Despite a multi-party commitment to increase spending on negative political advertising, a mix of cheap oil, shaky fundamentals, and poor governance caused Canada’s economy to shrink each of the first four months of 2015. Unfortunately, experts (including the CIBC’s Andrew Grantham and Bank of America economist Emanuella Enenajor) forecast that contraction will continue through June. If this proves true, Canada will officially be in a recession. Yet, despite evidence that the economy is failing, Canada’s Finance Minister Joe Oliver continues to do what he does best: deny. Oliver insists that Canada is not on track for recession.
By definition, two consecutive fiscal quarters of economic contraction constitute a recession. So no, Canada is not yet in a recession because we haven’t seen the GDP growth/shrinkage rate for the second quarter leading up to June 2015; but it sounds like that data might show us that we are in the midst of one. Why?
Enenajor says that Canada’s sputtering manufacturing sector is responsible for the continuing slowdown. The relatively weak loonie has created ideal conditions for a manufacturing rebound, yet Canadian wheels are still spinning—and not on the pavement. Canada has fewer factories than it did in 2009, and so less capacity for economic growth in this sector, and for the economy as a whole.
Oliver doesn’t buy that explanation, perhaps because it doesn’t absolve him of responsibility. He blames Greece, the U.S., China, Japan, Russia, and the “disappointing” and “mediocre” international economic environment. To summarize, Oliver doesn’t blame anyone else. He blames everyone else.
It’s tempting to chastise Oliver for passing the buck, but it’s fair for him to blame others for our problems. How is Canada supposed to reboot its manufacturing sector with all that Greek turmoil? Furthermore, we all know Japan is responsible for the declining price of oil, and therefore the bane of our existence. Another challenge comes in the form of the balanced budget: the promise that this government broke so many times because it couldn’t stop spending on self-promotional advertising, but which it now insists on keeping no matter the cost to Canadian workers and families. That was because of the Russians. Or the Chinese. Or it was Obama’s fault. Any way you slice it, this looks bad.
Worse yet, it’s an election year. How bad would it look if this government, which prides itself on its so-called economic stewardship, were to let the economy slip into recession before the writ drops? Think Joe Oliver wearing nothing but chaps and a cowboy hat…ya, that bad.
Oliver says that Canada needs “strong leadership” in order to avoid that disastrous scenario. “This is no time to take risks. We can’t experiment with risky plans that could drive us into a deficit,” he says. That’s too true. Can you imagine if we had weak leadership, the kind that might admit that there was a problem and take steps to fix it? That would be terrible. Worse yet, can you imagine if we ran a deficit? That would be like going back to last year, when, after years of record deficits, on Canada Day, our Prime Minister said that ours was “the best country in the world!” How about some applause for mediocrity? Let’s keep Harper in power, and make sure that Oliver remains in charge of the Ministry of Finance. We don’t want to go back to being great.