Earlier this month, former Bank of Canada governor Stephen Poloz offered his thoughts on the state of the country’s economy. His observations should have made bigger waves than they did.
“I would say we’re in a recession,” Mr. Poloz, now a special adviser to Osler, Hoskin & Harcourt LLP, said during a webinar.
Recession. Now that’s not a word we’ve heard pass the lips of the Prime Minister, or his Finance Minister, or even federal Conservative Leader Pierre Poilievre in recent weeks. And yet, there are few in the country more acutely aware of what a recession looks and feels like than Mr. Poloz, who believes Canada is within the parameters of one.
“A technical [recession] is a superficial definition that you have two quarters of negative growth in a row, and we haven’t had that,” Mr. Poloz said. “But the reason is because we’ve been swamped with new immigrants who buy the basics in life and that boosts our consumption enough.”
Last month, Statistics Canada reported that gross domestic product per capita had declined for the sixth consecutive quarter. In fact, it’s been negative in eight out of the last nine quarters. Unemployment reached 6.8 per cent in November, up from 6.5 per cent in October, according to the agency. Even the good news wasn’t that good.
The economy did add 51,000 jobs in November, but most of them came from the public sector.
While current Bank of Canada Governor Tiff Macklem hasn’t mentioned the “R” word when talking about the economy, he did oversee another half-a-percentage rate cut on Wednesday. That is the fifth consecutive one since June, and the second consecutive half-a-percentage trim, which is highly unusual. But as Mr. Macklem said, the bank did it because of the tepid economic growth the country is experiencing, as well as weak labour markets.
Now, you wouldn’t know that Canada’s economy is in the midst of a recession, or anything like it, from the discussions taking place in Parliament. There, everyone is focused on whether Finance Minister Chrystia Freeland and Prime Minister Justin Trudeau are at odds, or so the story goes, over the PM’s insistence on bringing in a grab bag of vote-buying measures – oops, I mean moves designed to help people out over the holidays.
This is not what happens in a serious country. These are not what our political leaders should be focused on. Our economy is in lousy shape. It’s obvious now that the reason the Liberals were so desperate to keep immigration numbers high was to help mask the country’s perennially low productivity numbers and other weak fiscal fundamentals.
As David Williams and Jock Finlayson recently pointed out in The Globe and Mail, the country’s economy is shrinking on a population-adjusted basis. Over the past five years, we were the second-worst performing economy among the 38 advanced countries making up the Organization for Economic Co-operation and Development. Adjusted for population, Canada’s economy is the same size today as it was in 2014. Let that sink in for a minute.
In September, The Economist asked the question: why is Canada’s economy falling so far behind the U.S.? Talk about depressing reading. By the end of the year, the magazine forecast, America’s economy is expected to be 11-per-cent larger than five years earlier. Canada’s will have grown by just six per cent. Given U.S. president-elect Donald Trump’s seeming obsession with the idea of Canada becoming his country’s 51st state, it’s worth asking how we would stack up against the Californias and New Yorks of the world. In fact, we’d be worse off than Alabama, which is the fourth-poorest state in the union, according to The Economist.
Maybe when Mr. Trump finds that out, he won’t covet us quite as much.
The value of the loonie to the U.S. dollar is terrible. (Just ask Canadian snowbirds.) The value of the loonie to the British pound is horrible. We still have the Polish zloty beat though! So, it’s not all bad.
Our federal debt is relatively low compared to other G7 countries. Our banks are strong. There are some things we do well. But our economy is anemic. Yet our politicians spend their time trading petty, juvenile insults and offering up ridiculous bribes like GST holidays to earn your support. It makes you want to scream.
Mr. Poloz perhaps said it best about the GST gimmick: “There are so many other ways to boost the economy that would provide a long-lasting effect. Giving away these things is kind of like giving somebody a fish instead of giving them a fishing rod.”
That just about says it all.