Revised LFS Numbers Don’t Change the Big Picture
What a rough week it’s been over at Statistics Canada.Â It’s a world-renowned statistical agency — though its lustre has been tarnished in recent years by budget cuts, cancelled data programs and series, and the nonsense of the Harper government’s libertarian crusade against the long form census.Â The problems this week around its Labour Force Survey report for July will certainly contribute to the sense of entropy surrounding this important and valuable institution.
The biggest change in the numbers is that full-time employment is now estimated to have declined by about 20,000, instead of the original 60,000.Â Not exactly something to boast about.Â 60,000 part-time jobs were created (same as the original report).Â The unemployment rate is the same as the original report — and exactly the same as 18 months ago.Â The participation rate is unchanged from June: higher than in the original report, but still stuck at its lowest level since 2001.
I published a Globe and Mail commentary on Canada’s stagnant labour market based in part on the original LFS report.Â Today’s revised numbers do not materially change the argument I made there, which is that Canada’s much-vaunted economic recovery was over-rated in the first place, and in fact ran out of steam a long time ago.Â Â There has been no sustained labour market progress for over three years.Â The employment rate is languishing just a hair above its level in June 2009 — the trough of the recession.Â That means job-creation since the trough of the recession has only just kept up with growth in the working-age population (ageing demographics is part of that story, too, on top of poor job-creation).
And the revised LFS numbers still confirm a growing contrast between the accelerating U.S. recovery and the stagnation and “serial disappointment” (Stepehn Poloz’s catchy phrase) of Canada’s trajectory.Â In the last year the U.S. economy created 2.3 million full-time jobs; Canada’s created barely any (with the smaller-than-originally-reported loss of full-time employment in July, the year-over-year change is now positive but miniscule).Â The U.S. unemployment rate has dropped 1.7 points since January 2013.Â Canada’s hasn’t budged.Â The stark difference in macro policy stance between the two countries is clearly an important factor behind this take of two recoveries: American policy is emphasizing job-creation, and mobilizes conventional and unconventional levers to get there, while Canadian policy is dominated by orthodox concern with balancing the budget.
In short, I think Canada’s relative underperormance since 2011 will become increasingly damaging to the Harper government, given how much it has invested in its reputation (deserved or not) as the “best economic managers.”
Remember the Twain quip: “there are lies, damn lies and statistics”?
Seems we now have our own Canadian version: “there are lies, damn lies, statistics and Statistics Canada, eh”?
Why would anyone have any confidence that the revised numbers are the correct ones if the “oops” factor is almost 210 fold (i.e. 42000 divided by 200)?
Because the actual reported unemployment didn’t change, I agree that the temporary issue is a minor thing, but I can’t shake this question: is it possible that Harper and his stooges forced Stats Canada to change the report?
If he did, or someone from the PMO or Con caucus made this happen, what’s the crime and what’s the punishment?
Letter in Ottawa Sun
The C.D. Howe Institute has urged the Canadian government to create 75,000 jobs by running a small deficit. But since we have over 1.3 million unemployed, why not create a substantial deficit and put everyone to work, just the way we gave jobs to all during WWII?
The belief that higher deficits damage the economy stems largely from a paper written by economists Rogoff and Reinhart that has recently been discredited when a student discovered background computer calculation errors.
The country with the largest debt ratio today is Japan, which controls its own currency just as does Canada.
Japan has little inflation, low interest rates and no problem issuing government bonds. Why would having creating full employment through deficit spending be problematic for our economy? On the contrary, it would make us more productive and reduce long-term costs of unemployment, social problems and welfare.