Hey there, time traveller!
This article was published 4/8/2020 (418 days ago), so information in it may no longer be current.
Canada’s economy was already on the mend in May, according to the official estimate of gross domestic product. The healing probably continued in June. Sports, entertainment and airlines were still in deep trouble, but on the whole Canadians were bouncing back satisfactorily from the coronavirus lockdown.
It is not yet clear whether the United States’ economy, our main export market, is recovering similarly from its COVID-19 shutdown. The latest signs suggested this week that U.S. recovery will be slow.
Statistics Canada reported on Friday that Canada’s GDP — the sum of all output of goods and services in Canada — rose by 4.5 per cent in May after steep declines in March and April. The agency calculated that the level of output in May was 15 per cent below the February level, before the coronavirus struck and people were told to stay home.
Preliminary signs observed by statisticians in June suggested a five per cent rise in output in June. If that is true, then the damage to Canada’s economic output stood at somewhere around 10 per cent as summer began.
For airline employees, athletes, stage performers and tourist industry workers whose jobs have disappeared, the blow is hard.
For 90 per cent of Canada, however, the pandemic has to date been more of an inconvenience than an economic catastrophe. The clouds have already parted and the sunshine is returning.
The climb back toward pre-pandemic levels of employment and income, however, will depend greatly on events in the U.S., this country’s likeliest source of contamination and the main export market for Canadian goods and services. The news on that front is less encouraging.
The U.S. this week was still recording more than 60,000 new COVID-19 cases each day (compared to fewer than 500 new cases per day in Canada).
Measures to slow spread of the virus in the U.S. will therefore have to be stepped up, at some cost to employment and industrial output.
The U.S. Senate, the House of Representatives and the White House allowed emergency benefits to workers to end on July 31, for want of an agreement on a new emergency package.
More than a million people a week were filing new claims for unemployment benefits in late July, which suggested U.S. unemployment may be increasing.
The U.S commerce department last week produced its usual GDP estimate, but the figure covered the whole three-month period to the end of June and gave no clue which way things were moving in May and June. The commerce department estimates output for each quarter-year, adjusts for seasonal variations and multiplies by four to find an annualized rate of change, which cannot be compared to Canada’s GDP numbers.
Canadians will have to find our own way back to the level of prosperity the country knew in the pre–pandemic era. We cannot count on a U.S. economic boom to carry this country out of the crisis.
The commerce department’s report found U.S. gross domestic product decreased at an annual rate of 32.9 per cent in the second quarter — an alarmingly large number that caught national attention.
There was, however, no reason to think the economic shrinkage that was seen in the virus-plagued second quarter would in fact continue for a whole year. It was a hypothetical number, not an economic fact.
In these conditions, Canadians will have to find our own way back to the level of prosperity the country knew in the pre-pandemic era. We cannot count on a U.S. economic boom to carry this country out of the crisis.