When we in the media ask for questions from the audience on the COVID-19 crisis, one that pops up near the top is “when will it all end?“
Whether addressing the disease or its economic effect, while experts try to offer the latest evidence to help us understand, the unsatisfying honest answer is that no one really knows for sure.
Even as we wait for fresh Canadian trade and jobs numbers this week, in many ways the economic answer to the question is the more difficult of the two. That’s because the economic result depends not just on the unpredictable unfolding medical situation, but also on the results of attempts by governments, businesses and the rest of us to cope.
We have repeatedly seen anger expressed at the fact that medical officials or political and economic leaders have got it wrong. But in a health and economic crisis unlike anything we have experienced before, the landscape is constantly changing.
WATCH | Modelling suggests we’re in it for the long haul:
What mathematical simulations tell us about how the COVID-19 pandemic will play in the real world. 5:04
Using the best evidence
“The thing is, we’re working with the best evidence that we have at the time,” said infectious disease specialist Sumon Chakrabarty on CBC Radio’sThe Current last week.
On Friday, recession arbiter, the C.D.Howe Institute’s Business Cycle Council, declared that Canada is officially in a recession. Growth figures from February released last week showed the economy was already slowing even before the Canadian lockdown had begun.
Echoing Chakrabarty’s comments on the medical outlook, the newly appointed next head of Canada’s central bank, Tiff Macklem, took a similar stance from the economic point of view.
“The bank has to be humble about what it doesn’t know,” he said, responding to reporters’ questions on Friday in an empty auditorium.
And as events unfold, Macklem warned that the Bank of Canada’s economists will be forced to forecast based on a range of possible outcomes that will probably change over time.
The next Bank of Canada governor, Tiff Macklem, left, flanked at a safe distance from Finance Minister Bill Morneau, centre, and current Gov. Stephen Poloz, is optimistic but realistic. (Blair Gable/Reuters)
“The Bank of Canada has tremendous analytic economic financial capacity to analyze what’s going on in the economy, and I think an important role for the Bank of Canada is to provide Canadians with as much information as it can honestly provide,” said Macklem, “recognizing that we’re probably going to have to look at more than one scenario.”
Just as the World Health Organization and Canada’s Chief Public Health Officer Dr. Theresa Tam have been accused of getting it wrong at first and changing their prescriptions to fight the virus, economic policy is taking plenty of flack as well.
Economists at commercial and retail banks have been chided for underestimating the severity of the effect of the pandemic on the economy.
Construction workers are pictured on a construction site in downtown Vancouver on April 23. The federal government has had to update its policy of economic support as each new group complained that it had been left out or shortchanged. (Ben Nelms/CBC)
Left out or shortchanged
The federal government has had to update its policy of economic support as each new group complained that it had been left out or shortchanged. Even then, existing plans face new criticism, such as from employers concerned that the support package means workers would rather stay home than take the jobs they offer.
As governments expand borrowing to pour money into the economy, no one is sure what the long-term effects will be. Some worry about deflation; others, inflation.
Similar to the events of the Great Recession in 2008, some critics worry attempts by central banks to flood capital markets with cash to avoid systemic failures are employing public funds to artificially boost the price of stocks, adding to the wealth of stockholders who are already better off.
But even if the medium- and long-term uncertainty remains for both the illness and the economy, fresh data this week will give a firmer grip on what is happening in the present.
Tomorrow’s trade figures are for March, so they will give a fresher perspective than last week’s GDP numbers, likely revealing how a slowdown caused by our trade partners in Asia and Europe transformed into a domestic logjam as the virus hit home.
But Statistics Canada’s Labour Force Survey report for the month of April will be the freshest economic data of all.
Although Friday jobs numbers are likely to be bad, representing the first full month of the lockdown, there’s a bright side. As provincial economies experiment with reopening businesses and sending employees back to work, there is a chance that this week’s lows will represent a nadir. (Jason Burles/CBC)
Optimism tempered by realism
Although Friday jobs numbers are likely to be bad, representing the first full month of the lockdown, there’s a bright side. As provincial economies experiment with reopening businesses and sending employees back to work, there is a chance that this week’s lows will represent a nadir. Of course, all bets will be off if it turns out we have opened up too soon, or if frustrated Canadians cause a new outbreak by mingling too quickly.
As our next Bank of Canada governor pointed out, at a time like this optimism is good. So long as it is tempered by realism.
“There is certainly a fairly optimistic scenario, that when you think of this as a natural disaster — as we recover from the natural disaster, the economy bounces back fairly quickly,” said Macklem, who is current dean of the University of Toronto’s Rotman School of Management.
“But clearly, there are downside risks against that scenario.”
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.
