David Rosenberg: The Canadian economy is mired in weak fundamentals and investors are taking note | Canada News Media
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David Rosenberg: The Canadian economy is mired in weak fundamentals and investors are taking note

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David Rosenberg is founder of Rosenberg Research, and author of the daily economic report, Breakfast with Dave.

The Canadian dollar has broken sharply lower to below 74 US cents, back to where it was in late May. At that time, oil prices (WTI) were US$68 per barrel; today they are near US$80. The CRB index, which tracks commodity markets, was 540 in May and has since edged up to 550. So here we have seen the loonie go back to the same level it was three months ago when commodity prices were lower than they are now.

This speaks to a downgrade of the domestic economy, and deservedly so.

We have now seen employment decline in two of the past three months and the number of weekly hours worked stagnate in the March-July period. The unemployment rate has climbed 0.6 of a percentage point from the cycle low to 5.5 per cent, a signal that a recession is quickly approaching.

Meanwhile, June’s real GDP declined and the trade picture has recently shifted from surplus to deficit. The once-hot housing market is also showing vivid signs of cooling down. Strip out the year-over-year surge of 30.6 per cent in mortgage interest costs, and headline inflation is running near target at 2.4 per cent, and at 2.3 per cent for the core index.

At the same time, the Bank of Canada is signalling another rate hike, which is beyond nutty, but is sure to be the last of this economic cycle.

From a big-picture standpoint, the Canadian economy is mired in weak fundamentals. The budgetary situation is out of control and there is no serious attempt in Ottawa to promote fiscal stability. There is a false glow attached to a 1.9-per-cent year-over-year real GDP growth rate at a time when the pace of population growth is running at a 2.4 per cent annual rate, courtesy of the immigration boom. That means the economy, in real per-capita terms, is contracting by 0.5 per cent on an annualized basis.

The real problem with the domestic economy is its composition. There is too much reliance on consumer spending, which has expanded by more than 20 per cent in the past decade. Housing has seen closer to high-single-digit growth. These are non-productive sources of growth. Business capital spending on both machinery/equipment and plants has contracted 10 per cent apiece over the past 10 years. Spending is in the wrong areas of the economy in terms of generating lasting positive multiplier impacts.

What is shocking is that there has been zero growth in these productive areas of the private sector over the past decade. That scenario is the product of a government which has lacked the will to use the tax and regulatory system to promote capital investment – it instead focuses on redistributing national income. As such, productivity in Canada is down 1.4 per cent year-over-year and has contracted outright sequentially for four consecutive quarters and in 10 of the past 11.

This is what is missing in Canada, and it is a sad state of affairs because productivity growth is the mother’s milk for future economic prosperity. Instead, what Ottawa has done is attempt to camouflage the situation via the most aggressive immigration program since the CPR embarked on building the transcontinental railway in the late 1870s.

This is not to say immigration is a bad thing. But its fast pace does complicate the inflation picture – especially in housing – while the beauty of productivity is that it promotes noninflationary growth and makes the Bank of Canada’s job a whole lot easier.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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N.B. election: Parties’ answers on treaty rights, taxes, Indigenous participation

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FREDERICTON – The six chiefs of the Wolastoqey Nation in New Brunswick distributed a survey on Indigenous issues to political parties ahead of the provincial election, which is scheduled to kick off Thursday. Here are some of the answers from the Progressive Conservative, Liberal and Green parties.

Q: How does your party plan to demonstrate a renewed commitment to recognizing our joint treaty responsibilities and acknowledging that the lands and waters of this territory remain unceded?

Progressive Conservative: The party respectfully disagrees with the assertion that land title has been unceded. This is a legal question that has not been determined by the courts.

Liberal: When we form government, the first conversations the premier-designate will have is with First Nations leaders. We will publicly and explicitly acknowledge your treaty rights, and our joint responsibility as treaty people.

Green: The Green Party acknowledges that New Brunswick is situated on the unceded and unsurrendered territories of the Wolastoqiyik, Mi’kmaq and Peskotomuhkati peoples, covered by the Treaties of Peace and Friendship. Our party is committed to establishing true nation-to-nation relationships with First Nations, grounded in mutual respect and co-operation as the treaties intended.

Q: How does your party propose to approach the issue of provincial tax agreements with First Nations?

Progressive Conservative: The government of New Brunswick operates in a balanced and fair manner with all organizations, institutions and local governments that represent the citizens of this province, including First Nations. Therefore, we cannot offer tax agreements that do not demonstrate a benefit to all citizens.

Liberal: Recent discussions with First Nations chiefs shed light on the gaps that existed in the previous provincial tax agreements with First Nations. Our party is committed to negotiating and establishing new tax agreements with First Nations that address the local needs and priorities and ensure all parties have a fair deal.

Green: The Green Party is committed to fostering a respectful relationship with First Nations in New Brunswick and strongly opposes Premier Blaine Higgs’s decision to end tax-sharing agreements. We believe reinstating these agreements is crucial for supporting the economic development and job creation in First Nation communities.

Q: How will your party ensure more meaningful participation of Indigenous communities in provincial land use and resource management decision-making?

Progressive Conservative: The government of New Brunswick has invested significant resources in developing a robust duty to consult and engagement process. We are interested in fully involving First Nations in the development of natural resources, including natural gas development. We believe that the development of natural gas is better for the environment — because it allows for the shutdown of coal-fired power plants all over the globe — and it allows for a meaningful step along the path to reconciliation.

Liberal: Our party is focused on building strong relations with First Nations and their representatives based on mutual respect and a nation-to-nation relationship, with a shared understanding of treaty obligations and a recognition of your rights. This includes having First Nations at the table and engaged on all files, including land-use and resource management.

Green: We will develop a new Crown lands management framework with First Nations, focusing on shared management that respects the Peace and Friendship Treaties. We will enhance consultation by developing parameters for meaningful consultation with First Nations that will include a dispute resolution mechanism, so the courts become the last resort, not the default in the face of disagreements.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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Canadian Coast Guard crew member lost at sea off Newfoundland

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ST. JOHN’S, N.L. – A crew member of a Canadian Coast Guard ship has been lost at sea off southern Newfoundland.

The agency said in a release Wednesday that an extensive search and rescue effort for the man was ended Tuesday evening.

He was reported missing on Monday morning when the CCGS Vincent Massey arrived in St. John’s, N.L.

The coast guard says there was an “immediate” search on the vessel for the crew member and when he wasn’t located the sea and air search began.

Wednesday’s announcement said the agency was “devastated to confirm” the crew member had been lost at sea, adding that decisions to end searches are “never taken lightly.”

The coast guard says the employee was last seen on board Sunday evening as the vessel sailed along the northeast coast of Newfoundland.

Spokeswoman Kariane Charron says no other details are being provided at this time and that the RCMP will be investigating the matter as a missing person case.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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