A pedestrian wearing a face mask or covering due to the COVID-19 pandemic takes a photograph of Christmas trees in Covent Garden in central London on Nov. 17, 2020.
TOLGA AKMEN/AFP/Getty Images
Is the Christmas economy worth salvaging? Unless you’re in retail, the answer is: Possibly not.
Across Europe, governments have imposed lockdowns through November into early December in the hope they can open up their economies for seasonal festivities.
But while the numbers show that retail and hospitality sectors tend to get a net boost from Christmas, the jury is out on whether it actually does the wider economy much good at all.
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This year the question is all the more pressing because of the risk that a premature reopening could trigger a third wave of coronavirus infections with dire consequences for both public health, economic growth and employment.
Take shopping.
The top five spenders on Christmas in Europe are Britain (639 euros per capita), Spain (554), Italy (549), Germany (488). and Portugal (387), a Deloitte survey last year found.
That kind of spending gives a substantial one-off shot in the arm to the retail sector: in the U.K., December sales are generally around 12% of the annual total – nearly half as much again as what the monthly average would be.
Even if spending dips in January as consumers pull in their belts, economists say the net effect is invariably positive.
That said, the adoption across Europe of the so-called Black Friday sales day in late-November has made the final run-up to Christmas less critical. And the growth in online shopping makes it less necessary for some stores to be physically open.
Thus, German retail association HDE sees sales in November and December this year increasing 1.2% compared to 2019, driven by online sales, food, furniture and hardware – even if brick-and-mortar retailers of clothing, perfumes and toys will suffer.
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And one final thought: Even if consumers do not shop before Christmas, that does not always mean the economy loses out.
“Consumption patterns also shift – not spending on drinks at a Christmas party translates into the purchase of new furniture etc.,” Paul Donovan, chief economist at UBS Global Wealth Management, observed in his weekly audio blog.
‘SCROOGENOMICS’
Last-minute shopping is the most visible aspect of the Christmas economy and the one that broadcasters tend to focus on. However, there are less tangible but equally real economic impacts too.
One is productivity, which can take a dive as gift-buying, partying and the general bustle of Christmas distracts workers.
While the phenomenon is hard to quantify, facilities and services group Sodexho found in a 2016 survey that 25% of workers reported lower motivation and productivity and a similar number admitted trying to avoid taking on new work.
While some of that might be down to stress related to end-of-year targets, employer groups like the UK’s Reward & Employee Benefits Association (REBA) acknowledge a distracting effect linked to Christmas and offer tips on how to combat it.
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More controversially, some economists suggest that the very act of gift-buying can be bad for the economy.
The argument rests on applying the theory of “dead weight loss” – which typically happens when things like monopolies or trade tariffs distort the market – to the exchange of gifts.
In his 1993 paper “The Deadweight Loss of Christmas,” Yale professor Joel Waldfogel concluded that when people overpay for gifts – especially unwanted gifts – that was tantamount to destroying the economic value of those products.
While that and the conclusions of Waldfogel’s follow-up book “Scroogenomics” are hotly debated, few dispute that Christmas has unintended knock-on effects for the economy that have to be paid for by someone.
Such factors, known by economists as externalities, could include the cost to the environment of all the packaging and plastics associated with a typical celebration. Or the cost to health services of dealing with drunk-driving accidents.
Working out the overall impact on gross domestic product (GDP), the standard measure of economic activity, of Christmas is next to impossible. But the data do at least suggest its significance is overestimated in many quarters.
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In the U.K., a big spending Christmas nation that also happens to produce monthly GDP figures, last year saw output shrink 0.3% in November, rise 0.3% in December and record zero growth in January of this year: in other words, the economy idled.
Data on new coronavirus cases in coming days should start to show whether Europe can indeed safely reopen for Christmas. But from the point of view of the economy, it might not be the end of the world if it doesn’t.
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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 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.
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