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Coronavirus: COVID-19 and the Canadian economy, one year later – Global News

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The true financial impact of COVID-19 will take years, if not decades, to ascertain.  But now, a year after the pandemic forced all Canadians inside their homes for the first time, we know not every Canadian was dealt the same hand.

“I think one thing: regardless of how you fared during COVID, it threw a stick of dynamite on everyone’s finances,” says financial expert Kelly Keehn.

Keehn says Canadians can be divided into two groups.  The first are those that used government programs like the Canadian Emergency Response Benefit (CERB) to pay their bills and continue to struggle making ends meet in a tough economy.  The second are full-time workers with benefits who put off spending money on vacations and are now sitting on extra cash.

“That camp over there that has some extra money, they’re actually reaching out to me saying they’re kind of embarrassed to even talk about it because they know so many people are suffering and the people that are suffering are still dealing with that conversation of, you know, tax time’s coming up. They may owe money,” Keehn says.

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Canadian economy posts worst showing on record in 2020

According to Statistics Canada data released in the fall, Canadians are sitting on over $170 billion in household and business excess cash.  CIBC economist Benjamin Tal says that number today is well over $180 billion, or more than four times larger than the banks see accumulated in normal times.

Much of that can be attributed to the areas of the economy that continue to suffer like travel.  With fewer people spending money on trips, domestic flights are down 35 per cent and international flights 77 per cent in year-over-year numbers as of December.

Tourist destinations within Canada have suffered because of the near-disappearance of U.S. travellers to Canada (a decrease of 95 per cent) as well as international travellers, (a decrease of 94 per cent) the Statistics Canada data also showed.






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And Canadians are spending far less on food, the data showed, as sales in restaurants unable to fill their dining rooms are down 52 per cent from the same time last year.

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There is some reason for optimism, as retail numbers have rebounded after months of big losses to pre-COVID-19 levels. The housing market had a tough second quarter in 2020 but has put up record numbers in the two quarter since. And it remains hot despite only 1.9 months worth of inventory, according to the Canadian Real Estate Association (CREA) — the lowest reading on record.

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Canada’s small businesses now have $135B in debt due to COVID-19, CFIB estimates

One person who won’t be buying a house anytime soon is 2020 University of Toronto graduate Patty Facy, who has been frustrated by a system she says has overlooked her and her classmates.

“And if you are somebody that just was unlucky enough to graduate right now, you’ve kind of slipped through the cracks when it comes to government relief,” she says.

That’s true, in that recent graduates didn’t qualify for CERB unless they had worked the previous year. The Canada Emergency Student Benefit (CESB) paid far less and for only 16 weeks.  And while current students received a tax credit, graduates have asked repeatedly to no avail for a freeze on repaying their student loans.

Facy has been working part-time for far less than she should get with a Masters of Information degree.

“There aren’t as many jobs out there, and new grads are competing with people that have been laid off from the workforce that have been in the workforce for years already,” she says.

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“So you’re competing with people who have years of experience.






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Freeland says consultations launched to help rebuild Canada’s economy post-COVID-19 – Jan 25, 2021

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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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 Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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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.

The Canadian Press. All rights reserved.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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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.

The Canadian Press. All rights reserved.

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