Tuesday, July 7, 2009

Canada and the US are "B" students

The Conference Board of Canada released its 2008 economic rankings for 17 high-income countries. It uses a grading system based on percentiles across the following categories: inflation (A), GDP growth (B), income per capita (C), labor productivity growth (C), unemployment rate (C), employment growth (C), inward FDI (C), and outward FDI (C). The terms in parentheses are the "grades" received by Canada. Overall, Canada was ranked 11th, while the US took 8th place.

Although Canada's ranking did not change over the year, the same cannot be said of other countries. Ireland fell from 1st to 17th, while Finland dropped from 6th to 15th.

One thing that I find rather interesting is that Canada gets an A for inflation and a C for productivity growth (the Conference Board grades inflation according to the Bank of Canada's inflation target, 2%). It should be noted here that Canada has experienced perpetually weak productivity growth, not just in 2008. Longer term, strong productivity growth keeps the lid on inflation, while weak productivity growth allows inflation to edge upward. Going forward, the Bank of Canada will face headwinds in targeting inflation if productivity growth does not improve.

But you never know. The primary reason that Canada's inflation rate was so relatively low in 2008 was due to strength in commodity prices in the first half of the year. The Canadian dollar appreciated, holding price pressures down.

The US grades are likewise interesting. It gets a D in employment growth, and an A (the only A in 2008 for this category) in labor productivity growth....hmm....correlation?

Rebecca Wilder


  1. Rebecca: I hadn't realized that the report was from the the Canada Conference Board. I had read the info a few days back, and realized while reading it, that it was slanted by the (reactionary conservative) bias of the CBC (Con Board, not broadcaster).

    Make no mistake, I'm a centrist, perhaps a tad to the right, but rationally so. The CBC has an agenda, and they play it. No tax is good enough for them, at the very same time as most Americans polled agree to higher taxes if it reduces their health costs.

    I will have to return to reference and substantiate my claims. This blog is far too high a quality to leave opinion unreferenced.

    Ironically, my purpose to post was to send you this link, but now that I've commented on the above, I will post it in the blog:

    [The value of building permits issued in Canada in May surpassed the $5-billion mark for the first time since October, 2008, Statistics Canada reported Tuesday.

    This marked an increase of 14.8 per cent from April, with gains in both the residential and non-residential sectors.

    The biggest gains were in Calgary, “with all components of the non-residential sector advancing,” Statscan said. Toronto followed with increases in the number of permits issued for multi-family dwellings – condominiums, apartment buildings and townhouses.

    The gains surpassed expectations. Economists at the Bank of Montreal had forecast “a roughly flat result.”

    Statscan reported that, in the residential sector, the value of permits has increased for three consecutive months.

    “In the non-residential sector, the value of permits increased 15.3 per cent to $2.4-billion, following a 12.9 per cent decrease in April. The gain was mainly the result of increases in the institutional component in Alberta and Ontario.” ]

    Rebecca will most likely wish to access the Statcan report on that. It certainly verifies my anecdotal impression of the Toronto housing market, as Rebecca has noted prior.

    This is all very curious, as events are unfolding not as predicted. Statcan is as good as it gets in this nation for reproting stats, and ranks very highly in the world for accuracy.

    Toronto I can understand, but Alberta? I suspect the devil is in the details...

    I will be back later to comment on the Conference Board's take of events. I freely admit, I distrust them and their self-serving agenda, but I must qualify that to post in this forum.

  2. Hi Steve,

    Good to hear from you. I must admit, the Conference Board's ranking procedure seems a little hooky.

    I did see the permits report - encouraging. I am still pretty positive about the Canadian economy...especially if the US recovers faster than consensus expects (of course, that is a big if).

    Thanks for stopping by, Rebecca


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