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  • Imagine a Winnipeg...2018 Alternative Municipal Budget June 18, 2018
    Climate change; stagnant global economic growth; political polarization; growing inequality.  Our city finds itself dealing with all these issues, and more at once. The 2018 Alternative Municipal Budget (AMB) is a community response that shows how the city can deal with all these issues and balance the budget.
    Canadian Centre for Policy Alternatives
  • Why would a boom town need charity? Inequities in Saskatchewan’s oil boom and bust May 23, 2018
    When we think of a “boomtown,” we often imagine a formerly sleepy rural town suddenly awash in wealth and economic expansion. It might surprise some to learn that for many municipalities in oil-producing regions in Saskatchewan, the costs of servicing the oil boom can outweigh the benefits. A Prairie Patchwork: Reliance on Oil Industry Philanthropy […]
    Canadian Centre for Policy Alternatives
  • CCPA's National Office has moved! May 11, 2018
      The week of May 1st, the Canadian Centre for Policy Alternatives' National Office moved to 141 Laurier Ave W, Suite 1000, Ottawa ON, K1P 5J2. Please note that our phone, fax and general e-mail will remain the same: Telephone: 613-563-1341 | Fax: 613-233-1458 | Email: ccpa@policyalternatives.ca  
    Canadian Centre for Policy Alternatives
  • What are Canada’s energy options in a carbon-constrained world? May 1, 2018
    Canada faces some very difficult choices in maintaining energy security while meeting emissions reduction targets.  A new study by veteran earth scientist David Hughes—published through the Corporate Mapping Project, the Canadian Centre for Policy Alternatives and the Parkland Institute—is a comprehensive assessment of Canada’s energy systems in light of the need to maintain energy security and […]
    Canadian Centre for Policy Alternatives
  • The 2018 Living Wage for Metro Vancouver April 25, 2018
    The cost of raising a family in British Columbia increased slightly from 2017 to 2018. A $20.91 hourly wage is needed to cover the costs of raising a family in Metro Vancouver, up from $20.61 per hour in 2017 due to soaring housing costs. This is the hourly wage that two working parents with two young children […]
    Canadian Centre for Policy Alternatives
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The Progressive Economics Forum

Bank of Canada, Exports, and LMI

Much has been made about Stephen Poloz’s decision to abandon ‘forward guidance’ in Bank of Canada rate setting announcements for the time being. Critics bemoan the loss of direction from the Bank. But Poloz’s comments yesterday were chock full of guidance on how the Bank sees Canada’s economic situation.

Having been disappointed by the failure of Canada’s export sector to resume investment or show any signs of life, researchers at the Bank investigated the performance of 2,000 product categories, and found that about 500 of those had very nearly been wiped out following the 2008 – 2009 recession. Further investigation found a permanent loss of capacity in some manufacturing export sub-sectors. Most surviving manufacturing exporters are still operating at or below capacity. This means we shouldn’t expect a whole lot of business investment in these sectors any time soon.

This permanent loss of capacity isn’t truly permanent, we can rebuild, but doing so will take more time, and will wait until conditions are much more certain. This has disastrous consequences for workers, particularly in southern Ontario where much of the loss has been located.

Stephen Poloz’s statement is clear on this. The size of the output gap is somewhat deceptive because of this loss of capacity. A clearer picture of the weakness Canada is experiencing shows up in the labour market gap. Which the Bank very carefully measures, by the way. The Bank’s aggregate LMI diverged from the unemployment rate in late 2012. TD Economics put together their own aggregate labour market indicator, that also shows the labour market is weaker than the unemployment rate shows.

This might be the perfect time for some public infrastructure investment (as recommended by the IMF), say, in affordable childcare spaces.

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