Article content continued

The tale of woe doesn’t end with a sclerotic labour market where the index of aggregate hours worked has stagnated over the past 14 months. Real final demand has contracted now for two straight quarters — if not an official recession, then one rung away on the ladder. The trade deficit has soared to an all-time high. Productivity growth on a YoY basis is closer to 0 per cent whereas in the U.S. it has accelerated closer to a two per cent annual rate. Order books in the domestic manufacturing industry have made no headway in five years. Output in this sector has turned negative recently on a YoY basis, and more broadly in the goods-producing sector too (adding in construction and resources).

The output gap has been re-established, which means the Canadian economy is now operating with spare capacity. Along with that, inflation in both the consumer and producer sectors has peaked out and rolled over in a discernible way, which will ensure that the Bank of Canada will maintain local interest rates below U.S. levels as far as the eye can see.

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or

It is plain to see that the Canadian economy needs help. It is perilously close to a recession and there are still lags ahead to be felt in terms of the restraint actions established previously by the Bank of Canada. Housing is in the doldrums and the Canadian consumer is in deleveraging mode. Hopes of there being a quick resolution on the trade file are foolishly optimistic. And the 25 per cent rebound in oil prices and Alberta-led closing of the Canadian price ‘discount’ are benefits that are now behind us and fully discounted.