National Economy
 

I don't feel like hogging the "Provincial Economies" thread with discussion that is related to the national economy, so making a new thread.

I noticed that the USD-CDN exchange rate has been eerily stable the last few months. There was a massive surge in September, but since October the exchange rate has been stabler than it has in a long time.

Also if we zoom out, the exchange rate has actually been very stable since 2016, historically speaking.

Google USD-CDN

This stability has definitely made my life easier for importing products from the US, although I was a bit worried about upcoming projects during the Sept 2022 surge, but that has since subsided.

Bnn reported this morning that Trudeau promised more money in supports if job losses start to occur with what looks like a sofetning economy.

Yep saw that.

https://media3.giphy.com/media/Yrf4i...giphy.gif&ct=g

Justinflation continues should keep lio happy

Why not merge the two threads into a single "Great Canadian Economy Thread" or somesuch?

Actually it sounds like inflation is stable and expected to decline.

It's the Justinflation of housing (rents and mortgage costs) that I "care about". :P And it's definitely not declining, at least not here. Rents are higher than ever and still climbing. Even property values were still going up as well, last I checked, even with interest rates being what they are.

This should sum up Canada's economic choices and problems nicely:

https://pbs.twimg.com/media/FvEsyONW...pg&name=medium

Actually, inflation has been declining for several months and is expected to continue to do so, at a slowing rate.

This was in the US, but 1 more bank collapsed over the weekend, and 2 more are in danger of collapsing soon.

https://www.bnnbloomberg.ca/u-s-stoc...bets-1.1914625

This a strange recession. GDP is technically up, but with the increase in population, I'd say per capita is probably down.

Total employment numbers are up, but when you account for all the new people, are there more people looking for work now (instead of less)?

One thing that's for certain is that people are definitely pinching pennies a lot more now than they were 1.5 years ago. Tough to tell compared to 2019.

Canadian Business Insolvencies Rip Higher, Not Even Real Estate Is Immune

https://betterdwelling.com/canadian-...ate-is-immune/

Not really surprising. As mortgage/rent payments continually rise leaving people with less discretionary income, it's natural that the retail/restaurant sector is being hit hard combined with Amazon and food delivery. This combined with not being able to find enough workers due to their relatively low wages and/or not being able to offer enough hours for their workers to live on.

Construction is not a surprise either as developers have cut back on housing construction in order to keep supply low and hence prices high. Also there are so many construction workers retiring and few to take their place. This is a direct result of poor government and educational policy where decades of telling young people that the only way they will become successful, both financially and socially, is to have a degree is coming home to roost.

Over the past 3 years every electrician and electrical engineer I work with has told me the same thing - that the price of wire has gone up a lot and is very unstable. I assumed this price instability to be as a result of COVID supply chain issues - however I now see that it's a result of the global copper shortage.

Electrical contractors get all their equipment from electrical wholesalers. This includes everything from fixtures, breakers, conduit, wire, relays, switches, poles, certain tools, etc. Whenever most of these items are quoted, the quote is almost always honoured for 30 days so that it has time to get approval from every party (developer, architect, engineer, general contractor, electrical contractor all need to sign off on the shop drawings, and communication takes time).

Wire has always been the one exception to this - historically wire quotes are typically honoured for 7-15 days, rather than 30 days. The reason for this is because wire has very low margin (3% is common), and copper is a floating commodity.

In 2021 and supply chains got disrupted, prices in the electrical industry got extremely unstable, and manufacturers stopped handing out 30 day quotes. For about a year we saw 15 day or even 7 day quotes for fixtures, poles, breakers, and so forth. This only applies to electrical devices, and not wire.

Wire quotes, which previously were as long as 15 days, all of a sudden dropped to 2-3 days. I assumed this to be for the same reason as the rest of the industry, which was COVID supply chain issues.

Fast forward to about a year ago, and all of the electrical supply chain issues have been sorted out, and we are back to 30 day quotes for all electrical devices at every step. Great.

However, wire quotes are still only being honoured for 2-3 days while the rest of the industry has stabilized. I found this very strange, until I learned about the copper shortage.

Digging deeper into I now see that this is because of a global copper shortage:
1. The world uses more electricity than ever before.
2. Copper is the best option we have for electrical transfer - it is incredibly conductive, but doesn't get hot like aluminum. And it has been relatively cheap, historically.
3. Global copper discoveries have gone down significantly over the past 30 years, despite discovery budgets having gone up (source)

Unless massive new copper discoveries are made, this problem is not going to go away any time soon. In fact it's probably going to get worse since there is an ever growing demand for electricity.

Ultimately I think that copper is about to get a lot more expensive, and the electrical industry is going to evolve as a result.

We already have a solutions that require less wire to be installed:

1. Wireless communication technology has become extremely reliable, and you can now control all of your lights using wireless switches. This can save hundreds kms of wire on even a medium sized building.

2. Solar has become more affordable. A lot of outdoor lighting can now be powered using solar panels mounted directly to the pole, for example. This used to cost $20K per pole 10 years ago. Now it cost $5K per pole, and is cheaper than trenching or even directional boring, depending how far the wire needs to travel. Until now this has only really made sense for remote locations, but if the copper shortage continues, I think we'll see more widespread adoption of this. (Example)

3. Battery storage has become much better and more affordable as well, with constant innovation. Batteries have their own challenges with components that need to be mined, but I don't know enough about this to comment. All I know is that batteries today are better and cheaper than they've ever been.

Ultimately I think we're about to see all the "legacy" uses of copper transition to newer technology that doesn't require incredibly long wire runs. We're headed into a world, in my opinion, where every building generates its own power. This was already happening, and a global copper shortage will just add fuel to the fire.

My take on this is purely related to my own experience in the electrical construction industry, which is only one use of copper. But as a whole, I think we're about to see a massive de-copperization, so that we're not as reliant on this metal anymore. Plumbing industry uses a lot of copper as well for example, but I'm not an expert in that field.

^ interesting points re: copper. Anecdotally, I'm seeing more and more public light poles with small individual solar panels. I hadn't thought about the savings on wiring (both material and installation with digging etc.), but I still have to wonder about the overall efficiency of having one solar panel + battery for each light. I get that wire is getting expensive, but I don't see how it beats a battery which presumably contains lithium and a bunch of other rare metals. Still smells like greenwashing to me.

I started buying Copper ETFs half a decade ago because of the electrification trend.

Ultimately economics are going to win, not ideology.

Using EVs as an example, only a small minority of people are going to buy an EV because they think it's good for the planet (even though it's not really all that much better).

The reason people will choose to buy an EV is because it is a much better car for them personally:
1. Much faster acceleration
2. Much more robust - batteries last longer than engines, and there are less moving parts
3. Far less maintenance - tire changes, breaks and wiper blades are about it
4. Cheaper to operate (gas > electricity)
5. Better use of space inside the car.

The four remaining obstacles of EVs for most people are:
1. Cost of the car
2. Limited ranges
3. Charging infrastructure
4. How long it takes to charge

All of these obstacles are being solved rapidly though. But these cars are going to need more copper than current ICE cars, and this copper is going to have to come from somewhere. This means that many of the legacy uses will need to be replaced with newer tech that uses less copper.

Whether or not the reduction in copper use elsewhere is enough to fulfill the growing demand for batteries (and solar panels) remains to be seen. I don't know how this is going to balance out. If we end up needing more copper and not less, then we either need more copper discoveries, or EVs simply aren't going to be the solution everyone thinks it is. And this doesn't take into account all the other rare-earth minerals, but I don't know nearly enough about those to comment on it.

Also, for some perspective on where we are in solar + battery evolution.

A typical pole-mounted LED light you see on a commercial parking lot is generally about 100W (this varies a LOT, trust me, but 100W is average). LED efficiencies have matured nowadays, so this wattage won't be changing much in the near future.

A typical solar-powered pole-mounted LED light is at most 30W. The cost to go use higher wattages simply isn't justified yet. Double the wattage means double the cost for the solar panel and battery. Right now it really only makes sense for applications where you don't have existing power nearby, and even then, you end up getting less light than you'd like. This is changing pretty fast though. I don't think we're that far away from all new outdoor lighting to be solar-powered. Ideology has had nothing to do with this process, this has all been economics. I don't think there were even any grants for solar-powered lights, but I could be mistaken.

I did a huge amount of electrical work in my house over the last few years and I can definitely confirm that wiring has gotten insanely expensive.

Changes to the building code (at least here in ON) in the last few years hasn't helped with electrical costs either; safety requirements have gotten a lot more stringent so GFCI and tamper-proof outlets are required in a lot more places than they used to be which cost a lot more. I wouldn't be surprised if the combination of code-flation and copper inflation have together increased the electrical component of residential construction costs by as much as 5x in the last 5 years.

As for the batteries, lithium is actually pretty abundant, but it's often in very low concentrations whenever it is found which makes mining it expensive & energy intensive and generates lots of rock waste. "Rare earth metals" are the same way; they're everywhere but in miniscule concentrations.

One challenge of course with mining is that we need a lot of these minerals for electrification and decarbonization but environmentalists tend to oppose new mining projects; a lot has been said on this topic already.

I follow developments in space very closely and there's a surprising number of experts who believe that mining in space isn't actually that far off. Last year, the US launched the DART mission to experiment with deliberately altering an asteroid's trajectory, ostensibly for planetary defense research. Dr. Pippa Malmgren speculates that one of the real objectives of this concept is actually to direct near-earth asteroids to crash into the moon, where automated refineries could refine ores from the crashed asteroids and export the metals to Earth. Supposedly a lot of refining and metallurgy processes are actually a lot cheaper/more energy efficient in low gravity, and environmental regulations are obviously far less of an issue. Sounds far fetched to me, but maybe that's how we're going to satsify our copper needs this century!

Load up this chart and go to 20 years, the price of copper has bounced around a lot but we are in a similar price range as we were in 2006.

https://www.macrotrends.net/1476/cop...cal-chart-data

I don't doubt the demand is there and increasing, but the market (miners) are obviously responding.

Thanks for the link, provides good perspective. There seems to have been a massive price run up starting in 2000 though, which seems to line up with the slow down in discoveries.

https://i.ibb.co/GxjZd8v/copper-discoveries.jpg
https://www.mining.com/chart-copper-...eries-elusive/

https://i.ibb.co/tQ2q5jv/copper-price.jpg
https://www.macrotrends.net/1476/cop...cal-chart-data

Yes definitely driven by "the internet revolution" in the broadest sense. I do think the market will sort itself out and we're not into some permanent shortage situation.

Major discoveries vs. mining output is something to monitor too. Like other commodities, when the price drops, new discovery slows, and then when demand rebounds, they are years out from finding new sources and the price spikes

LighteningGuy.............excellent post about EV adoption and I agree with what you stated 100%. I will, however, add another reason why EV sales are soaring.......resale value.

Due to our increasingly carbon taxes, gas prices are going no where but up and ICE engines are going to start failing off a cliff. Considering that most Canadians keep their cars for about a decade that means that someone today will basically be trying to sell their car in 2035 when new ICE vehicles will no longer be available for sale. By 2030, the idea of buying an ICE car will seem completely bizarre even though some may still be produced.

It's kind of like the old stick shift cars. They were never mandated out but now so few people under the age of 50 even know how to drive one that, even if you love driving a stick, you will never be able to resell it.

Have to respectfully disagree with you regarding stick shift cars.

Used stick shift cars tend to sell for more than their automatic counterparts, because they're so hard to find.

I had a 2018 VW Golf Sportwagon with a 6-speed manual, and I ended up getting $3K more than the market average for the automatic equivalent. Same thing when I had a Mazda CX5 with stick shift, sold it for about $1500 more. Usually if you're the guy selling the manual version, you don't have many people to compete with.

Getting back to ICEs, if anything their values will go up for a while when they start getting rarer. The only thing I can see preventing that is if you can't buy gas anymore.

Trudeau's big lie exposed. An essentially stagnant economy despite (or because of) the mass importation of bodies.

Philip Cross: Canada's worst decade for real economic growth since the 1930s
Causes of our slumping growth are domestic, not external
Author of the article: Philip Cross
Published May 09, 2023

Over the last ten years real GDP per capita grew just 0.8 per cent a year on average in this country, its lowest rate of growth since the 1930s. Total GDP has been growing because of our growing population. But GDP per person has been essentially stagnant. This extended period of slow growth has widened the gap between per capita growth in the United States and Canada, demonstrating that the causes of our slumping growth are domestic, not external.

From the fourth quarter of 2016 to the end of 2022, real per capita GDP rose 11.7 per cent in the U.S., but only 2.8 per cent in Canada. The U.S. outgrew us before, during and after the pandemic. From 2016 to the end of 2019 it outpaced us by 3.5 percentage points. During the worst of the pandemic, in the first half of 2020, per capita real GDP fell 9.7 per cent in the U.S. versus 13.2 per cent here. And since mid-2020, it has grown 15.3 per cent in the U.S. versus only 14.1 per cent here. The Americans’ ability to sustain growth over the past decade shows that our stagnation was not the inevitable result of population aging or the exhaustion of technological innovations — which are hitting them, too — but instead reflects factors under our control.....

https://financialpost.com/opinion/ca...th-since-1930s

That article makes a very good point about our ridiculous family reunification policy.

So many of these new Canadians have almost no job or language skills at all. This is why you can meet so many workers, especially in the retail/restaurant sector, that you can hardly understand. They also reduce our productivity because instead of investing in new technologies and the skills of the workers we already have, we just import more cheap labour so those crucial investments don't take place. As for the parents and grandparents, they do nothing for us except bulge our OAS and healthcare costs and take away what little housing we have. In laymen's terms, we are building a bigger pie but dividing in disproportionately more pieces individually leaving us with a smaller slice.

Our immigration system provides a disservice to our economy and quality of life in so many ways and, despite our high levels of it, we are falling further and further behind. Unfortunately, the rest of Canada seems to be following BC economic path over the last 30 years..........just import people and build/flip housing. It is exceptionally unproductive in terms of labour and capitol which is why BC's economy, despite having a 30 year housing boom, has not advanced the real wages of it's residents one bit and has resulted in grotesque levels of social and financial inequality.

The article makes a lot of leaps about cause and effect as does your post. The US has much more low skilled immigration than us. The bulk of theirs is in fact. I'm not saying allowing parents and especially grandparents to be supported by taxpayers makes sense but it's not a major factor in our trajectory.

A couple articles of national interest:

Industrial Market:
http://https://www.reminetwork.com/articles/canada-u-s-industrial-markets-diverge-in-q1/

Residential Rental Market:
http://https://www.reminetwork.com/articles/canadas-sizzling-hot-apartment-market/

When the bulk of peoples' incomes go towards keeping a roof over their head, they won't have money left over to spend on other things. That is why our economy has stagnated.

A wiki report on labour productivity worldwide makes the point quite clearly.

When it comes to productivity in relation to hours worked per-worker, Canada now sits at #16. This is beside #17 Spain, and #18 Italy...........................questions?

Canada is less efficient because of its sparse geography, the US is both a larger and more cohesive market, so more efficient.

Canadian oil sector is less efficient than most other oil producing countries. Oil sands are a very labour intensive and expensive way of extracting oil.

Our agriculture sector is less productive than California. Shorter growing season.

This list goes on......

.

.

To qualify for OAS you need to have at least 10 years of residency in Canada as an adult. Nobody just moves here and qualifies for it. And you need 40 years of residency to get the full amount. So if someone has 10 years they get 10/40 or 25% of the full amount. And they can only qualify for GIS if they are receiving OAS.

I find that mining gets largely ignored by many environmental interests. I haven't seen opposition to the new mines that have opened in this area. Some First Nations will oppose some projects which will delay something like big the Ring of Fire which involves a number of FNs who don't all agree on everything but most First Nations actually want mines for economic and employment opportunities.

There are a number of factors that are beyond our control. It's funny that often the same people who complain about us having too few people and too small a market will complain when we increase immigration.

Who has complained about us having too small a market and too few people? This sounds like the work of your imagination. Citation please.

There are colder and sparser countries higher than us in the productivity rankings. I think Canadians have been conditioned by the Natural Governing Party/oligopolies/laurentian elite or whatever you want to call it to accept mediocrity.

^^ The American market is important to us, but it has more barriers for Canadians than for Americans, and the small Canadian markets are divided among themselves.

I believe geography has much to do with it (economies of scale are important), but some also attribute the cause to a number of factors coming together (of course); such as Canadians working fewer hours. Not much is attributed to tax differences, but lack of innovation, research, and investment are seen as factors; also the brain drain of our most educated to the South.

https://businesscouncilab.com/insigh...ductivity-gap/

Could our national ideology (as such) be a contributing factor, making Canadians lazy? Perhaps the protestant work ethic was thrown out long ago with the religion itself. Everyone I've known assumes paid sick days when not even sick are an entitlement and a given. Is that the same in other countries?

Capital investment has always been higher in the USA, which is probably less important in Canada because there is always some schmuck willing to work for less. I mean, we even try to advertise our low wages as our “competitive advantage”. There are also plenty of countries ahead of us who have far bette labour protections.

I think a lot of it is just obliviousness. Witness the multitude of posters on here who seem to think the economy is red hot because their home prices have skyrocketed when we have some of the worst performance metrics and projections in the OECD.

Lets dive deeper. Most productive state in the US:

• Washington
• California
• Colorado
• Massachusetts
• New York
• Texas

Per a McKinsey’s study.
https://www.fastcompany.com/90851174...mckinsey-labor

These six states also supply one-third of the US’s jobs, and 40% of the overall U.S. GDP. Same study also identifies the key things holding the US back is lack of skilled workers, lack of investment and technology adoption.

If we did the same analysis in Canada we would find the most productive areas is Canada are Nunavut and the North West Territories. Followed by Alberta, Saskatchewan and NFLD. Then Ontario and BC tied.

All that tells us is for Canada productivity is associated with aspects of our economy that are more resource extraction based. It is much lower in economies that are manufacturing and services based. If we focused on growing our mining industry and minimized investment in growing tourism or manufacturing our productivity would climb.

Not certain that is a great plan.

Unless the country has a social security agreement with Canada, which is a lot of them, including major sources of immigration like India and China.

You're right that these places are resource-driven economies. Interestingly all these places also have affordable housing markets.

When people have more disposable income, they have money to spend on other things which is good for the local economy and would certainly help push up GDP numbers as well.

If a lack of scale is a problem then why has Australia pulled ahead of us in productivity? We have 50% more people and connected to the world's largest economy while Australia is an island in the middle of no where.

Also this theory can't explain why we have had such a plunge in productivity since 1990. Was Canada's land mass any smaller back then? Hasn't our population nearly doubled since then? We have the same geographical size back then and were 50% less populated with 50% fewer consumers but somehow we were nearly at the top of the world in terms of per-worker productivity. All this when Canada has the highest rate of university attainment on the entire planet.

These are nothing but cheap excuses to comfort ourselves and take the heat off our politicians. The gap between us and the US in terms of productivity hasn't been this great in a century. The reality is that Canada is losing ground every single year and, according to the OECD, will continue to do so more than any other country till at least 2060.

This notion that immigration will come to our productivity rescue has proven itself to be a lie and yet despite this we are now doubling down on it. As Einstein said " insanity is trying things over and over and expecting different results".

Australia has nearly completely deindustrialized, and they are more dependent on natural resource extraction than any other developed nation, much of it in the form of dirty coal. Australia's days of reckoning are coming.

Let's all thank preachy Justin and the Liberals for this sad state of affairs;

Mexico poised to enter global liquefied natural gas industry and surpass Canada
BRENT JANG
VANCOUVER
PUBLISHED MAY 8, 2023

Mexico is poised to catch the next wave of demand for liquefied natural gas and surpass Canada in the global race to be a new entrant for exporting the fuel.

Momentum for LNG exports from Mexico increased after Europe experienced an energy crunch that was triggered by Russia’s invasion of Ukraine in February, 2022.

While Mexico’s exports would start out relatively modest, it is on track to handily beat Canada.

Analysts forecast that the United States will be the top LNG exporter in 2023, followed by either Australia or Qatar. If most of the Mexican LNG projects and proposals get built, Mexico could eventually become the world’s fourth-largest exporter of the fuel.

Canada recently ranked the world’s sixth-largest producer of natural gas, but it doesn’t have any LNG export terminals yet.....

https://www.theglobeandmail.com/busi...urpass-canada/

^^^ I will assume by your post that you meant DE-industrialized.

That, of course, is very true but my post still stands. Canada's population has doubled in the past 50 years yet we continue to lose ground against our economic peers. Importing more cheap labour is the exact opposite of what we should be doing as it discourages both business and government to invest in new technology and our labour.

Due to the real estate frenzy we need to house all these people it has also caused a warping in precious capitol both labour and financial. Both of those resources are now going towards building houses as opposed to factories.

Talked to someone just yesterday at the dog park. He had fairly good English and is trained as an Engineer at UBC. What does he do?.............he, in true Vancouver fashion, is a real estate agent. He said he can make twice as much money while working a lot less by doing so.

Ditch family reunification, drop our immigration rates by at least half, only allow people in who are FLUENT in either English or French, and only allow in workers in areas where we have a critical shortage ie healthcare, engineering, advanced trades etc. We have been given the "mass immigration will solve our problems" theory years to succeed and newflash.................it isn't working neither economically nor socially.

yes, my bad.

Ever since I heard about the extra million people we got last year it made sense to me why our GDP numbers still show that the economy is expanding, but I suspected that per capita we might have contracted. Just saw this article which confirmed my suspicion. We are in a recession and have been for while, and it's not even close to being over yet. Very high chance this turns out to be a depression with a high inflation rate as they try to print their way out of this mess. I sincerely hope I'm wrong about this as it's not something I want to experience, but I can't be blind to reality.

Canada Has Entered A Per Capita Recession, Quality of Life Expected To Erode
https://betterdwelling.com/canada-ha...cted-to-erode/

I should add, that this is a recession that needs to happen and is long overdue. Once this bust is over there will be a boom, and it will be real, based off productivity not debt, and we will see a better version of this country. But we need to go theough some pain as a nation to get there. We waited too long and let bubbles grow, so now things need to deflate. But after the bust things are going to be epic. I still think that when all is said and done millennials are going to end up being the wealthiest generation ever.

Based on what? :shrug:

I think we're more likely looking at a prolonged period of negligible real growth. We might be looking at 2026 or 2027 before we're out of it.

The real estate bubble
Decline in Chinese growth
Record debt
High inflation
War in Ukraine
Climate change
Covid recovery

Very little short term to be optimistic about.

We're looking at a rough road to recovery.

I wouldn't be surprised if we are in a "per capita recession", although that data is a bit suspect. It doesn't even have a scale on the negative side. Are we supposed to guess?

Population is a bit fickle too as it's not always counting bodies crossing the border, but people attaining specific immigration status (PR, Citizen, etc.)

If we're talking per capita, they we should be specific about working age individuals. We're not expecting kids to contribute to GDP. Baby booms shouldn't be causing technical recessions, that would be silly.

I don't know where your fearmongering about "depression with high rate of inflation" comes from. We're already seeing steep declines in inflation and the BoC is saying we'll be back in target range this summer. That sound optimistic, but 2023 year end seems easily achievable at this rate.

The only sticky point is high house prices, which continue to surprise me. Reducing immigration and building more would help. I'm not sure who has the stones and the ability to make both of those things happen.

I'm curious why you think things will be "epic", and if millennials are the wealthiest generation ever, it will be a) in their golden years, who cares, and b) due to inheritance from boomer parents. Neither of which is helpful economically.