Op-Eds

On le croyait mort, mais certains l’ont vu rôder. Plusieurs prédisent son retour prochain. D’autres en font plutôt des gorges chaudes. L’inflation est redevenue le bonhomme Sept Heures des marchés financiers. Ce n’est pas tant l’augmentation du coût de la vie qui préoccupe les financiers, par ailleurs bien payés, mais l’effet négatif qu’elle pourrait avoir sur les taux d’intérêt et par-delà, sur leurs investissements. L’inflation soulève aussi un questionnement sur le financement de la dette publique. Ces derniers temps, l’afflux des bonnes nouvelles énerve les marchés. Aux États-Unis, ils notent l’accélération de la vaccination, le gigantesque stimulus budgétaire et un taux d’épargne très élevé. Cet été, les consommateurs trop...
Along with much of the world, Canada’s economy has suffered from the COVID-19 pandemic and other events in 2020, notably the shock to global oil markets. How badly? An examination of the immediate data and longer trends indicates significant damage, with a lengthy recovery period ahead. Let’s start with labour markets, where there are signs of recovery but also growing evidence of damage. The unemployment rate exploded to nearly 14 per cent from 6 per cent during the shutdown from March to May. The rate has dropped steadily since as many displaced workers have been re-engaged, but the second pandemic wave and renewed shutdowns in many provinces have meant more job losses. Employment fell by 63,000 in December, and the...
We knew the number would be big. Just how big was the question. Statistics Canada released its initial estimate of second-quarter GDP on Friday. Output dropped by 11.5 per cent compared with first-quarter GDP and by a little over 13 per cent compared with the second quarter of 2019. This is the largest recorded quarterly decline since Statistics Canada began reporting quarterly GDP numbers in 1961. The estimate was scary enough but the way it was reported may have caused either unnecessary panic or unnecessary pessimism. Media reports emphasized the “annualized” change in GDP, which was a drop of 38.7 per cent, which is worse than scary. Does this mean Canadian GDP will actually wind up falling almost 40 per cent, as it did in the...
The art of calling the start and finish of economic recessions might seem a minor one but it is critical to understanding how policy decisions can affect the economy. Making such calls is normally a backwards-looking exercise, with business cycle analysts waiting for the accumulation of enough data before they feel comfortable issuing even a nuanced interpretation of whether the economy has reached key points in a cycle. This spring, however, the sheer depth and size of the economic losses stemming from the COVID-19 lockdowns left no room for doubt. The C.D. Howe Institute’s Business Cycle Council was able to declare by May 1 that Canada had entered a recession in the first quarter of 2020 and that the peak of the business...
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...