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Economy

Thursday December 15, 2022

December 15, 2022 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday December 15, 2022

Household debt levels could cripple economy, economist warns

November 3, 2022

Canadian household debt levels have increased enough to spark a recession when combined with interest rate hikes, says one economist, after Statistics Canada released its latest report Monday.

Jim Stanford, the director of the Centre for Future Work, said the debt levels are high enough that, as interest rates rise, disposable income ordinarily spent on consumer goods is being used to pay debt.

“Chances are you’re going to see an increased interest bite from household budgets equal to about two or three per cent of GDP,” he said. “That alone is enough to put the economy into a recession, let alone the other impacts on business investment, for example.”

The standard definition of a recession is when the country’s gross domestic product (GDP) contracts for at least two quarters.

Household consumption accounts for more than 50 per cent of Canada’s GDP, Stanford said, making it the biggest single contributor to economic growth.

Stanford said $16 billion in additional interest payments made over three months is worth more than half of a percentage point of Canada’s GDP.

Statistics Canada’s new figures show for every dollar of disposable income in the third quarter of 2022 there was $1.83 in credit market debt. The figure is a slight increase from the previous quarter and up from $1.77 last year.

Thursday September 8, 2022

The figures come as the Bank of Canada has continued to raise its key policy rate. Last week it hiked the key policy rate another 50 basis points to 4.25 per cent in an effort to fight inflation.

Mortgage payments also hit Canadians hard with interest payments expanding by more than 16 per cent, which is the largest increase on record, according to the StatsCan report.

“It’s certainly hard evidence that the rising interest rates are wreaking havoc with household finances,” Stanford said. “We’ve never seen an interest shock like that to Canadian households before.”

He said he expects the situation to worsen in the coming months.

On Monday, Bank of Canada governor Tiff Macklem defended the interest rate hikes in Vancouver in front of the Business Council of British Columbia. He said they are working and the country needs to stay the course.

“If we under-tighten, inflation is going to stay too high. Canadians are going to have to continue to endure the hardship of higher inflation,” Macklem said.

He said the bank was surprised at how international events, like the Russian invasion of Ukraine and supply chain issues powered inflation.

He said such trends will make it more difficult to bring inflation down than it has been in the past. (The Toronto Star) From sketch to finish, see the current way Graeme completes an editorial cartoon using an iPencil, the Procreate app, and a couple of cheats on an iPad Pro … These sped up clips are posted to encourage others to be creative, to take advantage of the technology many of us already have and to use it to produce satire. Comfort the afflicted. Afflict the comforted.

https://mackaycartoons.net/wp-content/uploads/2022/12/2022-1215-NATshort.mp4

 

Posted in: Canada Tagged: 2022-42, Bank of Canada, Canada, christmas, debt, Economy, inflation, recession, Santa Claus, spending, Tiff Macklem

Thursday November 3, 2022

November 3, 2022 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday November 3, 2022

Freeland to release mini-budget today as economists warn a recession is coming

Finance Minister Chrystia Freeland will table her fall economic statement today — a roadmap of what’s to come from the federal government as the economy stands on the brink of a recession.

July 9, 2020

Prime Minister Justin Trudeau faced some heat when he told reporters during the 2021 election campaign that he doesn’t pay much attention to monetary policy and the Bank of Canada’s mandate to keep inflation at manageable levels.

“You’ll forgive me if I don’t think about monetary policy. You’ll understand, I think about families,” Trudeau said at a Vancouver campaign stop.

But now, with inflation at levels not seen in decades, monetary policy is something virtually everyone in government is seized with as the central bank hikes rates to push down sky-high prices.

Under Canada’s system, monetary policy (interest rates) is set by the Bank of Canada, while fiscal policy (spending) is up to the elected government.

Ontario Liberal MP Marcus Powlowski said that with interest rates so high, “times are changing.”

“I think there’s more of an opportunity to be frugal,” he said. “Any debt we incur is going to grow.”

MP Rachel Bendayan, the associate minister of finance, said the government has been “extremely fiscally responsible” and is “planning on continuing on that track.”

May 13, 2022

Conservative Leader Pierre Poilievre has made it clear what he wants: no new spending unless there are cuts elsewhere.

Anything else would be “pouring inflationary fuel on the fire,” Poiliere said in question period Wednesday.

NDP Leader Jagmeet Singh said he wants Freeland to address what he calls corporate greed and reform the employment insurance (EI) program.

Freeland has signalled already the government is expecting tough times ahead.

The era of cheap cash is over — rising rates will make it more difficult for businesses to borrow money, which could lead to downsizing and job losses.

The sizeable jump in the Bank of Canada’s policy interest rate — it’s gone from just 0.25 per cent in January to 3.75 per cent today — has also forced the government to rethink how much it will spend.

The cost to service the federal debt is relatively low right now, but it’s poised to increase in the short and medium term.

April 8, 2022

There are early signals suggesting that Ottawa’s fiscal health in the short term could be much better than predicted, thanks to higher oil prices and the growth in personal and corporate taxes in this era of high inflation.

According to figures released last week through the Public Accounts of Canada, the government’s fiscal ledger, the budget deficit for the 2021-22 fiscal year came in at $90.2 billion — substantially less than the $113.8-billion deficit Freeland projected in her April budget.

In an economic and fiscal outlook published last month, the PBO forecast a budget deficit of $25.8 billion — about 0.9 per cent of GDP — for the 2022-23 fiscal year if the government pursues “status quo policy” — meaning no major new spending on programs. That is significantly smaller than the April budget’s forecast of $52.8 billion. (CBC) 

From sketch to finish, see the current way Graeme completes an editorial cartoon using an iPencil, the Procreate app, and a couple of cheats on an iPad Pro …

https://mackaycartoons.net/wp-content/uploads/2022/11/2022-1103-NATshort.mp4
Posted in: Canada Tagged: 2022-36, Budget, Canada, Chrystia Freeland, Economy, fire, Jagmeet Singh, Pierre Poilievre, recession, restraint, spending, Tiff Macklem

Saturday October 29, 2022

October 29, 2022 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday October 29, 2022

It’s not a trick: Your Halloween treats are getting smaller

September 29, 2022

Standing in the centre aisle of the drugstore, with its seasonal display of spooky bat decorations, vampire teeth and fun-sized bags of chocolate, don’t be surprised if something seems off.

It isn’t a nightmare. Your Halloween candy just got smaller.

A bag of dark chocolate Hershey’s Kisses is now a couple of ounces smaller than before. A two-pack of Reese’s Peanut Butter Cups is a tenth of an ounce lighter. And Cadbury milk chocolate bars are about 10 percent skimpier.

Consumers can partly blame “shrinkflation” — the phenomenon of manufacturers reducing the size of their products rather than increasing the price. Over the past two years, companies have downsized paper products, salty snacks and many other consumer packaged goods as their ingredient, labor and transportation costs have skyrocketed.

December 10, 2021

But it’s also part of a years-long plan to make Americans’ treats less caloric. In 2017, Mars Wrigley, Ferrero (owner of Nestlé’s American candy business), Ferrara Candy and Lindt (which owns Ghirardelli Chocolate and Russell Stover Chocolates) joined forces to decrease calorie counts, offer a broader range of portion sizes and provide labeling that lists calories on the front of their packaging.

The National Confectioners Association last month announced that 85 percent of chocolate and candy sold today comes in packaging that contains 200 calories or fewer per pack. And nearly 100 percent of candies sold now have front-of-pack calorie labels, up from just over half in 2016.

“Five years ago, we were behind the ball on front-of-pack labeling,” said Christopher Gindlesperger, spokesman for the association. “Those four companies, that make up about half of the market, drove a remarkable change and rallied the rest of the industry.”

December 1, 2007

Other moves are intended to provide lighter options for candy consumers. Hershey, for instance, introduced “thins” versions of classic candies like Reese’s cups, York patties and Kit Kats. The company has launched an increasingly long list of zero-sugar options, from Jolly Ranchers to Twizzlers.

In short, many candy sizes and packages are shrinking but prices aren’t.

“All of these companies are having to make these decisions based on cost,” Wyatt said. “But I can say with certainty candy companies committed to these [calorie reductions and front-of-label calorie counts] before that inflation started. The products that have transparent labeling outperform others.”

Candy may in fact be the category that first experienced shrinkflation, Dworsky said. In the 1950s, he said, candy companies told vending machine operators they would have to raise prices, going from 5 cents per candy bar to 6 cents. The vending machine folks balked and asked the candy companies just to make the products smaller.

Dworsky’s message: The only way for consumers to protect themselves from shrinkflation is by memorizing product weights.

“It will go too far when you open that carton of eggs and there are only 11 inside,” he joked. (The Washington Post) 

From sketch to finish, see the current way Graeme completes an editorial cartoon using an iPencil, the Procreate app, and a couple of cheats on an iPad Pro …

https://mackaycartoons.net/wp-content/uploads/2022/10/2022-1029-MISCshort-1.mp4
Posted in: Business, Lifestyle Tagged: 2022-36, candy, consumer, costume, Economy, Halloween, inflation, microscope, Science, shrinkflation

Friday October 28, 2022

October 28, 2022 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday October 28, 2022

Freeland warns of ‘difficult days ahead’ as Canada’s economy shows sign of weakness

Finance Minister Chrystia Freeland issued a warning to Canadians Wednesday — the coming months won’t be pretty as rising interest rates slow a once red-hot economy and force some people out of their jobs.

June 17, 2022

The Bank of Canada’s recent rate hikes to tame sky-high inflation will increase borrowing costs for businesses and consumers alike, which will send shockwaves throughout the economy, Freeland said.

Speaking at an auto industry conference in Windsor, Ont., Freeland said she would be honest with Canadians about the roadblocks that lie ahead and the threat of higher unemployment and mortgage rates — developments that could hurt many households.

“Our economy will slow. There will be people whose mortgage rates will rise. Businesses will no longer be booming. Our unemployment rate will no longer be at its record low. That’s going to be the case in Canada. That will be the case in the U.S. and that will be the case in economies big and small around the world,” Freeland said.

“There are still some difficult days ahead for Canada’s economy. To say otherwise would be misleading.”

January 27, 2022

The Bank of Canada — like other central banks, including the U.S. Federal Reserve — has been aggressively raising rates this year to establish price stability and achieve its 2 per cent inflation target.

With inflation so sticky, economists are expecting more rate hikes to reduce demand and cool the economy. That could prompt a recession sometime in 2023.

While inflation has slowed somewhat in recent months as energy prices have stabilized, Freeland said the government will not be able to help everyone ride the inflationary wave.

“We cannot compensate every single Canadian for all of the costs of inflation driven by a global pandemic and Putin’s invasion of Ukraine,” Freeland said.

But she promised relief for the poorest Canadians who are most vulnerable to sudden spikes in the cost of food and rent.

June 22, 2021

During question period in the House of Commons on Wednesday, Conservative Party leader Pierre Poilievre said the federal Liberal government’s “half-trillion dollar inflationary deficits” over the past two fiscal years are responsible for the higher costs.

Pointing to the planned low-income supports, Poilievre said the prime minister has done “nothing for the vast majority of struggling families.”

“Even the small minority who do [receive the supports] will find it gobbled up by increased inflation,” he said, citing a recent RBC Royal Bank report that found the average family will lose $3,000 in purchasing power this year as a result of higher prices and interest rates.

He called on the government to scrap planned hikes to the federal carbon levy — something Poilievre has called a “triple, triple, triple tax” that will drive food prices higher because it will impose added costs on all parts of the supply chain.

August 12, 2022

In the face of Tory criticism, Freeland said the federal government will continue to tighten its belt in the coming months so that Ottawa doesn’t inadvertently drive inflation.

“Canadians are cutting back on costs and so too is our government. That’s our part … to not make inflation worse and more enduring,” she said.

Asked later by reporters if the government has more inflation relief planned, Freeland said now is a time for fiscal restraint. (CBC) 

 

Posted in: Canada Tagged: 2022-36, Bank of Canada, Canada, Economy, growth, inflation, interest, Justin Trudeau, mortgage, rate, Rental and Dental, vice

Thursday September 8, 2022

September 8, 2022 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday September 8, 2022

Justin Trudeau’s hands-off approach to inflation is becoming untenable

May 10, 2022

Prime Minister Justin Trudeau faces growing pressure to help Canadian households offset surging inflation as he meets with his cabinet in Vancouver this week to set his government’s fall agenda.

Unlike many of his global peers, Trudeau has avoided taking new measures recently to ease the burden of rising prices, even with inflation at its highest level since the early 1980s.

That may reflect a growing political sensitivity to criticism his government overspent during the pandemic, leaving the country with less fiscal room to tackle big future challenges like climate change. But there is also a wariness that doling out money to ease price pain may only wind up stoking more inflation.

Staying on the sidelines, however, has become increasingly difficult.

April 1, 2022

Trudeau is riding low in opinion polls after nearly seven years in power. And the likely election next month of Pierre Poilievre as new leader of the Conservative Party will add more urgency to the inflation debate. Poilievre has focused relentlessly on the cost of living during his leadership campaign, using the label “Justinflation” as he pins the blame on Trudeau.

Canada’s economy is doing better than most, thanks to high prices for commodities, its abundance of energy and strong population growth. Worker shortages are widespread. That means the nation would probably struggle more than peers to absorb more government spending that adds to demand.

From a short-term fiscal perspective, the government can use revenue windfalls to pay for any new measures it wants to take. The most likely scenario is something along the margins, targeted to those who need it most and in line with the Trudeau government’s net-zero commitments — so no blanket rebates for drivers filling up their cars with gasoline.

So far this year, the government has been pulling in billions more than anticipated.

June 17, 2022

National income — the best indicator for revenue — is on track to come in nearly $100 billion (US$77 billion) higher in 2022 than Freeland forecast in her April budget. That could mean as much as $15 billion in additional revenue.

For the first three months of the current fiscal year — April through June — the federal government ran a surplus, a surprise start given the $53 billion deficit projected for the year. The preliminary deficit for the fiscal year that ended March 31 was below $100 billion, versus $114 billion forecast earlier this year.

But it would be wrong to project those trends forward. (Financial Post) 

From sketch to finish, see the current way Graeme completes an editorial cartoon using an iPencil, the Procreate app, and a couple of cheats on an iPad Pro …

https://mackaycartoons.net/wp-content/uploads/2022/09/2022-0908-NAT.mp4

 

Posted in: Canada Tagged: 2022-29, Canada, cartoon process, devil, Economy, inflation, Interest rates, Justin Trudeau, Justinflation, leadership, Pierre Poilievre, Tiff Macklem
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Please note…

This website contains satirical commentaries of current events going back several decades. Some readers may not share this sense of humour nor the opinions expressed by the artist. To understand editorial cartoons it is important to understand their effectiveness as a counterweight to power. It is presumed readers approach satire with a broad minded foundation and healthy knowledge of objective facts of the subjects depicted.

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