growth

Thursday October 24, 2024

The Bank of Canada's interest rate cut offers brief relief, but Canada's deeper economic challenges—stagnant productivity, population pressures, and weak growth—keep the country stuck under stormy skies.

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday October 24, 2024

Brief Ray of Sunlight in Canada’s Stormy Economic Sky

June 6, 2024

Canada’s economy feels a lot like a rainy autumn day where, just as the clouds momentarily part to let in a sliver of sunlight, the dark skies quickly swallow it again. The Bank of Canada’s recent interest rate cuts are that fleeting patch of blue—a welcome break for mortgage holders and consumers facing high borrowing costs. But the broader economic forecast remains stormy, with clouds of weak productivity, strained public services, and a widening prosperity gap between Canada and its peers gathering overhead.

The temporary relief from interest rates being lowered offers some households a reprieve, much like the sun warming your face just long enough for you to think, maybe the worst is over. But that moment of optimism is short-lived when you realize the downpour hasn’t stopped—it’s just getting started. Canada’s structural problems—stagnant GDP per capita, high immigration without sufficient infrastructure, and sluggish business investment—continue to drench any hope for sustained economic growth.

News: Bank of Canada cuts its key interest rate by a half-point to 3.75%

Despite falling inflation, the Bank of Canada is likely to keep interest rates steady, raising questions about an immediate drop in borrowing costs.

March 5, 2024

Despite the IMF projecting 1.3% growth in 2024 and better numbers in 2025, these figures barely keep pace with Canada’s population boom. The pie may grow a little, but the extra mouths at the table are taking bigger bites. Meanwhile, across the border, America’s economic engine is humming at full throttle, widening the wealth gap between the two countries to levels unseen in decades. Australia and the UK are pulling ahead, too, leaving Canadians wondering how a once-wealthy nation ended up falling behind even in the pack of its Commonwealth cousins.

To some, it feels like Canada’s economic ship is springing leaks faster than we can plug them, weighed down by interprovincial trade barriers, rising taxes, and regulatory red tape. Meanwhile, businesses are keeping billions in capital idle like passengers clutching lifeboats, unwilling to dive in and invest under such uncertain conditions. And the government, focused more on redistributing wealth than creating it, continues to prioritize social spending over pro-growth policies that could set the country on a more prosperous course.

Analysis: Tepid economic growth, combined with a population boom, has hit Canada’s standing among rich countries

May 2, 2020

The sun may peek out from time to time—like this rate cut—but until deeper reforms address the underlying structural problems, it’s clear we are sailing into rough waters. Canada can’t simply count on the clouds to part. The country must act decisively to boost productivity, ease immigration pressures, and attract investment—before we find ourselves stranded in an economic fog we can’t navigate out of.

Because if there’s one thing worse than a storm, it’s getting so used to the clouds that you forget what clear skies look like. (AI)

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In Canada, today’s interest rate cut from the Bank of Canada—a pretty significant half-point reduction—offers a glimmer of hope amid an otherwise turbulent economic landscape. A family straddles on the roof of their home during a flood, taking respite from the storm as Tiff Macklem unveils the “Rate Cut” document. Around them swirls the rising tides and debris of debt, wreckage of lost innovation, stagnant wages, and soaring living costs, a stark reminder that this relief is temporary and the underlying issues still loom ominously beneath the surface.

A curious irony arises when we look southward to the United States. Despite robust economic growth, many Americans grapple with a sense of pessimism, fixating on income inequality, political instability, and inflation. Former President Trump’s exaggerated claims (aka lies) about the economy being in disarray only serve to amplify this narrative.

In contrast, many Canadians cling to the comforting illusion that our economy is stable, even as GDP per capita declines and our living standards lag behind not only the U.S. but also countries like Australia and the UK. This disconnect underscores a crucial point: Canadians may be too quick to celebrate fleeting moments of good news, such as interest rate cuts, while neglecting the mounting economic challenges that surround them.

Before dismissing this perspective as aligning with Pierre Poilievre’s “everything seems broken in Canada” rhetoric, it’s essential to recognize that the economy has been trending downward for decades. Federal fiscal policies—whether under Conservative, Liberal, or Liberal/NDP leadership—have all played a role in shaping the current disappointing state of the Canadian economy compared to similarly sized nations. Sloganeering will not lift Canada out of its economic malaise, nor will a complacent status quo. Forget the adversarial bunk that makes working across the aisle to get things done for the benefit of all in the long term. Setting aside partisan politics, we must demand real solutions to steer Canada back on the right path.

 

Wednesday March 27, 2024

In the face of Ontario Premier Doug Ford's optimistic portrayal of the province's economy, a reality check reveals underlying weaknesses including sluggish growth, rising business bankruptcies, and challenges stemming from rapid population growth and macroeconomic headwinds.

March 27, 2024

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday March 27, 2024

Ontario’s Economic Mirage: A Reality Check Against Ford’s Optimism

Ford's fiscal policies, including the unconstitutional Bill 124, have led to mismanagement and harm to essential workers and taxpayers, reflecting a pattern of ideological posturing and reckless spending detrimental to Ontarians' well-being.

March 16, 2024

In the midst of Ontario Premier Doug Ford’s buoyant proclamations about the province’s economic prowess, it’s high time for a sobering reality check. While Ford paints a picture of boundless opportunity and prosperity, the truth lies in the harsh realities facing Ontario’s economy, which demand far more attention than rosy rhetoric can conceal.

Ford optimistically points to multi-billion-dollar investment plans from major corporations like Stellantis and Volkswagen, citing them as evidence of Ontario’s economic vibrancy. Yet, this narrow focus on select corporate investments obscures the broader landscape of economic challenges facing the province. The surge in business bankruptcies, as noted by bank economists, speaks volumes about the underlying weaknesses that Ford’s narrative conveniently sidesteps.

News: Ontario to unveil provincial budget Tuesday, as province faces growing economic uncertainty

Loud budgeting emerges as a powerful societal roar against corporate exploitation, stagnant wages, and governmental financial burdens, empowering individuals to reclaim control over their finances and challenge systemic inequities.

March 11, 2024

Furthermore, Ford’s claims about record corporate investment fail to acknowledge the broader macroeconomic headwinds buffeting Ontario. High interest rates and slower global growth are casting a shadow over the province’s economic prospects, according to reputable economic forecasts. While Ford may tout specific projects, the broader economic context demands a more nuanced and cautious approach.

A critical aspect often overlooked in Ford’s narrative is the stark reality of Ontario’s declining real GDP per capita. Despite claims of economic growth, the metrics tell a different story—one of stagnation and decline for the average Ontarian. The disconnect between headline GDP figures and the lived experiences of ordinary citizens underscores the need for a more honest assessment of the province’s economic health.

October 20, 2021

Moreover, Ford’s optimism neglects the pressing challenges posed by rapid population growth. While headline GDP figures may appear robust, they mask the strains on public services and infrastructure brought about by Ontario’s expanding population. The costs of accommodating this growth, coupled with inflation and higher interest rates, present a formidable fiscal challenge that cannot be wished away with optimistic rhetoric.

In light of these realities, it’s imperative for policymakers to pivot from the allure of optimism to the pragmatism of addressing systemic challenges. Instead of fixating on flashy corporate investments, the focus should be on bolstering small and medium-sized enterprises—the lifeblood of Ontario’s economy—and fostering inclusive growth that benefits all residents, not just a select few.

As Finance Minister Peter Bethlenfalvy prepares to table the budget, it’s time for a shift in tone—one that acknowledges the complexities and uncertainties facing Ontario’s economy. Rather than chasing elusive records of corporate investment, the government must prioritize policies that promote resilience, sustainability, and shared prosperity for all Ontarians.

News: Ontario budget pours $2B into home care, but critics say it ignores long ER wait times

June 9, 2022

While optimism has its place in politics, it must be tempered by a clear-eyed assessment of reality. Ontario’s economic challenges are too pressing to be obscured by rhetoric and hyperbole. Leaders need to confront these challenges head-on with honesty, humility, and a commitment to meaningful action. Only then can Ontario chart a course towards a truly prosperous and inclusive future for all its residents.

Additionally, it’s crucial to note that according to recent reports, Ontario’s economy expanded at a sub-trend 1.3% pace through the first three quarters of last year, slightly outpacing the rest of Canada. However, the surge in business bankruptcies amidst economic weakness underscores the fragility of this growth. These economic tidbits provide a stark contrast to Ford’s glowing portrayal of Ontario’s economic landscape. (AI)

 

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 October 26, 2017

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday October 26, 2017

Economic statement was where Morneau wanted it: on the middle class

April may be the cruellest month to a poet, but October has been anything but kind to the Liberal government — particularly Finance Minister Bill Morneau.

October 19, 2017

Whether it was allegations of conflict of interest over his continued multimillion-dollar stake in the family business, or his heavily panned efforts at small business tax reform, the Liberals suddenly found themselves fending off suggestions that they weren’t at all the party of the middle class.

That’s where Tuesday’s fall economic update fits in. Announcing that the Canada Child Benefit will be indexed to inflation next July — a full two years ahead of schedule — and the decision to increase the Working Income Tax Benefit are the proverbial shiny objects intended to get Canadians to focus on some good news.

“This is about having trust in Canadians,” Morneau told reporters following the release of the 74-page document called Progress for the Middle Class. “Investing in Canadians was the right thing to do.”

Just in case you missed all the good news, let’s sum it up here.

October 11, 2017

Economic growth: up! Employment: up! Wages: up! Revenues: up!

At any other time, these strong economic indicators would be the most prominent feature in news coverage.

But this last period hasn’t been just business as usual for the Liberals. The focus has been on how Morneau handled his personal finances, not on his handling of the country’s finances.

At the Liberal cabinet retreat last month, Prime Minister Justin Trudeau told reporters that the Liberals didn’t get elected two years ago by going door to door promising to improve Canada’s macroeconomic indicators. It was a good line, and elicited chuckles from his assembled cabinet ministers.

Morneau, as is his practice, refers to all these things as “investing” in Canadians. Investments that will have a positive impact even if, for example, the current round of NAFTA talks fails. Even though consumer spending has already led to historically high levels of household debt. (Source: CBC News) 

 

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Thursday March 24, 2016

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator - Thursday March 24, 2016 Canada government tries to fend off critics worried about deficits Canada's government on Wednesday sought to deflect criticism that it had condemned the country to years of budget deficits, saying it could balance the books within five years if efforts to boost the economy succeed. The ruling Liberals on Tuesday projected a C$29.4 billion ($22.3 billion) deficit for fiscal 2016-17, nearly three times larger than what they promised during last year's election campaign. The Liberals, who say the spending will help boost growth, gave no target date for returning to balance, with the budget still expected to show a deficit of C$14.3 billion in 2020-21. Opposition politicians and influential media commentators said they feared Canada would face a long string of shortfalls of the kind it has not seen in two decades. This could cause problems for Prime Minister Justin Trudeau. "We're hoping to increase the growth rates," Trudeau told CBC Radio on Wednesday. If the government can stimulate the economy, "we get to balance in the coming five years," he said. "There is a track to that if we increase the growth in the economy." Trudeau faces no immediate political threat, since he only took power last November and is sitting high in the polls. But the longer the deficits last, the greater the potential political risk. (Source: Reuters) http://ca.reuters.com/article/domesticNews/idCAKCN0WP1R2 Canada, Justin Trudeau, Bill Morneau, growth, economy, budget, debt, spending, government

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday March 24, 2016

Canada government tries to fend off critics worried about deficits

Canada’s government on Wednesday sought to deflect criticism that it had condemned the country to years of budget deficits, saying it could balance the books within five years if efforts to boost the economy succeed.

The ruling Liberals on Tuesday projected a C$29.4 billion ($22.3 billion) deficit for fiscal 2016-17, nearly three times larger than what they promised during last year’s election campaign.

The Liberals, who say the spending will help boost growth, gave no target date for returning to balance, with the budget still expected to show a deficit of C$14.3 billion in 2020-21.

Opposition politicians and influential media commentators said they feared Canada would face a long string of shortfalls of the kind it has not seen in two decades. This could cause problems for Prime Minister Justin Trudeau.

“We’re hoping to increase the growth rates,” Trudeau told CBC Radio on Wednesday.

If the government can stimulate the economy, “we get to balance in the coming five years,” he said. “There is a track to that if we increase the growth in the economy.”

Trudeau faces no immediate political threat, since he only took power last November and is sitting high in the polls.

But the longer the deficits last, the greater the potential political risk.  (Source: Reuters)