Canada's macroeconomy continues to be lethargic at best, and there is growing recognition that the continuing sluggishness of business capital spending since the 2008-09 crisis is a big part of the reason why. Governments are in austerity mode; consumers are maxxed out and cautious about new spending; our exports are restrained by an overvalued dollar and uncertain demand in our key markets. The traditional engine of growth in a capitalist economy is supposed to be business investment -- and vibrant capital spending by companies could help to jump-start all of those other categories of spending (by creating jobs, stimulating more innovative exports, and boosting tax revenues). Business profits and cash flow are healthy -- yet businesses are spending far les
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 recent investment advice column in the Globe and Mail (by David Milstead, August 3) highlighted some surprising facts about Mexico's economy. The bullish author suggested Mexico will be a global economic powerhouse in future years thanks to pro-business policy shifts (like the new plan to open up the petroleum sector, 65 years after nationalization, to renewed foreign ownership), and he trumpeted the coming rise of a confident new middle class.
Here's some good reading on the economic future of Nova Scotia. The Ivany commission on the "new economy" has written up what it heard on the road in an interim report (at www.onens.ca). In so doing, it has cleared much underbrush and roughed out a path forward, like Dr. John Ross's report did for health care.
In short, we may be getting better at grappling with our problems -- just in the nick of time as the economic prognoses get more ominous and as one-note Harperist forces to the West work to trivialize the Maritimes as a mere welfare case.