Canada’s weak economic growth prospects threaten the well-being of Canadians and preclude the introduction of the Liberal government’s spending initiatives without undue fiscal risk or much higher tax rates.
The fall fiscal statement estimated Canada’s potential growth rate to be just 1.4 per cent from 2020 to 2025, down from the still modest pace of 1.8 per cent calculated before the pandemic. Growth could be worse still as, in research done for the Council of the Federation in 2015, I estimated the growth potential to be just slightly more than 1½ per cent, without pandemic effects.
The main reasons for such low growth are the aging population, slowing labour force growth and a continuation of a long trend of…
Quand le vent souffle fort, même les dindes peuvent voler. Pour un temps. À preuve les titres boursiers gonflés à l’hélium par l’action coordonnée de petits investisseurs.
L’appréciation aussi artificielle que spectaculaire d’une poignée d’actions soulève des questions importantes sur les causes profondes et sur les conséquences de ce phénomène, encore trop récent pour être pleinement compris.
Résumons d’abord les faits essentiels, sans entrer dans les détails de la plomberie financière.
Aux États-Unis, des milliers d’investisseurs novices, surtout de jeunes hommes, se sont coordonnés dans un forum du réseau social Reddit pour acheter une douzaine d’entreprises mal aimées, notamment GameStop, AMC et BlackBerry,…
A couple of weeks back, Jack Mintz warned Financial Post readers that governments that think low interest rates will let them keep borrowing big are on a dangerous path. As he pointed out, the presumption that deficits are sustainable depends on the rate of growth of the economy exceeding the interest rate. Drilling down, if a government borrows to pay all its interest, its debt will grow at the interest rate. If the economy grows faster than that, the government’s debt-to-GDP ratio can fall even if it also borrows to pay for some of its program spending. But if the interest rate is greater than the rate of economic growth, the government must cover all its program spending with taxes, and then some. Otherwise, its debt grows…
