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Economy at a Glance
Economist of the Week
Economics Society News, Events, and Articles
Is Protectionism Incompatible With Its Own Aims? – by Arshiya Chaudhary
News and Noteworthy
Federal budget needs to focus on post-COVID economic growth, Freeland says
Finance minister Chrystia Freeland hinted at some of the key considerations for this year’s federal budget this week. She stated that the goal will be to focus on economic growth. Key issues it will look to address will include housing affordability and the transition to a green economy. The Finance Department expects this year’s deficit to be $144.5 billion. Read more.
Inflation isn’t the main factor driving Canada’s sky-high housing costs, experts say
Some members of parliament have now defined the housing market as a “housing inflation crisis”. Experts warn that these issues predated the sudden rise in inflation, and that characterizing them as the result of inflation would be a mistake. Tax laws for investors and developers have likely played a more significant role in the current issues with Canada’s housing market than inflation. Read more.
Inflation Anxiety: More Canadians say they’re worse off now financially than any time since 2010
New data released by Angus Reid shows 39% of Canadians now say they are financially worse off than they were last year – the highest percentage since 2010. Albertans surveyed appear to be struggling the most of any province, with 49% of respondents saying they are worse off financially. Other data included in the survey suggested Canadians are now struggling to feed their families as well with 57% now saying they find it difficult, up from 36% when the same question was asked in April 2019. Read more.
Canada loses 200,000 jobs, nearly double the blow economists expected
Canadians worked significantly fewer hours in January, and the jobless rate surged from 6 to 6.5 per cent. This is a decline, nearly double the Bay Street consensus, in economic activity that will interrupt the momentum the Canadian economy had built up. While the drop in employment was larger than we had expected, the numbers confirm evidence of what happened as provincial governments reintroduced restrictions at high-touch businesses to limit the spread of the Omicron variant. As restrictions begin to loosen across the entire country, job losses should prove to be very temporary. Read more.
U.S. beats Canada on job creation but it’s still playing catchup amid Omicron
Contrary to the headwinds that slowed Canada’s momentum, the United States reported surprisingly strong employment numbers at the start of the year. The significant job gains also increase the possibility the Fed will hike interest rates in March. However, with over 467,000 job creations in January, the U.S. economy was still down almost three million jobs from pre-virus levels. According to the BMO economist, with looser restrictions and lower vaccination rates, workers in the U.S. are more reluctant to return to work because of the increased risk of catching COVID and dying from COVID. Read more.
Gasoline prices breaking records as crude oil tops US$90 a barrel
Gasoline prices during the summer driving season typically soar higher than what is seen in the winter months, but this might not be true this year. As crude prices soared above US$90 per barrel, gasoline prices across Canada shattered an all-time record high in January. The price drivers pay at the pump include rising crude prices, the massive uptick in economic activity, higher refinery margins, and the tension between Russia and Ukraine. In addition, if central banks raise interest rates this year as anticipated, that will likely curb personal consumption and, in turn, reduce demand for gasoline. Read more.