In recent days there has been a flurry of other announcements about changes.
Late Friday, the Radio City Rockettes announced they had canceled all of their remaining New York City holiday shows, citing “increasing challenges from the pandemic.” The dance company typically performs multiple shows per day in December. A number of other restaurants and theaters in New York City that rely on big December sales figures are also being forced to temporarily close. But some tourist destinations in Florida are expecting record sales.
Economists and policymakers say it may take weeks for the omicron variant’s full impact to come into view, and the situation is changing rapidly.
Major cities appeared to be the hardest hit so far. Broadway shows including “Hamilton” and “Tina,” about the life of Tina Turner, canceled performances this week because of coronavirus outbreaks and exposure. A Los Angeles theater production of “A Christmas Carol” was canceled Thursday, Friday and Saturday because of a similar outbreak. Some hospitals have canceled elective surgeries to clear space and personnel for covid-19 patients.
Restaurant reservations are declining again, according to the online reservation platform OpenTable, and a growing number of restaurants in New York City are closing because of coronavirus outbreaks among staffers and a lack of workers, according to the New York City Hospitality Alliance. College students and day cares are sending students home to combat outbreaks, but there are signs that people do not plan to stay home for long.
“I know of at least a couple dozen that are shutting down, which is horrible for these restaurants,” said Andrew Rigie, executive director of the NYC Hospitality Alliance. “The holidays are traditionally when many restaurants would earn their profit. This is another gut punch.”
As they have for much of the pandemic, the cancellations are moving through the broader hospitality industry, particularly in large cities. JPMorgan Chase canceled a major in-person health-care conference scheduled to take place in San Francisco next month, and the Cartwright Hotel at Union Square immediately suffered the consequences. Steven Viscio, the hotel’s general manager, compared the conference to the area’s “Super Bowl” in terms of the number of people it would have drawn and the amount of revenue it produces.
The 114-room hotel has roughly 25 employees. Viscio expects housekeeping shifts will stay limited now that the conference is off the book. He was also looking to hire one or two more staff members, but those plans will be delayed.
“Everyone has looked out for each other,” Viscio said. “But it’s still going to be a drain on everybody.”
Since early 2020, the coronavirus moved through the U.S. population in several phases, with covid-19, the disease caused by the virus, killing more than 800,000 people. The virus began its latest surge in recent weeks during a moment when the U.S. economy appeared to have regained its footing, with growth strong and unemployment falling.
But this fragile economy remains vulnerable to sudden shifts in consumer behavior. Some businesses are expecting a strong finish to 2021, while others could be forced to close their doors. The Florida Keys, for example, are preparing for perhaps the busiest holiday season ever, according to the local tourism council.
“The [tourism] numbers for December so far have broken records,” said Andy Newman, spokesman for the Florida Keys tourism council. “To be honest with you, thus far we haven’t seen any significant impact of omicron in terms of cancellations.”
Confirmed U.S. coronavirus infections have increased markedly in the past two weeks. More than 1,200 people die of covid-19 every day. So far, data shows that vaccinations and booster shots protect against severe illness from the variant, but health officials fear a surge in hospitalizations and deaths in areas with low vaccination rates.
Last winter, before vaccines were available, the virus moved with speed and lethality through the United States, particularly as many Americans traveled for the holidays. While millions of Americans are expected to travel in December and January, there are already signs of many people slamming on the brakes.
Lauren Randolph, 36, a recipe developer in Los Angeles, had elaborate Christmas travel plans with her husband, Dan Samiljan, 37. They would fly first to Tennessee to visit her family, then peel off to Kentucky to tour distilleries along the Bourbon Trail between Louisville and Lexington. After that, they planned another flight to Boston to visit family. Over the past few days, they have canceled the trip, getting credit for two out of three flights, canceling a car rental and the distillery tours.
“I have grandparents in their 90s, and we decided it just wasn’t worth the risk,” Randolph said. “The past couple years have made us used to going with the flow. No one was mad — our families are understanding people. Instead, we’re staying home and will see a few friends safely outside.”
For some restaurateurs, another coronavirus surge is mixed news. Ashwin Deshmukh owns a chain of six Williamsburg Pizza restaurants as well as a restaurant-bar called Short Stories in New York.
“People always want pizza, and if they’re not going out, they want it even more,” he said. But of the 18 holiday parties he had on the books for Short Stories, 10 have canceled.
“By Monday things started dropping off,” he said. “It could be a $50,000-to-$80,000 hit.”
Nik Sharma was going to have a holiday party there for his consulting firm Sharma Brands. Sharma canceled the party recently but told Deshmukh to keep the $7,500 deposit.
“On Wednesday night I was at the Knicks-Warriors game,” Sharma said, “and I was on my phone getting texts from people asking if the party was still happening. It’s just not a good look to be throwing a party with numbers rising. What if someone’s grandma ends up in the hospital because of this party?”
Consumer interest in catering (measured as viewing business pages or posting photos or reviews) was down 22 percent on Yelp the week of Dec. 6, compared with the same week in 2020. Food delivery service appears to be back on an upswing, with inquiries and reviews up 13 percent during the same period, compared with a year earlier.
It’s particularly challenging timing for the restaurant industry, which is also dealing with worker shortages and food inflation, said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association. Already, 90,000 restaurants have closed permanently or long-term, with an additional 200,000 restaurants still hoping to get pandemic relief money from the federal government.
“Restaurants can only defy the laws of gravity for so long,” Kennedy said. “We are an industry with roughly 16 days of cash on hand and that operates on 3 to 5 percent profit margins. You can change your business model only so much.”
On Tuesday, Erika Polmar, executive director of the Independent Restaurant Coalition, had 903 new emails from restaurateurs in her inbox, she said, all looking for guidance: Did she think there would be additional federal assistance? Did she know a bankruptcy expert? Could she recommend a credit counselor?
“This is the month that folks are hoping for a bump in sales, and they are seeing it slip away,” she said. “A restaurateur in the Northeast called me. He usually does a lot of holiday parties for pharmaceutical companies. They know more than other people, he said, and they are canceling their holiday parties because they are panicked. Parties make up a big portion of holiday business. This is yet another moment where restaurants have to navigate a crisis — and they have nothing left.”
By many measures, the economy had made tremendous strides before the latest surge. Policymakers at the Federal Reserve project the economy will have grown 5.5 percent by the end of the year. The unemployment rate fell to 4.2 percent in November, and most of the major stock market indexes are on track to finish close to 20 percent higher for the year. Retail sales also rose for the fourth straight month in November, with the expectation that consumer spending will remain strong through the holiday season.
Still, health officials warn that the omicron variant could peak in a massive wave of infections as soon as January, putting pressure on strained health systems already grappling with cases of the delta variant. Plus, some policymakers and economists initially underestimated the risks of the delta variant when it began spreading over the summer, only to backtrack as the wave hindered the economic recovery for months. Consumer confidence also plunged in the late summer as people’s renewed fears of the virus held them back from seeking out jobs or limited school openings and child-care options.
At a news conference Wednesday, Fed Chair Jerome H. Powell said the delta variant slowed hiring and constrained global supply chains. But he added that “wave upon wave, people are learning to live with this.” The more people who get vaccinated, the fewer the economic effects subsequent waves of the virus can have, Powell said.
“I just think at this point, we don’t know much,” Powell said Wednesday. “We’ll know a whole lot more in three weeks, and we’ll know more than that in six weeks.”
22 things you need to know about B.C. business and the economy in 2022 – BCBusiness
From inflation and supply chains to climate change and housing prices, we explore how things could unfold, with help from an expert panel
Well, that wasn’t always so fun. As they put 2021 behind them, with the COVID-19 pandemic still very much alive, business decision makers face another challenging year. What’s coming our way in 2022? To tease out some key themes for B.C. organizations of all sizes, we assembled a panel of seven experts.
Of course, it wouldn’t be a business and economic outlook without a big disclaimer. Several of the interviews with our panel took place before the floods that brought so much destruction, as well as the arrival of the Omicron variant. Here’s hoping for a better 2022.
Our panel of experts
(Left to right): Ryan Berlin, John Davis, Fiona Famulak, Alex Hemingway, Ken Peacock, Bryan Yu, David Williams
Ryan Berlin, senior economist and director of intelligence, Rennie Intelligence
John Davis, senior vice-president and regional manager, commercial banking, B.C. region, Wells Fargo
Fiona Famulak, president and CEO, BC Chamber of Commerce
Alex Hemingway, senior economist and public finance policy analyst, Canadian Centre for Policy Alternatives
Ken Peacock, chief economist and senior vice-president, Business Council of British Columbia
David Williams, vice-president of policy, Business Council of British Columbia
Bryan Yu, chief economist, Central 1 Credit Union
22 things you need to know about B.C. business and the economy in 2022
1. The big picture is mixed
Several forces are converging to deny B.C. and the rest of the world a smooth COVID recovery. “The economy is improving because the pandemic is ebbing and the economy is reopening,” says David Williams of the Business Council of B.C. “But we are running into some headwinds and difficulties with supply chains and global supply.” So the outlook for global and Canadian economic growth has been downgraded for 2022, with some of that expansion pushed back to 2023. “At the same time, inflation has ended up being far higher, broader and more sustained than many central banks had projected.”
2. An economic rebound hides fundamental flaws
As of December, the BCBC forecast the province’s real GDP growth at 5 percent for 2021 and 4 percent this year, versus 4.3 percent for Canada as a whole. Still, the economic fundamentals are much softer than those relatively strong numbers suggest, Ken Peacock stresses. “If you look across different industry sectors, for nine of the 16 broad industry categories, employment levels are still below pre-pandemic levels,” he says of B.C. “So more than half the industries have not seen jobs recover to where they were, and we’re almost two years out now.”
3. Inflation looks like it’s here to stay
Anyone convinced that the current wave of inflation is a passing phase could be disappointed. After the Bank of Canada upgraded its year-average inflation forecast by a full percentage point, Williams says, the Consumer Price Index (CPI) rose 4.7 percent year-over-year in October. “So these are very difficult times for Team Transitory.”
With inflation not expected to return to 2-percent levels until 2024, Peacock holds out hope that higher prices will ease somewhat. “But if we see 5-, 5.5-, 6-percent inflation stick around for two or three or four years, purchasing power is going to be severely eroded,” he says. “Households will fall behind. And this, I think, is a potential problem for this provincial government, which, from the day it was elected, has been very interested in raising well-being and prosperity for households, personal incomes.”
Sources: Statistics Canada, BC Stats, Business Council of B.C.
4. Interest rates have nowhere to go but up
Uncomfortably high inflation means that businesses should plan for rising interest rates, says Central 1’s Bryan Yu. He thinks the market’s call for three rate increases this year and two in 2023 is aggressive, though, given that the economy isn’t fully healed. “It’s heading in the right direction, but whether that warrants three hikes is debatable.”
In real terms after inflation, Williams notes, Canada’s policy interest rate is –4.5 percent. “Interest rates affect the economy with a lag of about two quarters to six quarters,” he says. “So you’ve got to ask whether a real policy rate of –4.5 percent is what the economy really needs in six to 18 months. It doesn’t look like it needs that kind of stimulus.”
With real interest rates at an all-time low, the Bank of Canada has promised not to change the policy rate until the second half of 2022. “With inflation now at 4.7 percent, it’s very difficult to believe that the central bank will leave interest rates on hold for that period of time,” says Williams, who points out that the BoC recently hinted at a second- or third-quarter hike. “But that still seems an awfully long time to leave interest rates, in real terms, being very significantly negative.” If real rates quickly move closer to zero, “that would be a very contractionary effect on the economy, and I don’t think the economy is all that strong and robust.”
5. Fintech could help save small business
The pandemic hasn’t been kind to smaller companies in need of financing. “Access to capital when you’re Jimmy Pattison is very different than if you’re some small business,” says Wells Fargo’s John Davis, whose firm typically provides loans and other services to companies with annual revenue north of $350 million. “And small businesses fell through the cracks a little bit here because they don’t have the access to capital that big companies have.”
As interest rates rise and labour constraints continue, those smaller outfits will face challenges in 2022, he predicts. Because the big Canadian banks have always had trouble figuring out that space, credit unions and other smaller financial institutions have tried to fill the gap, he says. But they want to move upmarket, too, because such loans don’t yield much of a return. “I’m wondering if some of the fintechs or non-bank solutions might be the ultimate credit providers and service providers to smaller businesses.”
6. Labour supply pains will continue, with a twist
“Without a doubt, the severe skilled labour shortage B.C. is experiencing is our biggest challenge in the next year,” the BC Chamber’s Fiona Famulak says. “There are jobs out there but not enough people to fill them. This is already impacting businesses and communities both large and small. In addition, the increasing cost of doing business and supply chain challenges are adding to the issues that small and medium-sized businesses are trying to manage.”
On the labour front, Davis has watched forest products companies hold job fairs to find mill workers. “One of our biggest clients is a hotel operator,” he says. “Getting people to do that kind of work is incredibly hard.” Davis attributes some of the shortage to the Canada Emergency Response Benefit (CERB), which made it relatively easy for workers with low-paying jobs to stay home. “It’s not just new people,” he says of the labour shortage. “It’s the people that have left and trying to get them to come back.”
At the same time, there’s still plenty of slack in the labour market, says Ryan Berlin of Rennie Intelligence. Before COVID, Metro Vancouver was home to 70,000 people looking for work—a number that has since grown to 100,000. “So there’s an excess of 30,000 people above what we had seen pre-pandemic who are wanting to work but can’t.”
Given that surplus, you’d think employers would have their pick, Berlin says. But even with Canada’s job vacancy rate at a record high, “they’re struggling to connect the skills and people out there to the needs that they have.”
7. Employment levels aren’t what they’re cracked up to be
Climbing out of what Peacock describes as a big hole, B.C. saw a 7-percent increase in jobs from January through October 2021, putting it ahead of the rest of the country. But distorting that picture is public sector employment growth, which spiked by about 16 percent, he notes.
And remember, employment throughout the province fell significantly in 2019, Peacock says. “So we went into the pandemic at a lower level of employment, which has made it much easier for B.C. to regain that pre-pandemic level of February 2020 that everybody’s been focused on.”
Peacock sees reason for concern about relatively muted hiring conditions in the private sector. “When I look at some of the additional costs that are being heaped on employers, going back to the employer health tax and then all these costs associated with managing the pandemic, some difficulties and challenges in hiring people and then sick-pay costs added on, one does wonder to what degree we’ll see stronger private sector hiring activity over the next couple of years.”
8. Expect supply chain woes to stretch on…and on
For B.C. businesses in a wide range of industries, global supply chain disruptions keep making it tough to serve their customers. “The view that they’ll soon sort themselves out seems a fairly optimistic assumption at this point,” Williams says of those troubles. “They look like they’re going to be around for quite some time.”
Just ask one of Wells Fargo’s biggest manufacturing clients, which recently announced that because it can’t get all the parts to fill its orders, it needs at least 18 months’ relief from the banks. “This is the market leader in North America for what they do, and they’re worried about that,” Davis says. Besides absorbing the cost of borrowing capital, the publicly traded company could see its market capitalization shrink, which makes it harder to borrow, he explains. Also, frustrated customers might look elsewhere—and a rival could step into the void. “That’s terrifying.”
9. Business investment is flagging—but there’s hope
As the saying goes, you have to spend money to make money. But in Canada, business investment per worker has been falling for several years, according to recent research by the Toronto-based C.D. Howe Institute. “So we are becoming less industrialized—we have less capital equipment, less technology, less innovation, less research and development per worker than we did the previous year or five years ago,” Williams says.
Lately, with help from deep-pocketed foreign investors, several B.C. businesses have reached unicorn status. “But what matters for the country and what matters for real incomes across the country is what’s happening at the average firm,” Williams says. “At the average firm, there’s less investment per worker going on over time, and the capital stock is actually shrinking on a per-worker basis.”
Yu expects the tide to turn in B.C. “As businesses get more certainty in the market—they understand where the demand is, things are reopening and they’re not going to close—they are going to move back into reinvesting in their operations,” he says. Yu also thinks that given labour shortages, some companies will look at software and equipment to boost productivity. “Possibly they’ll have less of a need for as many employees.”
10. Either way, climate change will cost us
If there was ever any doubt, last year’s raging forest fires and catastrophic floods made it clear that climate change is a major threat to B.C. But not everyone is happy about our policy responses to this existential crisis. For his part, Peacock sees the provincial carbon tax adding to already soaring energy costs. “At the end of the day, the carbon tax in B.C. is going to hit consumers’ pockets, and it’s going to hit businesses as well.”
Companies with a domestic customer base can pass on those extra costs, Peacock adds. For exporters, though, there’s no such option. “Most of our big exporters, the ones that really matter, are not in a position to adjust their prices,” Peacock says.
Among jurisdictions with a price on carbon, B.C. is one of the few without a cap-and-trade system or other mechanisms to shield exporters, he explains. “Over time, what this means is a less productive export sector, and companies are going to be less willing to deploy capital and make investments in B.C., unless the policy framework is realigned,” Peacock says. “I think that weighs on the export sector over the next three, five, seven years here in B.C.”
For the CCPA’s Alex Hemingway, high oil prices are yet another reason to move to renewables. “One of the issues that’s happening in terms of the lagging climate progress is the power of the fossil fuel industry,” he says, also citing lobbying efforts against employer-paid sick says and a wealth tax. “It gets at the power of these lobby groups to shape the policy agenda and throw some dirt in the gears when there’s a fear that it’s going to affect their interests.”
11. Like the rest of the world, we’ll keep an eye on China
To put economic pressure on other countries, an increasingly assertive China doesn’t hesitate to slow or halt imports, whether that’s Canadian canola or Australian coal. How vulnerable is B.C., given frostier-than-ever relations between Ottawa and Beijing?
In Wells Fargo’s local client base, the biggest single industry is forest products, which Davis calls the best example of a B.C. sector tied to China. “We’ve yet to hear—I’m touching wood as I say this—any concerns with that,” he says. “Are they going to be looking for that lumber supply from Russia? Are they going to be looking for it from Scandinavia? Maybe it’s too early for us to really see it, but I haven’t seen any fallout from that yet.”
Sources: Statistics Canada and BC Stats; Business Council of B.C. forecasts
12. As government supports wind down, businesses must find ways to add value
“Overall, pretty good,” the BC Chamber’s Famulak says when asked how we’re doing with government supports for businesses still navigating the pandemic. “But let me be clear: the federal and provincial governments need to look at ways they can continue supporting businesses that include easing tax burdens and slowing down the layering-on of costs as we have seen over the last few years. We need to deal with our skilled labour shortage, and governments need to explore all channels available to them, from enhancing immigration policy to essential skills training.”
Peacock suspects that many companies have been sustaining themselves on government programs. “When they’re wound down, we probably are going to see more businesses fail,” he says. “If these were struggling businesses, maybe shifting to another industry or sector or line of work will in the long term, in the medium term, be an improvement. But there’s pain associated with this turnover process.”
Williams suggests that businesses think about how to add value. “If they’re able to offer higher-value-added goods and services for their customers, they should do pretty well,” he says. “But the businesses that are in low-value-added sectors where they’re dependent on a low cost of labour and easy access to pools of low-cost labour, clearly that’s going to be more difficult.”
13. Land-based industries keep taking a hit
Peacock makes a distinction between the province’s tech sector, which is concentrated in Metro Vancouver and parts of Vancouver Island and the Interior, and land-based industries such as forestry and mining. For those businesses, the regulatory climate, Indigenous issues and the carbon tax make life complicated, he says.
Peacock singles out the provincial government’s recent announcement that it plans to defer logging on as much as 2.6 million hectares of old-growth forest. That policy decision could prompt the closing of 10 to 14 sawmills, plus a couple of pulp mills, he says. “This is going to lead to the shuttering and loss of high-value-added jobs.”
14. Indigenous economic reconciliation faces roadblocks
With the province and many businesses committed to economic reconciliation with Indigenous Peoples, what can we expect in 2022? “It’s mixed, because I think the reconciliation and economic development and First Nations’ involvement in economic projects is clearly a positive,” Peacock says. “And I think businesses have for many years been keen, as long as they know the rules and the relationship and who owns the land, to get on with doing business.”
But events like the blockade of the Coastal GasLink pipeline by a Wet’suwet’en Nation clan pose challenges, Peacock maintains. “I think it’s prompting companies to take a closer look at deploying hundreds of millions of dollars or half a billion dollars in the province and wondering what that investment return might be over a decade or two, given some of the complexities related to the land base.”
Source: Central 1 Credit Union
15. Dwindling choices spell more housing crisis
One of the biggest pandemic stories is the red-hot provincial housing market. With help from low interest rates, B.C. home sales remain well above pre-pandemic levels, Yu says. But for 2022, Central 1 forecasts a 21-percent drop.
Don’t expect prices to follow suit, though. “The pricing conditions are going to remain very strong because there’s no supply,” Yu says. “There’s not a lot of choice or options for a lot of buyers right now, so they’re kind of rushing toward the market.”
To tackle its shelter shortage, B.C. needs to massively increase not just public and not-for-profit housing but also the overall supply, the CCPA’s Hemingway contends. “Every time we make a gain in another area—if people’s wages rise a little or if their costs go down for child-care investment—it can still quickly get eaten up by increased rents.”
16. The COVID immigration boom could turn out to be a blessing
Rennie Intelligence’s Berlin was one of many observers left puzzled by the federal government’s pandemic immigration moves. At first, he was shocked to see Canada boost its target in the midst of COVID, given that it would inevitably result in a surplus of workers. The feds, who have set a quota of 1.2 million immigrants for 2021-23, welcomed some 220,000 during the first eight months of last year. So the year-end total could be an all-time high of 370,000.
For B.C., which gets about 14 percent of national immigration, that’s good news, Berlin maintains. Besides potential labour, he says, immigrants bring diverse cultures and perspectives. “So I think that bodes well for setting us up as we turn the corner and put COVID in our rear-view mirror.”
B.C. also stands to benefit from robust interprovincial migration, Berlin says. From April 2020 through last June, we attracted a net 43,000 new residents from other parts of the country while most other provinces lost people. “If you look at it from, again, a labour supply perspective, to me, that’s a good thing.”
With that population growth comes demand for new housing, Berlin adds. “Over the next six months, we’re not out of this, but I think there’s some tailwinds for our part of the world in particular that will put us in a pretty good position to begin to actually grow in the next year.”
17. For some, taxes remain a steep price to pay
Peacock doesn’t mince words about provincial taxes on people and businesses. “Top marginal tax rates are at a high for individuals,” he says. “Effective marginal tax rates on investment in B.C. are among the highest, if not the highest, in Canada. So it’s starting to shape up like the investment climate is pretty good for some industries, but it’s pretty bad for land-based operators and maybe some manufacturers here in B.C.”
18. Taxing the rich calls for getting creative
In Hemingway’s view, this is a good time to do something about growing economic disparity: “The public appetite for action in terms of reducing inequality, including taxing the rich, seems to be higher than at any point I can remember.” He cites a recent national survey by Ottawa-based Abacus Data in which 89 percent of respondents backed a 1-percent tax on the wealthiest Canadians to support pandemic recovery.
At the provincial level, Hemingway sees a big opportunity to redistribute wealth by taxing property, whose value in B.C. has climbed by more than $1 trillion since the mid-2000s. Today, property tax applies to individual parcels of land. “But now that we have the beneficial ownership registry online, what you could do is apply the tax to the total holdings of any specific landowner above a given value,” Hemingway says, suggesting that the provincial government use different brackets.
19. Cities and the climate need more public transit
Post-pandemic and in an era of rising inequality and climate change, there’s a growing recognition the government must play a bigger role in several areas, Hemingway says. For example, B.C. needs to “massively and much more quickly invest in public transportation,” he argues. “We’ve been moving at a pace of maybe building about one SkyTrain line a decade in Metro Vancouver. If we’re serious about this climate thing and we’re also serious about city-building, we need to be looking at ramping that up considerably.”
20. Watch for a retail reconfiguration
At Central 1, Yu expects a B.C. retail slowdown this year, for two reasons. “No. 1, the sales numbers are being boosted by higher prices,” he says. The second factor: as the economy fully reopens, much of the demand related to housing should rotate back into services. “So we’ll see that in the GDP, but the retail numbers will suffer.”
During COVID, the property class that Wells Fargo has been most worried about is retail, Davis says. It remains a concern as shoppers keep moving online. Davis flags what he calls the barbell effect: big-box stores like Costco and Walmart are doing well, along with luxury retailers. “But if you’re in the middle category—if you’re the Gap or Old Navy or whatever it is—you’re getting slaughtered.”
However, experiences still matter, Davis says. Take Vancouver’s Robson Street, which now has less typical retail and more Asian-style service businesses such as tea shops and dessert spots. “I think you’re going to see a reconfiguration of retail in a big way.”
21. Natural resources have a big role to play in the recovery
Tech may grab all the headlines, but Williams contends that other sectors are better equipped to deliver us from the pandemic. “You really need your big economic engines to pull you out of this, and our big economic engines are the natural resources industries,” he says. “For every hour worked in the natural resources sector across Canada, we get $330 of value added.” In unconventional oil and gas, that number is $1,300—23 times the national average of $56.
Given their broader economic benefits, it doesn’t make sense to replace such industries with those that generate only $30 to $90 per hour worked, Williams says. “So it’s a really delicate balance, I think, for policy makers to address our carbon challenges but at the same time recognize Canada’s comparative advantages on international trade.”
22. As the economy rebounds, slow and steady might win the race
“We’re entering into a very delicate time in the economic recovery,” Williams says. “And so I think it’s important for the federal government, for central banks, also for the provincial government, to avoid any more policy mistakes,” he argues. “Change the game.” Although some government interventions in the economy were necessary, they might not be appropriate now, he adds. “And so we need to be a bit more nimble, I think.”
Still, Peacock believes B.C. will enjoy solid growth this year, noting that the pandemic recession was especially unusual in one way. In a typical downturn, spending on goods such as cars and appliances drop off while services remain fairly stable. But during 2020, services fell 7 percent while sales of goods grew.
“I don’t think that’s been regained or even half regained in 2021 because of the ongoing closures,” Peacock says. “So that lift does stretch out into 2022, along with the getting back of some international tourism. I don’t think it’s going to be a huge surge but rather a slow, steady grind. And that’s going to help provide a boost.”
Economic outlook: 'They say it's not, but it's hot!' – Export Development Canada
Prices are rising at a faster rate than we’ve seen in almost 40 years. Waved off at first as a temporary problem, central banks are tackling this head-on with tighter monetary policy. Expectations are now aligned around the fast tapering of quantitative easing programs, earlier and more rapid interest rate increases, and possible balance sheet reductions. This has financial markets and consumers braced for imminently tighter access to financing. A risk to the outlook is that current demand-led price growth moves into wage and other contract settlements, which will be harder for central banks to neutralize or reverse without more stringent monetary action.
Fiscal policy is also likely to become more stringent. This won’t be just in Canada; almost every Organisation for Economic Co-operation and Development (OECD) nation will be in the same fix. Pandemic stimulus has caused debt to balloon well beyond previously acceptable limits and governments everywhere will be under pressure to roll back stimulus and get their finances on a more sustainable trajectory before higher interest costs exacerbate the problem. Thankfully, they’ll be able to do this at a moment of economic strength, which will at least help on the revenue side.
International trade is generally benefiting from a strong world economy and consequently, Canada experienced surging growth in the dying months of 2021. Pent-up demand will power trade activity through 2022 and 2023, especially as supply chain constraints begin to diminish toward mid-year. Protectionism, in its many overt and more subtle forms, is expected to gradually give way to strong demand conditions. There’s definitely enough activity for everyone for at least the next two to three years.
This all adds up to impressive forecast numbers. Developed markets are projected to grow well above their long-term trend, collectively rising by 4.1% this year and by 3% in 2023. Likewise, emerging markets will see impressive growth in the wake of last year’s rebound, together expanding by 5.3% in 2022 and a further 5% next year. This puts 2022 global growth at a robust 4.8%, which will then moderate to a still-high 4.3% for 2023.
Demand conditions will keep commodity prices higher than initially expected and definitely higher than sustainable levels in the long term. The price of West Texas Intermediate crude oil is projected to average US$71 this year and US$65 in 2023. Gas prices will follow the same pattern, coming off current highs as Western European supplies are replenished. Copper prices will face continued upward pressure owing to immediate supply constraints, and increased structural demand as a result of higher global resolve to shift from fossil fuels to cleaner, copper-intensive forms of energy generation and transportation. Copper prices are projected to average US$8,997 this year, edging down slightly to US$8,287 in 2023.
Higher commodity prices are putting upward pressure on the Canadian dollar, although that’s being offset somewhat by shifts in expectations for monetary policy movements here and elsewhere. The Bank of Canada was initially more hawkish in its policy actions, boosting the loonie’s value against the U.S. dollar and the euro. But with the Federal Reserve and the European Central Bank now messaging tighter monetary actions, the Canadian dollar has eased back and is now expected to average US$0.79 this year and US$0.80 in 2023.
The bottom line?
Pandemic-fuelled uncertainty created broad expectations of a sluggish recovery. In contrast, growth is booming. Caught by surprise, global business is scrambling to ramp up production to meet demand. Supply chains, normally fine-tuned to perfection, are a mess, but will soon pull themselves back together. Inflation, perhaps the clearest signal of the economy’s strength, will moderate as central banks swing into action. At the same time, the effects of the Omicron variant threaten to delay the economy’s progress—and perhaps create space to better prepare for the inevitable upswing in activity. It’s all a bit chaotic, but the core story is a good one: There are clear rewards for those who are more prepared to deliver the goods over the next two years. Check out EDC Economics’ latest Global Economic Outlook and discover more valuable insights.
Launching Zero Waste Economic Transformation Lab – guelph.ca
Co-operators contributes $350,000 to fund lab start-up and first project
Guelph, Ont., January 20, 2022 – Today, representatives from Co-operators, the City of Guelph, Wellington County and the Guelph Smart Cities Office launched the Zero Waste Economic Transformation Lab, a new initiative under the Circular Opportunity Innovation Launchpad (COIL).
The lab will apply circular economy theories to develop and test new opportunities to reduce or redirect waste. As the lab’s founding corporate supporter, Co-operators is pledging a $350,000 investment to establish the lab and fund its first project to divert construction and demolition materials from landfill. Ongoing operations will be funded through public and private grants and corporate investments.
The commitment from Co-operators represents a unique local public-private sector collaboration to tackle factors contributing to climate change. It will also help extend the range of tools and innovation infrastructure developed by COIL and Our Food Future since 2019, adapting them to the construction and demolition sector as well as others in the future.
“Co-operators is committed to embedding sustainability into all areas of our business. We are especially excited that through COIL, we can help to sustainably divert materials away from landfills and keep them in the local economy,” says Chad Park, vice president of Sustainability and Citizenship at Co-operators. “Through this collaborative effort, we can reduce the environmental, social, and financial costs to governments, businesses and Canadian communities, while making them more sustainable and resilient.”
“We know that 45 per cent of global carbon emissions are generated when we manufacture new products, and construction materials are particularly resource intensive,” says Barbara Swartzentruber, executive director of the Smart Cities Office. “Redesigning systems to recycle and extend the life of materials is an essential part of fighting climate change and aligns with Guelph’s climate change objectives.”
The lab’s projects will bring together researchers, industry stakeholders, entrepreneurs and government to reduce waste in specific material sectors, including salvaged materials from properties following insurance claims.
As with Our Food Future, another Smart Cities initiative, COIL’s lab will focus on designing scalable systems-level solutions that create new social, economic and environmental benefits.
“Our comprehensive circular economy approach considers not only the reuse, recovery and recycling of materials that were previously wasted, it addresses processes and decisions that prevent waste generation across an entire value chain,” says David Messer, manager, COIL.
The Zero Waste Economic Transformation Lab’s projects will follow a process that can be replicated and applied across all waste streams in industries such as textiles, plastics and electronics. The lab will work with other cities, labs and circular economy innovation organizations across Canada to share best practices, advise on future strategies and collectively advance sector transformation using the circular economy approach.
The lab’s current national collaborators and advisors include:
“This is an incredible example of public-private sector collaboration. It’s fantastic to see a major local employer stepping up and working together with the City of Guelph and County of Wellington to tackle this global issue.”
Cam Guthrie, Mayor, City of Guelph
“This program will also help the County come closer to achieving our sustainability objectives, environmental visioning and economic growth plans by creating jobs and helping businesses with their waste challenges.”
Jana Burns, Wellington Place Administrator, Museum, Archives and Economic Development, Wellington County
“More broadly, however, this program will play an important role in supporting several key priorities within Guelph’s Strategic Plan as well as wider city priorities. It will accelerate partnerships and innovations in our economy. And it will further integrate businesses into our community and cultural fabric.”
Scott Stewart, Chief Administrative Officer, City of Guelph
Launched in April 2021 with $5 million in funding from the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), COIL is an innovation platform and activation network aimed at creating, proving and scaling transformative solutions across the food and environment sectors in southern Ontario that will move Canada toward a more sustainable, circular economy.
COIL builds on the Our Food Future Smart Cities initiative which is close to meeting its goal of creating 50 new circular businesses and collaborations.
Funding for COIL program participants is provided in collaboration with 10C’s Harvest Impact Fund, a community social finance fund developer with Our Food Future aimed at supporting impactful projects to strengthen the Guelph and Wellington communities.
Co-operators is a leading Canadian financial services co-operative, offering multi-line insurance and investment products, services, and personalized advice to help Canadians build their financial strength and security. The company has more than $61.5 billion in assets under administration. Co-operators has been providing trusted guidance to Canadians for the past 76 years. The organization is well known for its community involvement and its commitment to sustainability. Achieving carbon neutral equivalency in 2020, the organization is committed to net-zero emissions in its operations and investments by 2040, and 2050, respectively. Co-operators is also ranked as a Corporate Knights’ Best 50 Corporate Citizen in Canada and is listed among the Best Employers in Canada by Kincentric.
About Our Food Future
Inspired by the planet’s natural cycles, a circular food economy reimagines and regenerates the systems that feed us, eliminating waste, sharing economic prosperity and nourishing our communities. In Guelph-Wellington, we are working to build a regional circular food economy that will achieve a 50 per cent increase in access to affordable nutritious food, 50 new circular economy businesses and collaborations, and a 50 per cent increase in circular economic benefit by unlocking the value of waste.
Our Food Future is one of the ways the City of Guelph and Wellington County are contributing to a sustainable, creative and smart local economy that is connected to regional and global markets and supports shared prosperity for everyone.
David Messer, Manager, COIL
Smart Cities Office, Office of the Chief Administrative Officer
City of Guelph
519-822-1260 extension 3661
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