Amid so much talk of the “r-word” (recession, for those not afraid to say it aloud), as party leaders each position themselves as the saviours of Canada’s economy, Maclean’s offers a comprehensive reading list that gets you in the know on the challenges facing the country’s bottom line—and how politicians hope to fix all the uncertainty. We get you started with excerpts, but follow the links for the rest of each story.
How Canada’s economy went from boom to recession so fast
An in-depth look at the perfect storm that pushed Canada into recession
While Canadian consumers have so far helped offset the damage by their seemingly unending willingness to borrow and spend, the resulting debt that households have piled on now represents an economic risk in its own right—particularly if job and wage growth weaken. Moreover, much of that borrowed cash has been sunk into real estate, a relatively non-productive sector of the economy, resulting in home prices that are as much as 63 per cent overvalued, according to Deutsche Bank. No wonder some believe Canada is tiptoeing around the edge of the abyss. “You have a resource economy that’s been blown apart sitting on top of a housing bubble,” says Marc Cohodes, a well-known Wall Street short seller who’s betting against Canadian mortgage lenders. “That’s a toxic mix.”
The A to Z of the oil crash
The impact of the oil crisis is so widespread you’d need an encyclopedia to figure it all out. Well, we have one right here.
It wasn’t supposed to happen like this. In the months and years immediately after the end of the Great Recession, Canada’s economy was the envy of the world. Our banks were safer. Our house prices were higher (and rising!). Global investors couldn’t get enough of Canadian stocks. And people were lined up at Canadian job fairs across Europe and the U.S., hoping for a chance to come and experience Canada’s economic exceptionalism for themselves. Good times.
Good times, it’s now clear, that were too good to last. The speed with which the cracks in Canada’s economy have spread and broken apart is remarkable. Economists have been left scrambling to downgrade their forecasts for GDP growth, the job market has showed troubling signs of deterioration, and exports have continued to slide.
Stephen Harper: Conservative? Maybe not.
Not so fast with the labels. An exhaustive audit of the PM’s nine years in power reveals a surprisingly (gasp) liberal economic record.
Oliver’s signature pledge is to balance the books, but staunching the flow of red ink won’t settle the bigger question of whether Canadians are, in fact, better off sticking with the current PM. Seriously trying to answer it requires ditching partisan clichés. Voters used to thinking along the stereotypical lines of party brands need to give their heads a shake when the Conservatives in power have run a string of deficits, after an era when Liberals delivered a run of sizable surpluses.
And that’s not the only way Harper’s record fails to conform to expectations. This is a Tory government that often spends freely—one might even say liberally—to intervene in the private sector, is less than frugal by some measures when it comes to government administration, and cuts taxes in unexpected ways. It’s the surprises that make it all interesting.
Of all the economic-policy levers a politician can pull, none elicits a reaction like hiking or cutting taxes. Reducing the GST by two points in his early years in office still ranks among Stephen Harper’s most debated moves. More broadly, Tories claim “the family tax burden is at its lowest level in 50 years.” Personal income taxes amounted to 7.4 per cent of gross domestic product when Harper took office in 2006; by 2014, those taxes on individuals’ earnings had notched down to seven per cent of GDP. Over the same period, corporate income taxes fell to 1.9 per cent of GDP from 2.6 per cent.
When pollsters ask voters about their priorities, employment is always at or near the top of the list. The Conservatives pitch their annual budgets as plans for “jobs, growth and long-term prosperity.” Finance Minister Joe Oliver habitually framed his budget last spring as coming after the Tories created “1.2 million net new jobs” since the depths of the last recession. But the NDP points to vanishing manufacturing jobs, while Liberals stress high youth unemployment rates.