Tiff Macklem

Thursday December 15, 2022

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.

 

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 …

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 …

 

Tuesday June 21, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday June 21, 2022

Freeland defends budget after Scotiabank accuses feds of ‘doing nothing’ on inflation

A cut in planned government spending could help tame rampant inflation and reduce pressure on the Bank of Canada to hike interest rates, according to a report from Scotiabank.

June 17, 2022

The report from the bank’s chief economist Jean-Francois Perrault and modelling director René Lalonde claims that Canadian fiscal policymakers are “doing nothing of any significance to slow inflation at the moment.”

The authors argue that cutting government spending will take some of the burden to cool inflation off of the Bank of Canada and the private sector.

Scotiabank’s analysis came as Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland is met with the head of the U.S. Treasury Janet Yellen in Toronto on Monday to discuss cooperation between the nations and the global inflation concerns.

Friday May 13, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday May 13, 2022

Pierre Poilievre’s inflation disinformation

April 26, 2022

For every serious, stubborn and complicated problem, there’s an ambitious politician peddling a bogus plan to fix it. And if you need any proof, just listen to Pierre Poilievre’s simplistic explanation for runaway inflation, and then his troubling proposal for saving the economy. The narrative being spun by this federal Conservative leadership hopeful is that the Bank of Canada’s leadership is “financially illiterate” and its incompetence punished the country with the worst inflation in three decades. As prime minister, he would sort the bank out, pronto. And to make sure that happens, he announced at a leadership debate Wednesday that if he forms the government, he would fire Bank of Canada governor Tiff Macklem.