Category Canadian economy
The Bank of Canada stops and startles
The Bank of Canada held interest rates steady today. Going into the April 22 decision, I thought it was about time to stop the round of interest rates cuts, so I certainly agree with the decision. But I was a bit surprised at the move. Since his arrival at the Bank in February, Mark Carney […]
Was last November a turning point?
Statistics Canada's March GDP release was the fourth consecutive month in which output failed to go above what it had been in November 2007. So are we going into a recession as in 1981-82 or 1990-91? Or will the Canadian economy bounce back with stronger growth as in 2001-2002? Before answering, it might be a […]
The 2008Q1 GDP release: turning point or inflection point?
I thought that yesterday's news about the rebound in the current account was an indication that the first quarter GDP growth would be better than it was in 2007Q4. I thought wrong: Real gross domestic product (GDP) edged down 0.1% in the first quarter of 2008, its first quarterly decline since the second quarter of 2003. The economy, […]
Canada’s current account bounces back up
The roller-coaster ride continues: The current account surplus with the rest of the world (on a seasonally adjusted basis) increased sharply to $5.6 billion in the first quarter of 2008, led by higher prices for several exported commodities combined with a lower travel deficit. The deficits on commercial services and investment income were largely unchanged. The slow growth […]
Canada’s income redistribution strategy: take from the rich, give to the median
There have been any number of MSM stories based on StatsCan’s recent release on earnings and income. Median earnings from market income for individuals in 2005 are pretty much the same as they were back in 1980, and market income inequality has – by any measure – increased over the past 25 years. This isn’t […]
Canada and Argentina in the 20th century
Whenever I teach growth theory, I like to compare the Canadian experience with that of Argentina. Up until the 1930’s, the two countries followed very similar paths: foreign investment financing the development of resource-based economies. But then the 1930’s happened, and Canada and Argentina parted ways. This is the best graphical demonstration that starting points […]
Why the Bank of Canada should stop cutting interest rates
Today’s CPI release has generated certain expectations (documented here, here, and I expect in pretty much every story covering the March inflation numbers) that a 50 bps cut in the overnight rate target is in the offing next Tuesday. Those expectations may very well be fulfilled – Mark Carney has been dropping broad hints ever […]
Canada’s Goldilocks housing market and the Bank of Canada
Everyone knows that housing markets are crashing and burning all over the place: the US, the UK, Spain, and many more besides. But that’s not happening here: Although housing starts in the US are about half of what they were two years ago, they are more or less holding up in Canada. And new house […]
The forex market is dumber than a sack of hammers
Or maybe it’s just the people who comment on its gyrations. A Reuters piece from today is a case in point: Loonie slips on US economic outlook: The Canadian dollar slid lower against the U.S. dollar as investors were loath to bet on the currency, given Canada’s heavy dependency on the waning U.S. economy… Huh? […]
Mark Carney announces his presence with authority
The Bank of Canada lowered its overnight rate target by 1/2 of a percentage point to 3 1/2 per cent: [T]here are clear signs that the U.S. economy is likely to experience a deeper and more prolonged slowdown than had been projected in January. This stems from further weakening in the residential housing market, which […]
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