For the first time in a long time it looks like the economy may be the top issue in this election. With big price increases in food and fuel, house and condo prices dropping, unemployment edging up and incomes stagnant (except for public service executives) more and more Canadian voters are looking for answers and comfort in times of increasing economic uncertainty.
Strangely enough, most Canadians were feeling pretty good about the economy until the summer, even with a severe downturn in the U.S. battering some key Canadian industries.
While big manufacturing industries like automakers and lumber mills have felt a brutal squeeze as U.S. consumers slashed purchases of homes and cars, other parts of the economy picked up the slack because Canadians kept on spending.
They could do this largely because prices remained sky-high for Canada’s resource exports — petroleum above all, but also things like metals, coal and potash, a key component in fertilizers. There was also a boom in the value of grain and other agricultural commodities.
As a result, the cash flowing in from trade kept Canada’s domestic economy much stronger than the GDP numbers suggested. True, manufacturing slashed 67,300 jobs in the 12 months ending in August, but even so, total employment grew by 224,000 jobs in this period, thanks to gains in areas like construction, professions and services.
However, the looming problem for the Harper government was that the gusher of money from exports of high-priced resources tapered off as oil, grains and other products dropped in value by late in the summer. Yet many Canadians continued to feel the lingering impact of food and fuel inflation.
By July, job creation had stalled and gone into reverse, leaving unemployment a little higher than it was last winter. At the same time, July’s inflation rate, at 3.4 per cent, was the highest in five years.
Are you concerned about inflation / deflation / stagflation and is the economy a key issue for you in this election? Do you think that any Canadian politician has the ability to improve our economy while our largest trading partner is going through major financial difficulties of its own and facing ongoing fallout from a burst housing bubble?