Among G8, Canada’s economy of the past few years has been on a tear. Our dollar is skyrocketing, unemployment is at its lowest in the past three decades; and yet, many Canadians still don’t feel the force is with them.
The world is lusting for our base and precious metals, and thirsting for our oil sands. As a result, Canada’s overall net worth has recently hit a historic high of $4.9 trillion. If that net worth was to be distributed among every man, woman, and child, each would end up with about $150,000.00 per head. Of course, this is only “statistical reality,” because in our “real” reality, I don’t think many Canadians feel as if they have 150 big ones to go around.
What gives, then? Well, we are getting richer as a nation, but only on paper. For many Canadians, the country’s wealth failed to translate into personal wealth.
How can that happen? Well, just because the oil and gas sector are doing extremely well does not mean that Canadians are paying any less at the gas pumps. And just because Canada’s GDP is steadily increasing, it does not necessarily mean that Canadians are earning more.
It seems that profits earned by Canada have failed to find their way into the wallets of Canadians. Quite the contrary! Chances are — just to keep up in the raising-price environment — Canadians are more likely to end up borrowing money, and at higher interest rates, too!
We have had truly a wild ride in the past few years. But now it seems it might be time to deal with the economic “hangover.” This means dealing with inflation and the ever-decreasing purchasing power. It also means dealing with no meaningful increases of real income during the good times. It is difficult enough having to ask for a raise when the economy is doing well. Imagine trying to get more money from your employers during a bust!
Unfortunately, having a strong economy does not mean that everything works for everyone on every level. And never forget that at some point, the cycle swings the other way, too.
In Canada’s case, the economic slowdown — which is already rearing its ugly head in however mild a form — is resulting in commodity prices easing, while the soaring Canadian dollar is cutting into corporate profits and certain types of jobs. Meanwhile, people have gotten used to a certain lifestyle that corresponds poorly with not having enough money to support it.
So are Canadians in for a rude awakening, much like the kind Americans are going through right now? Probably so. Economists are mostly worried about Canada’s labor market, which has apparently been too strong for the country’s own good for too long. Some sectors have been dealing with structural unemployment for years. But, as more and more people are gaining very specific skills for very specific jobs, there are bound to be serious problems in the long run.