrench into the machine at a very delicate time with energy prices sailing. Doug Ford in Ontario is actually looking sensible in this stew.
10. Last, not least, is this pesky thing occupying our conversations and convoluting our public and economic health. The perception that we could ever be truly post-pandemic this soon, when most such cycles endure five or six years, has come back to bite us, infect us, and in too many cases failed to convince us to continue to take it seriously.
It is quite the full-meal deal, and the certainty we experienced in, say, 2018, feels more like four decades than four years ago.
Kirk LaPointe is publisher and editor-in-chief of BIV and vice-president, editorial, of Glacier Media.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
