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Trudeau defends his economic track record as new data shows GDP contracted last quarter

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Prime Minister Justin Trudeau defended his government’s economic performance Thursday by touting investments in housing and dental care when asked about new data that shows the economy actually contracted in the last quarter.

Statistics Canada reported this morning that the Canadian economy shrank at an annualized pace of 1.1 per cent in the third quarter — a performance much worse than what some forecasters expected for the July through September period.

In October, the Bank of Canada forecast that the economy would actually grow by roughly 0.8 per cent in that quarter.

Finance Minister Chrystia Freeland’s fall economic statement, tabled last week, cited a September survey of private sector economists projecting the economy would grow at least a little in the third quarter. The weak economic performance could undermine that document’s fiscal projections.

The new StatsCan data suggests the economy is underperforming even the relatively pessimistic growth projections from the central bank and others.

The slump was driven in part by reduced exports, including a steep decline in refined petroleum energy products, StatsCan said.

The U.S. GDP grew by 5.2 per cent in the same period.

Conservative Leader Pierre Poilievre pounced on the poor data, saying Trudeau has “led the economy into a ditch.”

The negative economic growth comes after the Bank of Canada went on an aggressive rate-hiking campaign to drive down red-hot inflation.

Trudeau addresses shrinking Canadian economy in 3rd quarter

 

Featured VideoPrime Minister Justin Trudeau said the government is investing in housing and affordability after Statistics Canada reported the country’s GDP shrank 0.3 per cent in the third quarter.

The intended effect of this effort — an economic slowdown to restore price stability — appears to be panning out.

“We know that Canadians are facing challenging times and have for a long stretch now,” Trudeau said.

“That’s why we’ve been stepping up with direct supports for Canadians,” he said, citing past GST rebates and rental relief for low-income Canadians.

Trudeau said Ottawa would push ahead with a housing accelerator fund, a program that floats money to cities that cut building-related red tape to get more units built.

Prime Minister Justin Trudeau and Deputy Mayor of Ajax Marilyn Crawford arrive for a housing announcement in Ajax, Ont. on Thursday, Nov., 30, 2023. (Christopher Katsarov/Canadian Press)

He said the government would come through with more low-cost loans for homebuilders to get affordable rental homes built to help deal with the country’s acute housing crunch.

He also said the federal dental care program for children, and a forthcoming expansion of rhe program for eligible seniors, will save families money when every extra dollar counts.

Trudeau claimed that Ottawa is managing its finances in “a fiscally responsible way” and the federal government could come through with more relief for Canadians if the economy slips into a recession and unemployment rates move higher.

“We have room to respond if there is more to do,” Trudeau said.

“We have the lowest deficit in the G7, the best debt-to-GDP ratio in the G7.”

He accused Poilievre of planning to quickly eliminate the federal deficit through harmful cuts to public services. “Conservatives propose cuts in services and programs as a way of creating growth, which makes absolutely no sense,” Trudeau said.

Poilievre warns of ‘stagflation’ risk

While Canada’s debt servicing costs are lower than those faced by some other countries, Freeland’s fall economic statement warns that they are expected to balloon.

With interest rates at a 20-year high, the cost to borrow to carry the federal government’s $1.2-trillion debt has spiked from $20.3 billion in 2020-21 to $46.5 billion in this fiscal year.

Poilievre said Canada could be facing “stagflation” — high inflation combined with high unemployment and slack demand for goods and services.

 

Poilievre, Anand spar over new economic numbers

 

Featured VideoConservative Leader Pierre Poilievre said the U.S. economy is ‘roaring’ while Canada’s is ‘snoring.’ Treasury Board President Anita Anand dismissed what she called ‘trite rhymes’ and touted the Liberals’ economic plan.

The inflation rate has levelled off in recent months and the country’s unemployment rate is still relatively low at 5.7 per cent.

And while the third quarter GDP figure was a big miss, Statistics Canada did revise up its numbers for the second quarter.

The statisticians at the federal agency now say the economy grew by 1.4 per cent in the April-June period, higher than the figure they previously reported.

But Poilievre said Canada’s record just doesn’t compare to what’s transpired in the U.S.

“Why is it that the American economy is roaring while the prime minister’s economy is snoring?” Poilievre said in question period.

Treasury Board President Anita Anand said the International Monetary Fund (IMF) projects that Canada will have the highest economic growth in the G7 next year.

Rachel Bendayan, the parliamentary secretary to the minister of Finance, said the Conservatives are “talking down” the economy while the Liberals are focused on their economic plan, which includes delivering more homes and boosting climate-friendly industries.

Industry Minister Francois-Philippe Champagne also responded to Conservative criticism by touting a recent multi-billion dollar investment by Dow, a U.S. chemical company, in Fort Saskatchewan, Alta.

“There’s one number the Conservatives never mentioned. We’re third for foreign direct investment,” Champagne said. “This is how you lead a country. This is how you lead an economy.”

 

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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