Canada 3Q16 Economic ScorecardBy: Paul Young, CPA, CGA

Overview

• This presentation will look at the economic trends as part of assessing the Government Canada economic policies

Agenda

• GDP Growth• Manufacturing Sales• Employment• Wages • Housing Prices• Retail Sales

Liberal Party of Canada

Source - http://www.cbc.ca/news/politics/finance-liberals-economy-budget-morneau-consultations-jobs-1.3883770 or http://www.forbes.com/sites/peterferrara/2012/07/12/obamanomics-the-final-nail-in-the-discredited-keynesian-coffin/#7ead6c221673 or http://www.huffingtonpost.ca/ralph-goodale/mr-harpers-economic-recor_b_8020980.html

Keynesian Economics

The idea is that the increased government spending and deficits will increase demand in the economy for more production, and that producers will increase supply to meet that demand, hiring more workers and reducing unemployment in the process. 

Obama “Obamanomics: The Final Nail In the Discredited Keynesian Coffin

Ralph Goodale - Liberal Party – 8/21/2015

Bill Morneau – Liberal – 12/6/2016

• Finance Canada is giving business leaders a decidedly gloomy picture of the Canadian economy as part of the department's pre-budget consultations this fall.

• A Dec. 5 slide show, obtained by CBC News, projects weak annual growth of just 1.8 per cent on average until 2029, and cites full-time job losses of 1.9 per cent across Canada so far this calendar year

• Harper dealt with a recession from 2008-2009

• There is no recession, but slow growth

GDP Growth

Source – Scotiabank

• Economic GDP has been downgraded many times during 2016

• Canada will lag behind United States and United Kingdom in terms of GDP Growth

• The impact of the stimulus has had no real impact on the economy

• Key quote “In our surveys, companies have mentioned a number of factors that can influence competitiveness or hinder exports directly. These include deficient infrastructure, regulatory uncertainty, rising trade barriers, relatively high electricity costs, and the unknown status of current and future trade agreements,” says Poloz” source - http://edmontonjournal.com/opinion/columnists/gary-lamphier-tepid-economic-growth-to-slow-even-further-says-bank-of-canada:

Manufacturing Sales• Transportation sales are closed

to 9B for 2016) • Forestry sales are led by a

strong domestic and international demand for lumber (Housing starts)

• Oil is off close 10B in 2016• Manufacturing sales is flat

with 2015 Issues:• Softwood dispute has not be

resolved• Slower retail sales led by lower

demand for autos• Manufactures are under cost

pressure due to hydro costs, regulatory burden and access to market.

Source – Stats Canada

Employment

Source – Stats Canada

Key Comments:• Goods producing has 99K less jobs then it had

October 2015• Healthcare jobs have increase. Caution:

Healthcare related jobs are driven by government spending on healthcare

• Retail sector has lost 18K jobs since October 2016 Key Quote “ Young people reacted to the comments by heckling Prime Minister Justin Trudeau at a youth labour forum this week. They’re right to be angry. Temporary work is second-class employment. According to recent Statistics Canada numbers, temp workers earn roughly 75 per cent of what permanent employees do. The median weekly wage of permanent workers aged 25 to 54 in September was $962, while temporary workers earned $720. Source : http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/why-morneau-needs-to-be-less-accepting-of-temporary-work/article32543380/”

Wages

Source – Stats Canada

• Wages are under pressure in Manufacturing

• Retail/Wholesale wages have grown due to more focus on distribution, i.e. eCommerce – Note – Stats Canada decided last fall to combined retail sales data with Wholesale. Wholesale/Warehouse tend to pay more than retail sales clerk

• Government wages may reflect arbitration settlements.

• Key Quote “In response to widespread uncertainty about Canada’s economic climate and business conditions, organizations are planning cautious salary increases for 2017. The Conference Board of Canada’s Compensation Planning Outlook 2017 projects average base increases for non-unionized employees to be 2.2 per cent next year, with the lowest increases going to workers in Alberta and in the oil and gas industry.Source - http://www.conferenceboard.ca/press/newsrelease/16-10-26/canadian_workers_in_for_another_year_of_modest_salary_gains_amid_slow_economic_growth.aspx

Housing Prices

Source – Scotiabank

According to the report, Canadian detached single family house prices are expected to increase by nine per cent this year, and by 2.9 per cent annually over the next five years. Meanwhile, condominium prices are forecast to grow by 4.6 per cent this year, and 2.2 per cent per annum over the next five years.Moody's does caution that some metropolitan areas will see "modest" near-term price declines. Prices in Edmonton are expected to trend slightly lower, despite an expected rise in oil prices. Saskatchewan and Newfoundland housing markets are in for "a rough two years," Moody's said, citing a combination of overvaluation and slow projected economic growth.• Source - http://www.cbc.ca/news/business/house-

prices-moodys-1.3810209

Retail Sales

Source – Stats Canada

• Retail sales have been sluggish since February 2016

• The tax cuts and changes to family tax benefit payments have had little impact on retail sales

• Family budgets are under pressure due hydro rates, carbon tax (BC) as well as other taxes

Summary • Canada’s economy is still struggling with sluggish growth• Employment has seen more part-time jobs than full-time created in 2016• Housing prices continue to grow faster than wage growth, inflation and GDP• More and more countries are imposing more protectionism policies. Exports are about $520B or about ¼ of

GDP. Canada depends on exports as part of driving the Canadian economy. Lower exports will impact the tax revenue collected by the government

• Government has approved a major pipeline. There are more pipelines/projects waiting for approval. Delay in approving projects could influence future FDI

• Infrastructure spending funding has been slowed.• Liberal government has decided to impose carbon taxation on all provinces

• Imposing carbon taxation/price for carbon could have the following impact• Lead to slower growth as it will increase costs of goods for consumer by about 6-9% or about $2,500 to family budget -

http://www.slideshare.net/paulyoungcga/what-is-carbon-tax-or-a-price-for-carbon • Make exports more expensive. Many Canada largest trading partners like the United States do not have carbon taxation/price for

carbon.