 Welcome to Mind Your Business ! Consider this your weekly guide to understanding what’s happening in the worlds of economics, business and finance. By Peter Armstrong
|  | Liberal party leader Mark Carney departs Rideau Hall to speak to media after asking the Governor General to dissolve Parliament and call an election (Frank Gunn/Canadian Press) | | | This Canadian election is about a lot of things. It’s about trade and tariffs and threats and sovereignty. It’s about anger and disappointment and frustration. But if you zoom out, it’s about the economy.
There are two key questions voters will have to answer for themselves. One is, who is best to stand up to U.S. President Donald Trump?
The other is which candidate, which party, is most likely to make good on its promise to grow the economy.
Both the Conservatives and the Liberals have promised to take measures to boost economic growth.
And there's no question Canada could use a boost.
The economy is weak, unemployment is high and climbing, and on a per capita basis, GDP has been shrinking for the better part of two years.
But if you look at a longer timeline than that... the prognosis is even worse.
The economist Trevor Tombe calculated per capita GDP among OECD countries since 2015. The ensuing picture is not pretty. | | |  | | | | | Canada comes in second last. Ahead of only Luxembourg.
Now, the context matters here.
This chart starts in Q1 (January, February and March) of 2015. Back then, Stephen Harper was prime minister and the price of oil had just fallen off a cliff.
That clobbered the Canadian economy. It sharply drove down investment and has not yet rebounded.
Amid that downturn, Justin Trudeau became prime minister. His government introduced a series of policies that made it harder to get resource projects approved.
The Conservative Party and many industry associations have long and repeatedly said those Liberal policies kept investment low and hindered an economic rebound.
And now staring down a devastating trade war, Canada's economy has very little cushion. It wouldn't take much to nudge the country into a recession.
Meanwhile, job growth posted some positive gains at the end of 2024.
But some economists are warning those gains may not be reflective of the bigger picture.
"We have doubts about the strength of the labour market indicated by this survey," wrote Matthieu Arseneau and Daren King from National Bank of Canada.
They dug into two different measures of the jobs market.
The main one is called the Labour Force Survey. The LFS is the most commonly used metric to measure job growth in Canada. It quickly crunches numbers from the previous month and gives a snapshot of activity.
But it's also prone to revisions.
The more reliable metric, the Survey of Employment, Payroll and Hours (SEPH), takes a bit longer to put together but generally paints a more accurate picture of what's happening in the labour market.
As King and Arseneau show, the picture SEPH paints is that jobs aren't keeping up. |  | | | None of this is particularly surprising. We knew the economy was wobbling and barely keeping itself out of a recession.
And now a trade war has done two things. It has heightened the threat, but it's also increased resolve to get the economy moving again.
The provinces are working at removing trade barriers to increase domestic growth.
The two main political parties have said they want to speed up the approvals process to build infrastructure to get resources to market.
All of these things are needed whether Canada is in a trade war or not, but this election is going to sharpen the debate and push those parties to put some substance to the rhetoric.
So, here's my promise: every Monday, we can convene here and go through the proposals, figure out what they mean for you, for the economy and for the country.
I don't cover politics anymore and try to avoid the partisan side of things as best I can. We will focus on the economy.
I will be writing like mad for our website and popping up on various shows. CBC News has extensive coverage for these next weeks.
I'll also be contributing to the Live Page on our website, which will be updated throughout the day and give you a sense of what's happening and where things are headed.
You can find that and much more on our main page: CBCNews.ca. | | | Share this newsletter | | or subscribe if this was
forwarded to you. | | |  | | Week 1 of the Canadian election campaign is underway with the leaders criss-crossing the country starting Monday. Economic issues are already dominating with tax cuts and GST breaks from both the Liberal and Conservative parties. | | | | | | The latest Canadian GDP numbers will be released on Friday. Per capita GDP numbers are expected to start rebounding this quarter. (U.S. GDP will be released on Thursday.) | | | | | | The Survey of Employment, Payroll and Hours comes out on Thursday. It will provide a deeper dive into the state of Canada's jobs market in January. | | | | | Three things to read, watch and listen to this week | | |  | The new book Abundance offers a road map to make government work again. (Simon & Schuster) | | | 1. The fleeting promise of government that actually works | | | At the beginning of their new book, authors Ezra Klein and Derek Thompson offer a pretty clear sense of what they're trying to do.
"This book is dedicated to a simple idea: to have the future we want, we need to build and invest more of what we need. That's it. That's the thesis," they wrote.
Klein and Thompson are both journalists (Klein works for The New York Times, Thompson for The Atlantic) who wrote recent pieces that nudged up against a basic idea.
They saw something in the other's argument that augmented their own and decided to put both ideas into one book.
"Over the course of the twentieth century, America developed a right that fought the government and a left that hobbled it. Debates over the size of government obscured the diminishing capacity of government. An abundance of consumer goods distracted us from a scarcity of homes and energy and infrastructure and scientific breakthroughs," they say.
But scarcity and abundance, argue the authors, are choices. And those choices have consequences.
"If liberals do not want Americans to turn to the false promise of strongmen,” the authors write, “they need to offer the fruits of effective government.”
This is already the It Book this spring. It's the new Piketty, or the new Deficit Myth.
Everyone is talking about it. And it's being heralded as a sort of road map for the Democratic Party to start its rebuild.
"Their book comprises more than a set of concrete steps to fix specific socioeconomic problems in America. It’s mainly a sharp cry against myopic Democrats who block new ideas and govern through checklists, leading to what the authors call 'an endless catalog of rules and restraints,'" writes Samuel Moyn, a professor of law and history at Yale University, in the New York Times.
In an alternate universe, it's the backbone of a debate that's probably being played out in Canada ahead of a federal election.
Many of the people that were so angry with the Trudeau Liberals were upset by how hard it is to get anything done in this country.
Housing affordability is in crisis, but nothing's being built. Infrastructure projects run wildly over in both time and budget. Remember when it was all but impossible to get a passport during COVID-19?
So there are lessons for Canada in this book as well.
Check out Abundance by Ezra Klein and Derek Thompson here.
Read this review of Abundance in the New York Times. | | | 2. Super power plans | | | I read two very different things last week that both speak to the same thing: how to establish Canada as a superpower.
The first was a Financial Times piece by Tej Parikh. The other was a letter signed by all the CEOs of Canada's major energy companies.
One is a piece of journalism that maps out an argument I've been making here for a while: that Canada cannot just weather the storms that are coming — it can thrive.
The other is a concrete set of actions some of the biggest companies in Canada say need to be taken to get us there.
"The country is energy independent, with the world’s largest deposits of high-grade uranium and the third-largest proven oil reserves. It is also the fifth-largest producer of natural gas," wrote Parikh.
He says Canada also has vast resources of potash (fertilizer), fresh water, lumber, cobalt, graphite, lithium and other rare earth elements.
This next section, in which Parikh cites Marko Papic, chief strategist at BCA Research, was widely shared on social media last week. The new federal minister of finance quoted the first half, while many of his critics quoted the second half.
“Canada absolutely has potential to be a global superpower," said Papic. "But the nation has lacked the visionary leadership and policy framework to capitalize on its advantages."
Over in the energy patch, the CEOs of 10 of the largest oil and natural gas companies and the four largest pipeline companies offered a way for the next government to tap into that potential.
"We are at a turning point in Canada's history and national interest," the corporate leaders wrote to Liberal, Conservative, NDP and Bloc Québécois leaders.
They say there is increasing public support to grow Canada's energy sector, including new oil and natural gas pipelines and LNG (liquefied natural gas) terminals.
But getting that done will take real effort.
"Realizing Canada’s opportunity will take collaboration between industry, government, and society. The federal government has an opportunity to reset its policies, and regulatory frameworks to support oil and natural gas investment and remove the barriers we have imposed on ourselves over time," wrote the CEOs.
They have five basic suggestions. - Simplify regulation.
- Commit to firm deadlines for project approvals.
- Grow production.
- Attract investment.
- Incentivize Indigenous co-investment opportunities.
"By declaring a Canadian energy crisis and key projects in the 'national interest,' the federal government will be able to use all its available emergency powers to ensure that the dramatic regulatory restructuring required to expand the oil and natural gas sector is rapidly achieved," wrote the business leaders.
As I say, these two pieces are very different in both substance and intended audience. But together, I think they speak to the moment Canada has found itself in.
We have spent a lot of time talking about the perils of that moment. What I like about these is they speak to the opportunities that come as well.
Read Tej Parikh's piece from the Financial Times here.
Read the letter from the energy CEOs here. | | | 3. Who killed The Bay? | | | I'm verklempt about the demise of The Bay.
I always loved that store. My wife and I received a traditional Bay blanket as a gift on our wedding day that I still use every winter. I shopped there with some regularity.
So I'm sad to see this historic operation close down. My colleagues Nisha Patel and Anis Heydari filed about a hundred pieces last week on various aspects of what happened and how we got here.
Colleague Eli Glasner did a great segment on The National asking a pretty simple question: who killed The Bay?
His piece ran like a sort of whodunnit that zeroed in on some suspects.
Suspect #1: The customer
Customer behaviour has changed. Like, it's changed a lot. Especially after the pandemic. Did our habits lead to the demise of The Bay?
Joanne McNeish, a marketing professor at Toronto Metropolitan University, says the problem is that we changed, but the store did not.
"When we walk through these stores, they remind us of the 2005 retail store. And so I've heard a lot of the discussion that says, 'Well, young people don't like a department store.' No, they don't like a 2005 department store, but they love a store that curates their choices," she told Glasner.
Suspect #2: Management
To McNeish's point, the store didn't properly adapt to a changing retail landscape.
That's not to say it didn't try. HBC invested $60 million to take on Amazon in 2016.
The CEO at the time, Gerald Storch, made some bold claims about the company's plans to dominate online sales:
"Canada is our country and at Hudson Bay, nobody will beat us on the internet. Nobody."
Amazon invested $3 billion and beat just about everyone on the internet.
Suspect #3: The owner
In 2008, a guy named Richard Baker, founder of an American private investment firm called NRDC Equity Partners, bought The Bay.
"I refer to them as corporate house-flippers. They buy a house, throw a code of paint on it, change the countertops and sell it again for a profit," said McNeish.
Critics say Baker and his company never really had a sense of what The Bay was, let alone what it would need to become to survive.
In conclusion, Glasner says it was all three.
"After surviving centuries, the case of who killed The Bay is messy. Part changing customer habits, part a failure of management to pivot and part collateral damage from an American company seemingly focused on growing its own empire," he reported.
Whatever it was that killed The Bay, I am sad to see it go.
Check out Eli's segment on The National here. | | | How the economy looks beyond Bay Street | | | Retail sales update | | | Before I ran away for March Break, I looked ahead to the retail sales figures that were set to be released.
They came out last Friday and as predicted, they showed a dropoff in consumer activity in January.
The December figured showed the GST/HST holiday had driven up sales by 2.6 per cent.
January saw a dropoff of 0.6 per cent and the preliminary estimate for February points to a 0.4 per cent decline. | | |  | I'm trying to follow up on data that I preview in this newsletter and give you a better sense of what ended up happening.
These retail sales numbers are a bit volatile, though.
"The tax holiday will continue to add some noise to the data through March — just in time for tariff uncertainty to hit consumer sentiment — though the removal of the consumer carbon tax could add a buffer starting in April," wrote BMO's senior economist Shelly Kaushik.
So, take the wobbles with a grain of salt.
What do you think?
I always appreciate your feedback. | | | Share this newsletter | | or subscribe if this was
forwarded to you. | | | That's it for this week | | | Drop me a line anytime.
Send ideas, comments, feedback and notes to peterarmstrong@cbc.ca.
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