Looking Good - In Canada, Anyway
We're next-door neighbours - trading partners, and we share quite a few social values, although we do certainly have our differences. When the United States prospers, so does Canada. The U.S. market remains and will always be Canada's biggest opportunity for expansion of goods and business exploits. Our biggest trading partner given our contiguous borders. We've a mere one-tenth of the population of the U.S. - so their market can absorb much of what they produce, Canada cannot; we've got to have energetic trading partners and the U.S. is a large market.It isn't finished goods that the U.S. depends upon for trade with Canada with the exception of some issues like the automobile industry. Rather it's raw materials, and energy industries that the United States is interested in securing through its trade partnership with Canada. Although we are beginning, slowly to enlarge our capacity for export with all manner of high-tech products, film production and entertainers. We won't even start on some B.C.-based industries.
But the saying in Canada is that when the U.S. sneezes, Canada gets a cold. When there's an economic slow-down in the U.S. Canada braces itself for an after-shock which sees it joining its neighbour, reluctantly but surely in the financial sick-bed. We'd like it to be otherwise, to be less dependent, to be able to carry our economic health on our own shoulders. The latest news is that Canada's labour market is chugging along beautifully with unemployment at a 30-year low.
Statistics Canada has announced the current unemployment rate to be 6.2%, a wonderfully low figure for Canada, but no cigar in the United States where the unemployment rate has traditionally been much lower than Canada's. Incredibly, we're gaining in job creation. Whereas in the United States Alan Greenspan, former Fed chairman is indicating that huge cracks are appearing and a recession is on the horizon.
The U.S. jobless rate, at 4.5% is considered to be sluggish, with fewer-than-anticipated job creations, and weather is being blamed for much of that. The construction business has stagnated, blamed in part on snow, ice and sleet through the past winter. In Canada construction goes on if not at full speed then pretty well close to it, all winter. It's the slumping housing market that is the big worry in the U.S. and little wonder, given the huge unsold housing inventory.
In a country where interest on home mortgage payments can be deducted from income tax, why was it seen as feasible to offer no down payment, no interest rates on mortgage payments for new-house inventories? Causing people to think they were on easy street, purchasing more house than they could afford, and then forfeiting their purchase when interest rates eventually kicked in and beggared them. Mortgage rates have increased and people discovered they had no equity in the homes they were living in, in this revised market.
Canada's trade surplus widened to its largest proportion in two years, as exports rose to a record high and imports fell. The strength in the Canadian job market was led by banks, insurers and real-estate companies, followed by transportation and warehousing services and health care. Builders are hiring at a healthy rate as construction continues its steady pace forward in Canada.
Government payrolls account for much of the increase in job creation in the United States, while U.S. builders cut a huge number of jobs, the largest decline since 1991. American manufacturers reduced payrolls after cutting several thousand jobs a month earlier. The differences between the two economies and their growth rates is likely unprecedented and rather nervous-making on both sides of the border.
Nervous-making for the U.S. because it can ill afford a recession with its costly war in Iraq and Afghanistan. Its steeply rising debt is truly monumental and should be a source of worry to all Americans. And for Canada because it is always worried when its neighbour is in the economic dumps since we always historically dumped along with it.
Yet here is the Government of Canada preparing to launch its March 2007 budget with financial gifts everywhere, from addressing the fiscal inbalance with the provinces, to tax reductions, to opening new environmental programmes.
On the other hand, these are pre-election goodies, so perhaps not too much can be invested in that symptom of our robust economy, equaling smart spending.
Labels: Canada-US Relations
posted by Pieface @ Sunday, March 11, 2007
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