Canada Has All the Symptoms of an Economy in Decline

Signs of Decline: Canada’s Economy Showing Troubling Symptoms

April 12, 2024 TruthUSA

Commentary

Unemployment figures are seen as a lagging indicator by serious economists and market observers, despite many mistakenly believing it to be a leading indicator. The evidence and reasoning support the lagging indicator argument, as employers typically only cut jobs after confirming a decline in revenue and profitability, as historical data shows.

It is no surprise then that Canadian unemployment rose from 5.8 percent to 6.1 percent in March, according to Statistics Canada, indicating a potential recession with a 22 percent increase in one year. Historical data from previous recessions also supports the theory that unemployment is a lagging economic indicator.

The analysis raises the question of whether history will repeat itself, with unemployment possibly increasing in the coming year. Despite government claims and media narratives, the economy is struggling, evident from stagnant or falling real disposable income and a continuous decline in employment rates according to Statistics Canada.

Changes in the labor market over the years, including an aging workforce and increased education levels, have altered the landscape. More government employment and less productive work contribute to keeping unemployment relatively low. The economy now relies heavily on government-backed programs and sectors like condos, coffee shops, and cannabis, leading to a decline in living standards and underperformance compared to the United States.

Amid these trends, the mentor’s advice to anticipate reversals rather than timing market peaks proves valuable. The possibility of a 7 percent unemployment rate in the future, along with significant economic shifts, suggests a challenging road ahead. Factors like low wages, poor productivity, high taxes, and oversupply due to immigration contribute to keeping incomes down.

While official numbers may not fully capture underemployment and gig economy dynamics, the economy shows signs of decline, both cyclical and secular. The growth of the underground economy, driven by multiple jobholders and a shift towards non-traditional work, points to deeper issues in Canada’s economic landscape.