All the major political parties have put out their plans to deal with the housing market crises in Canada’s cities. The focus is on affordability. In other words, how to make home ownership easier for Canadians currently priced out of the housing market. But is there much the federal government can do? Unfortunately, the answer is no, with most levers – especially those that will encourage more supply – at lower levels of government. First, let’s understand the constraint on affordability. The amount Canadians pay for their mortgages out of their disposable income is roughly the same as 30 years ago. However, with house prices skyrocketing, fuelled by low interest rates, the constraint to home ownership is getting the necessary...
Statistics Canada’s latest gross domestic product release contained at least two surprises. The first was that real GDP fell at an annualized rate of one per cent in the second quarter. That made headlines. With all the stimulus and rising optimism about recovery from the COVID recession, why the setback? But a second surprise was that nominal spending — measured in the dollars that actually changed hands, before adjustment for price changes — rose at an eight per cent annualized rate. That raised eyebrows. The difference between a one-per cent real fall and an eight-per cent nominal rise is nine per cent higher prices. Real activity slipped a little. The value of our money slipped a lot. We already knew that consumer prices were up...
As the Liberal government in Ottawa starts ramping up for the big celebrations October 19th of Prime Minister Justin Trudeau’s 20 years in power, fiscal storm clouds loom. A gradual but modest rise in interest rates, the continuation of a decade and a half of slow economic growth and several supply and demand shocks have laid bare the unsustainability of Canada’s public finances. Now, as autumn 2035 approaches, we face what is clearly turning into a fiscal crisis. What got us here? The easy answer is the economic and fiscal impact of the COVID-19 pandemic that wreaked havoc on the economy and public finances in 2020 and 2021. The federal and many provincial governments saw the ratio of their net debt to their GDP jump 20 percentage...