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  • Boom, Bust and Consolidation November 9, 2018
    The five largest bitumen-extractive corporations in Canada control 79.3 per cent of Canada’s productive capacity of bitumen. The Big Five—Suncor Energy, Canadian Natural Resources Limited (CNRL), Cenovus Energy, Imperial Oil and Husky Energy—collectively control 90 per cent of existing bitumen upgrading capacity and are positioned to dominate Canada’s future oil sands development. In a sense they […]
    Canadian Centre for Policy Alternatives
  • A new Director for CCPA's BC Office: Message from Mary Childs, Board Chair October 24, 2018
    The CCPA-BC Board of Directors is delighted to share the news that Shannon Daub will be the next BC Director of the Canadian Centre for Policy Alternatives. Last spring, Seth Klein announced that, after 22 years, he would be stepping down as founding Director of the CCPA-BC at the end of 2018. The CCPA-BC’s board […]
    Canadian Centre for Policy Alternatives
  • Who Owns Canada’s Fossil-Fuel Sector? October 15, 2018
    The major investors in Canada’s fossil-fuel sector have high stakes in maintaining business as usual rather than addressing the industry’s serious climate issues, says a new Corporate Mapping Project study.  And as alarms ring over our continued dependence on natural gas, coal and oil, these investors have both an interest in the continued growth of […]
    Canadian Centre for Policy Alternatives
  • Pharmacare consensus principles released today September 24, 2018
    A diverse coalition representing health care providers, non-profit organizations, workers, seniors, patients and academics has come together to issue a statement of consensus principles for the establishment of National Pharmacare in Canada. Our coalition believes that National Pharmacare should be a seamless extension of the existing universal health care system in Canada, which covers medically […]
    Canadian Centre for Policy Alternatives
  • Kate McInturff Fellowship in Gender Justice September 19, 2018
    The CCPA is pleased to announce the creation of the Kate McInturff Fellowship in Gender Justice.This Fellowship is created to honour the legacy of senior researcher Kate McInturff who passed away in July 2018. Kate was a feminist trailblazer in public policy and gender-based research and achieved national acclaim for researching, writing, and producing CCPA’s […]
    Canadian Centre for Policy Alternatives
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The Progressive Economics Forum

GDP: Consumers to the Rescue

Following positive GDP numbers in April and May, Statistics Canada reported today that a sharp drop in June dragged Canada’s economic growth to a mediocre pace of 0.4% for the second quarter.

June’s declines in manufacturing and resource extraction did further damage to industries that had declined in April and May. Construction also declined in June, pulling the whole goods-producing sector into negative territory for the quarter. Goods production was hobbled by a continuing trade deficit and a reduction in business investment.

The service sector also turned negative in June, but remained strongly positive for the quarter, more than offsetting the goods-producing sector’s decline. Service industries benefited from upticks in consumer and government spending. In particular, household final consumption expenditure surged by 0.9% in the second quarter, its largest quarterly jump since 2010.

However, it is not clear that such consumer spending can be sustained in subsequent quarters, given record household debt and rising mortgage rates. Similarly, existing austerity policies and the federal government’s commitment to eliminate its deficit by 2015 for electoral reasons cast doubt on whether public expenditure will continue to support economic growth.

In summary, Canada eked out mediocre economic growth in the second quarter mainly because of a surge in consumer spending that seems unlikely to continue.

UPDATE (August 31): Quoted in today’s National Post (FP2), Montreal Gazette (C2), Ottawa Citizen (F1), Windsor Star (A15), Saskatoon StarPhoenix (B1), Edmonton Journal (C3) and Vancouver Sun (C2).

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