 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
|  | New MPs are given an orientation tour ahead of the new parliamentary session this week. (Adrian Wyld/Canadian Press) | | | The worlds of economics and politics will collide again this week.
Parliament is set to resume in a flourish of tradition and grandeur. There will be trumpets and red carpets and a King's speech to start the week.
The economic news to wrap the week will be decidedly less celebratory.
GDP numbers are going to refocus the conversation on economic growth and how much trouble lies on the road ahead.
The actual headline on Friday is expected to show the Canadian economy as a whole held up rather well in the first quarter (January, February and March).
But the deeper you dig into the details, the more you see the trouble.
"We expect gross domestic product data on Thursday will show the Canadian economy grew by 1.8 per cent annualized in Q1," wrote RBC economists Nathan Janzen and Claire Fan.
"The catch is that most of the increase came early in the quarter from a 0.4 per cent rise in January."
They say GDP contracted in February and in March is likely to have grown by 0.1 per cent.
This is how GDP growth looked when we got last month's numbers. | | |  | | | | | The issue is what's coming next.
A Bloomberg survey of economists found the forecast is going to get worse from here.
Most economists believe output will shrink one per cent on an annualized basis in the second quarter (April, May and June) and another 0.1 per cent in the third quarter (July, August and September).
A recession is defined as two back-to-back quarters of negative growth. So that forecast would mean Canada has already started to slip into a recession.
The issue, of course, is tariffs. But the fact is, Canada's economy has been weak for the better part of two years now. So, as the uncertainty that comes with the trade war begins to bite, there simply isn't much cushion.
Speaking at the G7 meeting of finance ministers and central bankers last week in Banff, Alta., Bank of Canada governor Tiff Macklem said he expected second-quarter growth to be "quite a bit weaker" than the first quarter.
He said Canada is "keen" to sit down with the U.S. and get a deal on trade and get back to growth.
"If things move in the other direction, [the Canadian economy will] do worse," he said.
We will also get a deep dive into the state of the Canadian jobs market on Thursday.
The unemployment rate rose to 6.9 per cent last month. Job losses were mostly focused in wholesale trade, forestry, fishing, quarrying, oil and gas. |  | | | This week's jobs data comes in the form of the Survey of Employment, Payroll and Hours. It's a deeper dive than the more common Labour Force Survey.
It takes more time to put together (as such, these numbers will look back at the state of the labour market in March) but they're less volatile and less prone to revisions.
But the Labour Force Survey has told us there was serious weakness working its way into the jobs data.
Overall employment would have fallen in April were it not for temporary jobs related to the federal election. And manufacturing posted its largest single month of job losses (-30,600) since the pandemic.
So, the SEPH numbers will be important to give us a sense of where things were headed.
What do you think will happen? Email me at peterarmstrong@cbc.ca
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forwarded to you. | | |  | | GDP numbers for March (and thus the entire first quarter of the year) will be released on Friday. Economists believe Q1 GDP growth came in around 1.8 per cent. But they also believe it's slowed sharply since then. | | | | | | Jobs data on Thursday will look back at the state of the labour market in March. The Survey of Employment, Payroll and Hours will dig into the jobs landscape before tariffs really kicked in. | | | | | | Parliament resumes this week with a speech from the throne on Tuesday. Expect a personal income tax cut to be one of the first priorities of the new Liberal government. | | | | | Three things to read, watch and listen to this week | | |  | A new podcast asks the question, who broke the internet? (Pascal Le Segretain/Getty Images) | | | 1. Who broke the internet? | | | I am uncommonly excited about this podcast.
Cory Doctorow hosts a four-part series asking what happened to the worldwide web and why it's become ... so bad.
He was an early champion of the internet in 1993.
"It was the biggest thing since fire," he says in the trailer for the podcast Who Broke the Internet. "The early internet was full of promise... It was open, free and anti-commercial."
But he says somewhere along the way, something went horribly wrong.
"Have you noticed that the internet is, you know, terrible right now?" he asks.
Why yes, Cory, I think we all have.
It's filled with ads and horrible content, and instead of bringing people together, it's driving us apart.
But Doctorow doesn't just want to understand what's wrong, but why it went wrong in the first place.
"Because what happened to the internet wasn’t an accident. The internet sucks because powerful people made decisions that had the completely foreseeable outcome of turning the old, good internet into a hellscape," he says.
Doctorow invented the term "enshittification." I wrote an article about the term here.
It refers to what happens when tech companies disrupt an existing industry, change it fundamentally, and build companies that will never turn a profit.
Look at the taxi industry as a prime example. Uber and Lyft came in, drove down prices. In some cases, public transit was reduced as well, because prospective riders were simply taking an Uber instead.
Now you can't get a taxi, bus schedules are often slower than they used to be and because the ride-sharing companies are losing money, it's harder and harder to get a ride with them, too.
"That's the lasting legacy here, in that we don't just have this era in which, you know, small businesses are chased out of the industry, it's that we then go back to a status quo that's worse," Doctorow told me for that article.
His new podcast is aimed at understanding who did what. And, more importantly, what can be done now to turn this mammoth ship around.
Check out the first episode of Who Broke the Internet here. | | | 2. Lagarde says global trade will never be the same | | | I had a fascinating conversation with the president of the European Central Bank last week.
Christine Lagarde was in Banff for the meeting of G7 finance ministers and central bankers.
Lagarde is a veteran of these things, a diplomat who plans everything she says very carefully.
So I was struck by this statement she made right at the beginning of our interview.
"It's fairly obvious that international trade will never be the same again," she said, referring to U.S. President Donald Trump's chaotic tariff threats.
When pressed on what that means and what that will look like, Lagarde said trading nations will have to navigate this period, but she made it clear she's also hopeful.
"In every threat there is an opportunity, and I really believe that. What sounded like a complete reshuffling of the cards as of April 2 [a.k.a. 'Liberation Day'] this year has also launched a complete review of relationships of trust, of diversification of sources and destination of both products and and services and of the long-term relationship between both the policymakers, but also, more importantly, the economic actors," said Lagarde.
There's a lot of information crammed into those sentences. A "complete review of relationships of trust" is a step further than even Prime Minister Mark Carney has gone in his statements, about how the era of deepening ties with the U.S. is over.
Lagarde told me she spoke directly with Carney (who is an old colleague and friend of hers), but she wouldn't divulge what was said.
What she did say is that tariffs disrupt trade, and while negotiations to remove those tariffs are ongoing, what businesses really need is certainty.
"I think it will be in everybody's interest to reduce and hopefully remove the level of uncertainty that we have at the moment. It's one thing to have tariffs and it's not, you know, a win-win outcome, but it's another thing to have complete uncertainty," she said.
Lagarde is incredibly smart and understands global trade as well as anyone. She's deliberate and clear, and I've listened back to this interview a few times and feel like I pick up new things every time.
Check out my interview with Christine Lagarde here. | | | 3. Are humanoid robots imminent? | | | Bloomberg Originals host Emily Chang just released a spectacular video looking into OpenAI's enormous new facility.
The sprawling "Stargate" site in Abilene, Texas, is a $500-billion US bet on the future of artificial intelligence.
Chang gets a tour of the facility and sits down with OpenAI CEO Sam Altman to discuss the site, the plan and the future of AI.
The entire conversation is riveting. But there's one segment that has been rattling around in my head that I'd like to highlight here.
Altman and Chang pivot the conversation to how much (or perhaps whether) society has truly prepared itself for the potential of AI.
Altman says he doesn't think the world has fully come to grasp what's coming. He thinks people understand in a very abstract way that AI will be a better programmer or may be better at customer service than humans are today.
"I don't think the world has really had the humanoid robots moment yet," he said.
I stopped in my tracks. Wait, what? "Humanoid robots"? Is that really a thing?
Altman believes it will be. And he believes it's not "very far away."
"So yeah, it’s coming and we have always tried to just be super honest about what we think the impact may be, realizing we may be wrong on a lot of the details," he said.
Chang then asked the question I was yelling at my computer screen.
“What happens when the humanoid robots get here?”
“I mean they’ll obviously do a lot of jobs, but the point I was trying to make is the first day you’re walking down the street and there’s, like, seven robots that walk past you doing things or whatever, it’s going to feel very sci-fi," Altman said.
Yes, indeed, it will feel very sci-fi. So much so that even after watching this video about how his company is building toward that future, I'm not sure I believe it (yet).
Watch Emily Chang's tour of the Stargate and interview with Sam Altman here. | | | How the economy looks beyond Bay Street | | | Inflation's sharp (one time) deceleration | | | Last week, we were looking ahead to Canadian inflation numbers.
Someone wrote in a few weeks ago asking why I use the term acceleration (or, in this case, deceleration) when writing about inflation.
It's a specific term because inflation is (almost) always rising. The question isn't did prices go up, it's whether they rise more or less than they did in the previous month.
So the numbers we got last week showed the rate of inflation slowed from 2.3 per cent in March to 1.7 per cent in April.
So prices were still rising, just not as sharply as they were the month previous. | | |  | By now, most of you already know what was pushing prices around.
BMO's chief economist Douglas Porter says two factors were responsible.
"[It] was due to the one-two combo of the removal of the consumer carbon tax at the start of the month and a big drop in global oil prices," he wrote in a note to clients.
But the underlying inflation story is one of stubborn price growth.
"The big relief from lower gasoline prices in April masked an unfriendly inflation picture beneath the surface. Some of that upswing in underlying prices appears related to the simmering trade war, with food and vehicle prices showing some real power," wrote Porter.
So as much as we may feel like we are done with inflation, it's clearly not done with us.
What do you think?
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