What happened to Canada’s economic miracle?
By Chris Sorensen - Tuesday, April 2, 2013 - 0 Comments
Stalled growth, rising debt — Canada’s stuck
Our latest cover story is actually two stories, comparing the state of the Canadian and American economies. View the companion piece to this story, here.
To outsiders looking in, Canada must seem like a potent place. In the midst of a global recession, our banks were profitable, home prices soared and lost jobs were quickly replaced—all feats Ottawa was fond of boasting about. “We have the soundest financial system in the world and that’s a strong point that we can share with others,” Finance Minister Jim Flaherty told reporters in 2008. A few years later, at the World Economic Forum in Davos, Prime Minister Stephen Harper promised to set the stage for a generation of economic growth with changes to immigration and a focus on selling oil and gas to Asia—part of a grand vision to make Canada an “emerging energy superpower.” The country’s new-found reputation for punching above its weight may have also played a role in the U.K.’s decision to hire Bank of Canada governor Mark Carney to run the Bank of England, the first time a foreigner has been sought for the job.
Carney doesn’t start his new gig until July 1. But already the holes in Canada’s narrative of economic exceptionalism are big enough to drive an oil sands dump truck through. Our banks, though still sound, have been downgraded by rating agencies because of their exposure to a potential Canadian housing bubble and high levels of consumer debt. Economists are worried that a pullback in government spending won’t be offset quickly enough by a ramp up in exports. And Alberta’s vaunted oil and gas sector is suddenly in trouble as a glut of new U.S. crude threatens prices and future investment. The stiff headwinds are reflected in GDP forecasts now expected to come in well under the previously anticipated (and already dismal) two per cent growth for 2013.
Canadians previously took pride in the fact that our small, resource-based economy was doing far better than that of our bigger neighbours to the south—Harper reminded CNBC viewers as recently as 2011 that Canada was still “outperforming the average, or the pack, in the industrial world”—but in the space of just few months the tables have seemingly turned. What happened?
-
Canadian consumer debt up some six per cent at end of 2012: TransUnion
By The Canadian Press - Tuesday, February 5, 2013 at 6:10 AM - 0 Comments
TORONTO – A new report says the level of Canadian consumer debt at the…
TORONTO – A new report says the level of Canadian consumer debt at the end of 2012 — not counting mortgages — was up nearly six per cent from a year earlier.
TransUnion says the $1,525 jump from the end of 2011 was the biggest year-to-year fourth-quarter increase since 2008.
The quarterly analysis estimates the average Canadian owed a total of $27,485 as of Dec. 31 for things like car loans and leases, credit cards and lines of credit.
British Columbia was the only province to show a decline, of just under one per cent.
-
U.S. GDP: federal govt. spending saves the day
By Erica Alini - Friday, October 26, 2012 at 11:16 AM - 0 Comments
The U.S. economy expanded at an annual rate of two per cent from July through September, compared with 1.3 per cent growth in the previous three-month period, the U.S. Department of Commerce said this morning. That was in line with the higher end of the spectrum of expectations analysts had provided in the run-up to the Oct. 26 release, which ranged from 1.5 per cent to two per cent.
On the face of it, the GDP figure, the second-to-last major economic indicator to come out before the Nov. 6 election (the last one will be the October jobs report, on Nov. 2), might seem likely mildly good news for the Obama administration. But two per cent is still too slow to put a significant dent in unemployment, and a look at the details reveals there’s very little cause for celebration.
What “saved” the day, in fact, is a freakish surge in federal government spending, which rose 9.6 per cent from a 0.2 per cent decrease in the previous quarter. The other factor propelling growth was consumer spending, which has largely fueled the recovery since the beginning of 2010. But with personal savings rates dipping again, it’s anyone’s guess how much longer American wallets can keep this up.
Meanwhile, more healthy indicators of growth delivered disappointing results. Business purchases of equipment and software, which had contributed a decent share to GDP up until earlier this year, were little changed from the previous quarter. That has likely much to do with the looming fiscal cliff—which is hurting Canadian business as well—as uncertainty over taxes and fiscal policy is keeping American businesses from investing and hiring.
Similarly, exports fell 1.6 per cent, after growing 5.3 per cent in the previous quarter, a sign of weak demand from recession-stricken Europe and slowing China.
The one bright spot of the release was the housing market, where residential investment increased 14.4 per cent, compared with 8.5 per cent growth in the previous three months.
-
Are Americans getting too cozy with debt again?
By Gabriela Perdomo - Thursday, May 3, 2012 at 12:33 PM - 0 Comments
SS&SS/Flickr
They were supposed to be wary of debt, but data show borrowing among U.S. consumers is growing again. A number of analysts and media outlets are hailing this as a sign of newfound “consumer optimism,” but a closer look at the numbers leaves little reason to cheer.
Though credit card debt has been decreasing, the latest data from the Federal Reserve, which exclude mortgages and home equity loans, borrowing for cars and student loans has soared. Overall, consumer borrowing outside real estate increased by US$8.7 billion in February of this year—topping a six-month upward trend that saw a staggering increase of US$18.6 billion in January.
The Associated Press notes that “consumers are taking on more debt at a time when their wages have not kept pace with inflation. And they are paying more for gasoline.”
Not that Canadians have anything to teach Americans here, but it’s still legitimate to ask: What does this mean for the U.S. recovery? It depends on who you talk to.
-
Chart of the week: spending spree
By macleans.ca - Thursday, April 14, 2011 at 8:00 AM - 3 Comments
Are Canadian consumers about to hit their breaking point?
Real consumer spending in Canada hit record highs while other major economies stalled. But with retail sales now softening, are Canadian consumers about to hit their breaking point? -
This week: Good news, bad news
By macleans.ca - Friday, February 25, 2011 at 10:41 AM - 1 Comment
Facing the music…
Justice Richard Boivin of the Federal Court got it right when
Chinese researchers in costume move a cub being reintroduced to the wild
Facing the music
Justice Richard Boivin of the Federal Court got it right when he ruled that multi-millionaire Han Lin Zeng must answer non-capital charges of fraud back in China—notwithstanding claims he might face other indictments punishable by death. Canada’s policy against deporting people who face execution is proper, but Ottawa is hardly in a position to assess potential future cases against an accused. And as Maclean’s recent piece on the convicted Bangladeshi assassin Nur Chowdhury illustrates, this country is playing host to more than its share of miscreants and murderers ducking punishment in their homelands. Han Lin Zeng must go.
Madame premier
Something about provincial politics is drawing women back toward public life. In Alberta, Progressive Conservative Alison Redford and veteran Liberal Laurie Blakeman are seeking their parties’ respective leadership nominations—and the chance to take on Danielle Smith of the upstart Wildrose Alliance. In B.C., Christy Clark is considered the front-runner to replace Gordon Campbell, while all three party leaders in Newfoundland are women. Canada could soon witness a first ministers’ conference featuring a trio of female premiers. It won’t come a moment too soon.
A better way
It wasn’t the new provincial party media predicted, but the launch of a conservative-leaning political movement in Quebec offers a beacon to those who reject visions of the place as a sovereignist, taxpayer-funded utopia. The Coalition for the Future of Quebec wants to bring probity to a province it says is crippled from endless debates over secession and rife with public sector graft—to wit, the latest round of corruption allegations within Montreal city council. If Quebecers can’t vote for the “CFQ” now, they might soon want to.
Waste not, want not
India has found a solution to soaring food prices: simpler weddings. The government says 15 per cent of all grains and vegetables are tossed in the trash after “extravagant and luxurious” receptions, and is proposing a new law that will “curb profligacy” and ensure extra food stocks for the poor. We propose a toast.
Americans Phyllis Macay and Bob Riggle were killed by Somali pirates
Buy now, pay later
Canadian families are swimming in debt—and the pool is getting deeper and deeper. Not only has the average household deficit surpassed $100,000 for the first time, but debt-to-income ratio has also reached a record high (150 per cent, which means that for every $1,000 in after-tax income, families owe $1,500). At the same time, annual savings have plummeted, from 13 per cent in 1990 to just 4.2 per cent last year. With so many unpaid bills piling up, it’s no wonder Canadians are flocking to booze like never before. According to a separate report, our wine consumption over the past decade has grown six times faster than the rest of the world.
Still trust your doctor?
If you’re reading this magazine while sitting in a physician’s waiting room, beware. In British Columbia, a radiologist with three decades of experience is under investigation after misreading seven CT scans in one weekend. In Montreal, a lung specialist was suspended and fined for using a hidden camera to film more than a dozen naked patients. And in Toronto, two doctors are behind bars after allegedly drugging and sexually assaulting a woman at a downtown hotel.
Assumed risk
It was another fatal week for folks who strayed from the beaten path while enjoying the mountains. Three snowmobilers died in the backcountry near Golden, B.C.—buried by an avalanche they likely triggered—while a skier was killed after he went out of bounds at Lake Louise, Alta. We understand that danger is all part of the thrill, but there are endless warnings about the risk of going outside the ropes. When will the fun-seekers take them to heart?
Sick with anticipation
The royal wedding invitations are in the mail—and if the early reports are any indication, the guest list is not exactly majestic. In are David Beckham, Posh Spice, and the owner of Kate Middleton’s favourite pub. Out are Barack Obama, the first lady, and French President Nicolas Sarkozy. Said a royal aide: “Prince William has led a fairly ordinary life in the military and the couple’s guests reflect this.” Those “sick” over not making the cut can always purchase the latest in royal wedding souvenirs: William and Kate barf bags.
