GDP: Resource Exports Cover for Domestic Weakness

Statistics Canada reported today that GDP grew by 0.6% in the first quarter. The volume of energy and mining exports expanded by more than 5%, offsetting lower exports of many manufactured goods as well as a weak domestic economy.

Consumer spending growth slowed to 0.2% in the first quarter of 2013, its lowest rate of growth since the first quarter of 2009. Business investment declined by 0.3%, with lower investment in housing as well as machinery and equipment offsetting higher investment in non-residential structures. Government spending grew by 0.5%, but public-sector capital investment shrank by 0.5%:

The decline in business investment is striking given buoyant corporate profits. The gross operating surplus of corporations increased by 1.1% in the first quarter, more than the wider economy and significantly more than employee compensation:

The corporate sector is reaping large profits from exporting commodities and investing in structures for resource extraction but not in the broader economy. A policy solution is for governments to collect higher resource royalties and corporate taxes, and invest the proceeds in needed infrastructure and services.

4 comments

  • If your political ambitions have been satisfied maybe you could mention the N word.

  • Travis, your domain name has expired.

  • Maybe it’s been nationalized. 🙂

  • No I have a back end problem with the site for the moment and I am too busy trying to finish an article to solve the problem for a blog I do not have the time to write for at the present.

    Erin what happened to Sask? At the height of the last boom in commodity prices the total compensation of capital in Sask was 130% of wages, almost 7 times the national average. What, is Newfoundland the new Jerusalem?

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