Batter Up

Steve Saretsky -

The Canadian economy shed a whopping one million jobs in March, far surpassing economists median forecast of 500,000 workers. Prior to the pandemic, the biggest decline in Canadian employment was 125,000 in January 2009. Unfortunately, there’s not much of a silver lining here. The labour force survey was actually completed during the first week the Government began imposing social distancing measures, so these numbers are going to look even worse in April.

Unemployed Canadians are in desperate need for Government cheques, and they are indeed being printed. Per Carla Qualtrough, the Canadian minister of employment, 3.32 million applications were received this weekend alone for the $2000 per month Canada Emergency Relief Benefit plan. Since March 15th, there have been 8.5M applications for either employment insurance or the CERB. Keep in mind, there has been some double counting (people who applied to both CERB and EI). Either way, at an absolute minimum, about 25% of the entire labour force has sought out assistance.

It’s no wonder the Bank of Canada has been so aggressive in its policy response. They’ll be back in the batters cage again this Wednesday, in what will be one of Governor Poloz’s final speeches. It’s widely anticipated he will hand over the keys to the printing press to Carolyn Wilkins on June 02.

While the printing presses are firing on all cylinders, it appears not everyone is receiving their fair share of free money. The Bank of Canada has recently included additional support for corporate and provincial bonds, however, municipalities have been left out. Vancouver mayor, Kennedy Stewart, says he’s deeply concerned the city could face insolvency. B.C. municipalities are not legally allowed to run a deficit: according to the Local Government Act and the Vancouver Charter, local governments can’t run a budget deficit without special approval from voters or from the province. “The only way we can stay afloat is with the help of the federal and provincial governments,” Stewart said. The economic shutdown is expected to cost the city upwards of $189M in lost tax revenues should measures continue into December.

Despite encouraging signs we are starting to bend the curve, daily case growth nationally has slowed to 5.3%, the lowest in a month-  PM Justin Trudeau announced in a presser this week, “Normality as it was before will not come back full-on until we get a vaccine for this… That will be a very long way off.”

Let’s hope that’s not the case.

Three Things I’m Watching:

1. One million jobs evaporated in March, per Stats Canada.

2. Given the forecasts for a sharp rise in unemployment we should expect mortgage arrears in Canada to move significantly higher. Mortgage deferrals will only help mitigate the increase.

3. Daily case growth is slowing in Canada. It appears distancing measures are working.


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The Saretsky Report. December 2022