As Canada approaches the three-year mark since the start of the pandemic, Statistics Canada has reviewed how COVID-19 has changed the Canadian economy and society, showing a mixed bag of trends.
The StatCan report released on Thursday found that while employment growth and economic activity continues to be strong, essentials such as groceries and housing have gotten more unaffordable. Meanwhile, some of the negative social impacts of COVID-19, including increased drug and alcohol use and poorer mental health, continue to persist.
“Life in Canada, as in other countries, has changed in many ways since the start of the pandemic—some changes were direct impacts of the pandemic, while others were trends that were accelerated by it,” StatCan said.
StatCan described Canada’s economic activity as “resilient,” as real GDP has outpaced other G7 countries since the second quarter of 2021. The report notes that Canada’s real GDP was 2.7 per cent above pre-pandemic levels in December 2022.
The Bank of Canada has steadily increased interest rates since February 2022 in an attempt to slow down the economy, and by extension, inflation. Interest rates currently stand at 4.5 per cent, but the Bank of Canada says it typically takes 18 months to two years to see the full effects of rates hikes.
But despite strong economic growth, new business openings appear to have plateaued. After the initial stages of the pandemic saw a wave of business closures, the number of active business recovered to pre-pandemic levels by late 2021. However, as interest rate hikes have driven up borrowing cots, business entries have slowed and business closures have remained stable.
In November 2022, business openings fell to their lowest level in two years, while insolvencies rose up due to challenges relating to supply chains, inflation and the labour market.
The Canadian economy also faces serious challenges with deteriorating housing affordability. While home prices have come down since peaking in early 2022 thanks to the Bank of Canada’s interest rate hikes, the average cost of a home was still 33 per cent above pre-pandemic levels as of December 2022.
In some cities, the figure is much higher. Average home prices in the Montreal area and the Greater Toronto Area were 37 per cent above pre-pandemic levels, while in Halifax, home prices were 58 per cent higher.
The rate hikes may have brought down home prices, but at the time, the report notes that mortgage interest costs had gone up by 18 per cent within a year as of December 2022.
On top of the high cost of housing, inflation was above six per cent for 10 consecutive months in 2022. And while the headline inflation rate has come down in recent months, food inflation remains high, with some grocery items seeing yearly price increases in the double-digit range.
The high cost of food and housing has led to serious financial stress for many Canadians. Low income earners had major reductions in their personal savings and higher-than-average increases in their household debt, and in April 2022, StatCan found that one quarter of Canadians had to borrow money or use credit to meet day-to-day expenses. In late 2022, nearly half of Canadians said they were concerned with their household’s ability to afford housing, a StatCan survey found.
STRONG LABOUR MARKET GROWTH, BUT WORKFORCE CONTINUES TO AGE
Meanwhile, Canada has also seen strong growth in the labour market, as unemployment rates remain at or near record lows. In January 2023, employment levels were 800,000 jobs above pre-COVID-19 levels, with gains largely driven by jobs in professional, scientific and technical services, as well as public administration and health care.
But in the coming years, one in five working-age Canadians are set to retire, StatCan says, adding that the gap between retirees and new entrants to the labour market is at “record levels.”
In order the combat these labour market trends, Canada has plans to boost immigration levels to up to 500,000 newcomers per year by 2025. However, StatCan says immigration will “only partially alleviate the impacts of population aging,” noting that newcomers’ skills tend to be underused in Canada’s labour market, and that new immigrants typically settle in larger cities, which have the worst housing affordability.
SOCIAL IMPACTS OF COVID-19 STILL LINGERING
StatCan also says the social impacts of COVID-19 on well-being and mental health persist, especially for younger Canadians.
In late 2021, a StatCan survey found that six in 10 working-age Canadians and two-thirds of seniors felt they had a “strong sense of meaning and purpose.” However, only half of respondents aged 15 to 24 reported the same thing. Older Canadians were also more likely to report higher levels of perceived well-being compared to those under 30.
And while COVID-19 was the biggest cause of excess deaths since March 2020, deaths due to alcohol and drugs also skyrocketed during this time period.
In 2020, there were 4,605 deaths due to accidental poisoning, and in 2021, there were 6,310. By comparison, the height of the overdose crisis in 2017 saw 4,830 poisoning deaths. Young people were also disproportionately affected by these deaths.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
