Op-Eds

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...
Qu’est-ce que peut bien voir la Bourse pour regagner si rapidement le terrain perdu, alors que l’économie réelle se contracte comme jamais dans une profonde récession ? Comme se plaisait à répéter mon ancien collègue de La Presse Alain Dubuc, « la Bourse, ce n’est pas l’économie ! ». Elle est plutôt le reflet d’opinions variées quant à l’évolution future des bénéfices des seules entreprises cotées en Bourse. Ici, le mot clé est futur. La Bourse est un marché qui met un prix sur le futur, diablement difficile à prévoir, surtout au beau milieu d’une crise sans précédent. Ce prix est rajusté au fur et mesure que le marché digère de nouvelles informations, parfois contradictoires, d’où la...
For much of the last decade, Canadians have been told their debt levels were unsustainable and that their day of reckoning was fast approaching. Data recently released by the Office of the Superintendent of Bankruptcy (OSB) seem to indicate that day has arrived. According to the data, insolvencies by Canadian consumers were up 9.2 per cent in October 2018, compared to a year earlier. To say the least, these results appear alarming. But in light of what we know about homeownership and net worth, we are not so sure. The data show that Canadians’ net worth has never been higher. Moreover, the data do not distinguish between the more harmful economic effects from households in negative net asset positions, or balance sheet...