But that’s not all that awaits economy devotees. Also this week, due to an accident of the calendar, Wednesday will offer a new set of hotly awaited — and hotly debated — economic data that will also help set the tone for 2022.
Canadian inflation figures are out and face close scrutiny following last week’s report of staggering price rises in the United States. Also Wednesday, U.S. Federal Reserve chair Jerome Powell is widely expected to reveal what he is going to do about those rising prices in the coming year, something that will affect Canadians, too.
So far there’s no sign of a winter slowdown in Canada’s hottest real estate markets as the last national figures of 2021 come out on Wednesday, along with expectations of higher mortgage rates. (Michael Wilson/CBC)
Not to be left out, the other economic issue that rivals inflation — house prices — gets its final reveal before the new year as the Canadian Real Estate Association (CREA) rolls out its latest data on Canada’s pricey market, and the Canada Mortgage and Housing Corporation releases the latest numbers on housing starts.
Two other economic indicators — retail sales and manufacturing orders — are both expected to show the economy remains strong.
While some of us may have had trouble working up much enthusiasm for the weekend wrestling match between the victorious Winnipeg Blue Bombers and the ruffle-furred Hamilton Tiger-Cats, for the economy-minded, the rest of the week will provide not just excitement but fodder for hours of holiday debate.
In some ways, Freeland’s first economic item of business this week, creating a new set of rules for the Bank of Canada, was a matter of housekeeping.
Allowed to run hotter?
Some commentators had feared a delay in announcing the new rules signalled big changes afoot, such as adopting U.S. rules where Congress requires the Federal Reserve to consider equally the inflation rate and unemployment when choosing when to adjust interest rates.
In the event, it seems that a continuing battle with COVID-19 and a parliamentary election were the real reasons for the delay.
“This is not a dual mandate,” Freeland said sternly at a Monday news conference with her chief central banker, Tiff Macklem. “We are very explicitly, with this mandate renewal, choosing not to do that.”
But the implication of the change — which gives the bank leeway to consider unemployment as well as the inflation target when setting rates — is that Macklem and his team will be permitted to let the economy run a little hotter than it otherwise would if they decide jobs are at stake. Otherwise, there would be no reason for the change of wording.
On Wednesday, Macklem gets an entire news conference of his own to try to explain the subtle differences that the rewording imply.
WATCH | What to expect in Tuesday’s fiscal update:
What’s expected in the fiscal update, Bill 21 back in the spotlight | At Issue
4 days ago
Duration 13:42
The At Issue panel discusses what to watch for in the federal government’s upcoming fiscal update and how it might address inflation. Plus, the panellists look at Quebec’s Bill 21 and why it’s getting renewed attention in Ottawa. 13:42
Lots more to come about Wednesday, but first a mention of the second appearance in Freeland’s economy double-header, when at about 4 p.m. on Tuesday, just as Toronto and Montreal markets close, the minister presents her fiscal and economic update — the first look at the books since the April budget and the first since September’s election.
While some government critics have expressed outrage over what they see as reckless overspending to deal with the COVID-19 crisis, a report late last month by University of British Columbia economist Kevin Milligan, writing for the C.D.Howe Institute, suggests Freeland may have more room to manoeuvre.
“The budget forecast nominal GDP growth for 2021 at 9.3 per cent,” Milligan wrote. “Recent estimates have nominal growth more than three per cent greater than that, which would give Ottawa a windfall [of] as much as $10 billion.”
The ideal solution to COVID-19 spending
Milligan suggested that could mean the books will show a declining debt-to-GDP ratio, long seen as the ideal solution to COVID-19 spending, where the economy grows so much that debt shrinks as a proportion. The problem, he warns, is if a lot of that rise in revenue is due to inflationary price rises rather than actual new business activity.
Which leads us to one of the most hotly awaited statistics expected Wednesday: Canadian inflation. After last week’s U.S. inflation rate hit 6.8 per cent — the largest increase in four decades — the outlook for Canadian inflation is expected by institutional economists to come in at a relatively paltry 4.7 to 4.9 per cent.
U.S. Federal Reserve chair Jerome Powell, shown last month in Washington, D.C., is expected to issue a statement on Wednesday on whether the central bank will take concrete steps to cut stimulus and increase interest rates in 2022. (Elizabeth Frantz/Reuters)
That is still high enough for consumers and businesses to feel the pinch of shrinking spending power, but with gasoline prices cooling off, Canadian inflation may begin to show signs of peaking. That said, after recent underestimates by economists for both Canadian GDP and Canadian jobs, everyone will be anxious to hear Statistics Canada’s actual numbers.
But perhaps even bigger news on inflation that will affect not just Canadians but the global economy is a statement on Wednesday by Federal Reserve chair Powell on whether the U.S. central bank will take concrete steps to cut stimulus and increase interest rates in 2022.
More than half the economists polled by the financial news company Bloomberg say he will signal that 2022 will be the year that business and personal lending, including mortgages, will begin to cost more. Canadian borrowers whose rates are partly made in the U.S.A. will want to know how fast that could happen.
So far, sales data from Canada’s hottest markets, including Vancouver and Toronto, shows few signs of cooling. The CREA data out on Wednesday looks at the whole country. If, as some say, borrowers confront successive hikes in the face of persistent inflation, prices could weaken in the new year.
For economics fans, this will be an exciting week, but unlike Sunday’s football final, when it is all over, it will be harder to be quite sure who won.
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
