Roundup: A contraction and a rate cut

Posted on by

While he didn’t use the word itself, Bank of Canada Governor Stephen Poloz essentially said that Canada is in a recession, and he cut the interest rate by another quarter of a percent, leaving prime at 0.5 percent. Poloz said that we are in a contraction, but there should be growth in non-energy sectors in the second half of the year. Nevertheless, shrinking the growth outlook for the year by a full percentage point of GDP blows billions of dollars out of the projections that were built into the government’s budget, which almost certainly will push it into real deficit territory (as opposed to the paper surplus that it was sitting in after raiding the contingency reserve and EI fund in order to pay for those family tax breaks and still make it look like there’s a surplus). Where the real kicker could come in is the fact that the Bank of Canada is trying to use monetary policy to stimulate the economy to help it grow, while the government is cutting in order to achieve its balanced budget rather than stimulating at a time of contraction to prime the pump, as it were, and there was talk about how it meant the government was basically undoing the work the Bank was trying to do. So there’s that. Also not helpful is the government then coming out to attack Justin Trudeau and Thomas Mulcair as a means of trying to distract from their economic record, so that they can make the pitch to be allowed to stay in office after the election. Maclean’s assembled an expert panel to discuss the rate cut, while Andrew Coyne fears the damage that all of the election promises will end up causing the economy by the time the vote is over.

Good reads:

  • Joyce Murray found out an ad went out in her name that praised “sobriety” for First Nations students, without her approval. She and the First Nations paper that ran the ad apologised, but the NDP candidates and MPs who called her a racist haven’t.
  • Rona Ambrose sent a snarky email to the provinces about drug prices, but won’t sit down at the table with them to do anything about it.
  • The government is planning new penalties for employers who abuse temporary foreign workers, but criticism tends to be that there is little inspection currently.
  • The NDP are consulting about a potential transition into government, though it will be difficult with little experienced bench strength.
  • NRCan is trying to evaluate their “risk factors” of their employees’ friends and relationships for conflicts of interests, which seems like a huge overreach.
  • The preliminary investigation into Senator Meredith is complete, and the Senate Ethics Officer is being asked to look into the harassment of eight employees.
  • Lindsay Tedds puts that $4 billion CRA write-down into perspective.

Odds and ends:

Retiring Liberal MP Gerry Byrne talks about his 19 years on the Hill, and the rise of toxic partisanship.

Maclean’s found a map of Canada from 1955 that predicted the future. They show what happened and what didn’t.