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That’s enough to cancel out basically every Trudeau benefit to date
First Reading is a daily newsletter keeping you posted on the travails of Canadian politicos, all curated by the National Post’s own Tristin Hopper. To get an early version sent directly to your inbox, sign up here.
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If the economy had stayed where it was heading in 2015, Canadians would all be earning an extra $4,200 per year, according to an illuminating new report by Statistics Canada.
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This roughly means that if the Canadian economy had merely spent the last nine years sticking to its usual rate of growth, Canadians would have experienced a natural increase in their paycheques larger than any number of Trudeau government benefits, including the $500 one-time top-up to the Canada Housing Benefit offered in 2022, or the $650 per child currently offered to eligible families as part of the Canada Dental Benefit.
The Statistics Canada report — authored by researchers Carter McCormack and Weimin Wang — adds to a growing body of literature showing that Canadian productivity is dropping fast, resulting in noticeable decreases to income and living standards that are set to continue dropping for the foreseeable future.
Everyone from the Bank of Canada to the Canadian Chamber of Commerce to the OECD have now issued increasingly dire warnings about Canada’s “productivity problem.”
Earlier this year, the Bank of Canada’s senior deputy governor Carolyn Rogers warned that lagging productivity was now a national emergency. “You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass,” she said at a March speech in Halifax.
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In 2021, the OECD calculated that if Canada keeps this up, it will rank as the worst performing economy in the developed world for at least the next three decades.
Historically, Canada’s high rate of capital investments has been most important towards increasing its per-worker productivity. As an example, a Canadian worker with a $100,000 bulldozer is going to produce much more for the economy than a Canadian worker with a shovel.
But McCormack and Wang highlight 2016 as the year when Canadian businesses dramatically cut back on how much capital they were investing in each worker.
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This phenomenon just happens to coincide with the opening months of Trudeau’s premiership, but the researchers chalk it up to a 2014 collapse in energy prices.
“Investment per worker sharply declined following a collapse in energy prices in 2014 and 2015 and has not recovered,” they write in a note, adding that dropping productivity won’t reverse itself without “sustained increases in capital spending.”
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And while GDP per capita was already on the decline, the report also cites the “shock of the COVID-19 pandemic” at pushing it into overdrive.
In a 2022 analysis on the COVID-19 lockdown, Wang concluded that while Canadian GDP was pretty quickly able to return to pre-pandemic levels, GDP per capita was never the same.
Which isn’t to say that federal policy hasn’t contributed to Canada’s ever-shrinking productivity rates.
For one, the researchers point to “near-record population increases.” With more than a million newcomers now coming to Canada each year as a result of loosened federal immigration policy, population growth is now well outstripping GDP growth — with the result that the country’s already lacklustre economy is increasingly being shared out among more and more people.
“The pace of population growth warrants particular emphasis in the current context,” wrote McCormack and Wang.
Perhaps most damning for Canada is that the U.S. — a country that has similarly been hammered by COVID and low 2014 energy prices — has not experienced anything close to the falling productivity seen by Canadians.
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The new Statistics Canada report found that Canadian GDP per capita is roughly seven per cent lower than where it would be if the Canadian economy had stayed the course on where it was headed in 2015.
The Americans, by contrast, mostly have stayed the course of where they were headed in 2015. An analysis last June by University of Calgary economist Trevor Tombe determined that if Canadian productivity growth had merely kept pace with the U.S. for the last five years, the result would have been a $5,500 per person boost to average incomes.
Menstrual products have become mandatory in yet another category of Canadian washroom. The Ontario government of Premier Doug Ford has just made it mandatory for construction sites employing “twenty or more workers” to provide “both tampons and menstrual pads” in onsite washrooms. Unlike Trudeau government mandates for free menstrual products on military bases and in federally regulated workplaces, the only difference with the Ford order is that it didn’t explicitly require tampons to be put in men’s facilities. Although that will generally be the effect, as construction sites typically employ single-stall port-a-potties that are not segregated by gender.
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After it became a week-long scandal that the Trudeau government had deleted images of Vimy Ridge from the official Canadian passport (in favour of stylized images of trees and squirrels), the Bank of Canada has issued a statement solely to assure Canadians that while they are currently redesigning the $20 bill to incorporate a portrait of King Charles III, “the back will continue to feature the Canadian National Vimy Memorial.” It’s also going to continue to be green, but will be vertically oriented like some current iterations of the $10 bill.
Also, fun fact: There are $20 billion worth of $20 bills in circulation. Transforming a few cents of polymer and ink into $20 slips of currency is usually why the Bank of Canada can be relied upon as one of the few federal departments to reliably turn a profit. But as with a lot of things these days, that’s no longer the case, and they continue to hemorrhage billions.
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TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
The Canadian Press. All rights reserved.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
The Canadian Press. All rights reserved.
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