Canada's Long Road to Economic Recovery
Nov 23, 2009
Despite months of optimistic forecasts with regard to Canada’s economic rebound, two researchers in a recent study have argued that we are still a long way from being back where we were prior to the downturn of more than a year ago.
In Canada’s Long Road to Economic Recovery, Jim Stanford and David Macdonald conclude that more public investment is the key to Canada’s economic recovery.
Little more than a year ago, Canada experienced the largest contraction in Gross Domestic Product (GDP) since the end of World War II, a 50% increase in unemployment within a year, and unprecedented financial instability.
For months now, many analysts have been claiming that full-fledged economic recovery is imminent. While it’s true that the financial sector is moving in the right direction and that this is cause for optimism, it is very likely that the road to recovery will be a long and winding one. The authors highlight the need for a “firm and steady” federal government commitment to actively support Canada’s economic recovery. Although the Harper government claims that it’s January 2009 stimulus plan is working, there is increasing evidence that more robust interventions are needed, and soon.
The most troubling trend identified by the authors is that Canada’s private sector is still contracting. What are considered to be the normal leading engines of economic expansion in Canada’s market economy – business investment, construction, and exports – have not rebounded from last year’s economic shock. Private sector output and job creation is shrinking. The public sector is the only one that is growing.
The main conclusion of the report is that the federal government’s infrastructure stimulus program has not been successful and needs a much larger injection of funds. The Harper government gave the financial sector one of the biggest support packages in history – some $200 billion. Compared to this, the 2009-2010 stimulus package of $18 billion pales in comparison.
The report can be accessed here.
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It's hard to believe one of the biggest stimulus packages in history is still not enough according to the report. The way these types of projects work today I'm not sure who thought jobs would be created over night. The government would have had to do away with a lot of red tape to get people back to work right away.
Jeff D - 2009-12-10 10:21