Economy

Thursday November 3, 2022

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 …

Saturday October 29, 2022

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 …

Friday October 28, 2022

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) 

 

Thursday September 8, 2022

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 …

 

Wednesday June 29, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday June 29, 2022

What are they thinking?

June 24, 2022

In the days leading up to Canada Day, the same people who brought you the trucker convoy that occupied Ottawa are pledging to return on Friday, over the weekend and on weekends during the summer.

So, of course, 24 members of the Conservative party caucus agree to meet with the convoy organizers in a government building secured by those MPs for a friendly little gathering. Just to make them feel welcome no doubt. What on earth are they thinking?

This, at the same time as the man who will almost certainly be the next Conservative leader, Pierre Poilievre, still hasn’t commented publicly about the decision overturning Roe v. Wade in the U.S.

Poilievre has something to say about just about everything else, but not on one of the most important legal decisions in a half century? This, from a party that insists it will not reopen the abortion question in Canada, even though one of the leadership candidates is staunchly anti-abortion and socially conservative? She, who almost certainly cannot win the leadership, will be in a position to throw her support behind the man most likely to win — the aforementioned P.P.? Could his silence be linked to needing that social conservative support? What on earth is he thinking? (Hamilton Spectator Editorial)