So there's really no new model for how to run this economy, and nobody's even, I think, thinking about that question, much less an answer."
-Doug Henwood, of Left Business Observer, on The Real News Network
Tepid GDP numbers released Tuesday by Statistics Canada confirm that Canada's economic recovery, such as it was, is sliding completely into the ditch. We're clearly heading for stagnation at best, and quite possibly another "double dip" downturn.
The headline number was disappointing, to say the least. Real GDP grew only 2 per cent (annualized) in the spring quarter. That's just a hair faster than the U.S. economy (which everyone knows is still deeply in the soup). Two per cent doesn't keep up with population and productivity -- implying higher unemployment ahead, not lower. Typically, at this stage of recovery, the economy should be growing three times faster.
The U.S. federal government has been paralyzed for two weeks by a lack of budget spending authority, with hundreds of thousands of federal employees off the job. And that's just the immediate economic fallout from a political showdown over whether the U.S. government will be allowed to borrow beyond its current $16.7 trillion (U.S.) debt ceiling. Without that authorization, many more government operations would cease immediately, and the U.S. would likely default on some of its existing debt. Perhaps most painful of all, even the best-case outcome to this week's drama seems to be a compromise that would permit four months' additional borrowing -- merely setting the stage for another showdown in February.
The second-quarter GDP numbers confirm that Canada's continuing "recovery," such as it is, is still balancing very precariously on a knife-edge between expansion and contraction. The various sources of growth vary widely in their current momentum. The overall net balance is barely positive. And coming austerity in the public sector could very much push the balance into negative territory in coming quarters.
A new report from Citizens for Public Justice (CPJ) on job creation in Canada arrived just as the Prime Minister said Monday he intends the next election to be about jobs and the economy. As part of a study of poverty, CPJ has published a set of fact sheets on job creation in Canada since the 2008 recession. It looks at regional and generational differences, assesses job quality and measures newly created jobs against new job seekers.
Anyone who believes what Conservative cabinet ministers have been repeating about job creation in Canada should read the CPJ fact sheets.