The fiscal “snapshot” delivered by Finance Minister Bill Morneau on July 8 was, as its name implied, a static picture – leaving us hanging about what comes next. Like the basketball caught on camera in mid-air as it bounces from rim to rim: Will it go in or out? Or a person teetering on a cliff’s edge: Will she pull back safely or fall? Likewise our fiscally overextended federal government: Will it return to sustainable levels of spending and borrowing, or are Canada’s public finances out of control? Previous forecasts from the Parliamentary Budget Officer and other projections had muted the shock value of the snapshot’s numbers, but they are alarming. Federal spending in the current fiscal year (2020-21) is now projected to be $612-...
Economic downturns are never pleasant but this one stands out for all the wrong reasons. The C.D. Howe Business Cycle Council announced on May 1 that the Canadian economy entered a recession in the first quarter of 2020. Monthly GDP peaked in February, then fell by 7.5 per cent in March and, according to Statistics Canada’s flash estimate released June 30, by a further 11.6 per cent in April. These declines wiped out all the growth in Canadian real GDP since August 2010 and represent the steepest, fastest slide in the 59 years for which we have data. Though there are some positive signs in May’s economic data — a 1.8 percentage point increase in employment, increases in hours worked, exports and building permits, as well as...
The beginning of summer has brought welcome news about Canada’s economy and Canadians’ prospects after a spring devastated by COVID-19. Measures of activity and confidence, even numbers of jobs, are up from the lows of March and April. But we still have a long way to go. Millions of Canadians are still working less than they were, or not at all, and the reopening of the economy will be too slow and sporadic to save thousands of businesses. In past recessions, governments have provided fiscal stimulus, notably through infrastructure projects to speed recovery, so it is natural to hope for a similar spending boost this time. Fulfilling that hope will be a challenge, however. Projects big enough to move the economic needle take time –...