Historic numbers in the latest jobless figures

Montreal unemployment is lower than in Toronto for first time in memory

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The Gazette, Wednesday, November 25, 2009

It's official - we're in the midst of a jobless recovery.

Economic growth has resumed, but job growth lags, a normal consequence of recession and recovery. It's not just a question of lagging confidence by the companies in their hiring, it's also a result of productivity gains, as measured by output per person, which they've achieved in a downturn. It will take a while for employment growth to catch up to GDP growth.

The numbers are eloquent. While GDP growth turned positive in the third quarter of this year, unemployment actually increased last month by 0.2 per cent, to 8.6 nationally. That's up from six per cent before the start of the recession last fall.

And here's a truly astonishing number - Quebec's unemployment rate of 8.5 per cent is actually below the national average. No one I know has ever seen a number like that. In the previous recessions of 1981-82 and 1990-91, Quebec's jobless rate was several points higher than the national average. Historically, even in good times, it is about two points higher.

And Quebec's unemployment actually declined by 0.3 per cent last month, while the national jobless rate moved higher. In Ontario, unemployment increased from 9.2 to 9.3 per cent, reflecting the continuing economic difficulties of our country's industrial heartland. Even in oil-rich Alberta, unemployment spiked to 7.5 per cent last month, up from 7.1 per cent in September.

This is more than anomalous. It's a break with history. Ontario's manufacturing and financial services sectors have been hard hit by the failures of Detroit and Wall St. Quebec's high-tech manufacturing sector, notably aerospace and pharma, is evidently resilient, or at least coping. Montreal also benefits from being by far the largest university city in the country, a huge space in the services sector.

Consider: While Montreal's unemployment rate was 9.2 per cent last month, Toronto's was 9.6 per cent. Think about that - Toronto has a higher unemployment rate than Montreal. And if you want to look at a recession-proof city, consider the government town of Ottawa, where the unemployment rate of 5.4 per cent is more than three points below the national average.

And if you want a real pause, and cause for concern, look at the unemployment numbers in the United States, where 10.2 per cent of the population is out of work. Double-digit unemployment has come to America. This is not on Barack Obama's message track of hope and change.

But it is in his daily briefing note on the U.S. economy. The U.S. has been there before in recent history, as high as 10.8 per cent in the 1981-82 recession, from 7.5 per cent going into it. But U.S. unemployment has more than doubled from 4.7 per cent since the start of this downturn.

And U.S. numbers apparently do not capture the hidden unemployed - part-time workers seeking full-time jobs and those who have given up looking for work - which take the real unemployed percentage up to about 17 per cent. In other words, one American in six is out of work.

Once again, no one can remember when the unemployment rate in the U.S., was more than 1.5 points higher than in Canada. Historically, it's the other way round.

And there are no bragging rights for Canada in this: The United States is not only our closest neighbour and best friend; it is by far our largest trading partner, accounting for about a third of our economy. You just have to look at the auto and forestry industries to see the challenges for Canadian exporters in these U.S. numbers.

It doesn't get any better when you compare at the U.S. fiscal frameworks with ours. The U.S. is in very bad shape, with a deficit last year approaching 13 per cent of GDP, and a national debt, which has nearly doubled in the last eight years to more than $12 trillion, equivalent to the national output.

There isn't much comfort for Canada in this, although our current deficit of $56 billion is only three per cent of GDP, and the federal debt of about $500 billion is only about 30 per cent of GDP.

These Canadian numbers are acceptable outcomes in this Keynesian moment of pump-priming the economy.

The Americans are in a very bad place, as reported by the New York Times on Monday: "With the national debt now topping $12 trillion, the White House estimates that the government's tab for servicing the debt will top $700 billion a year in 2019, up from $202 billion this year."

Stated another way, the report continued: "An additional $500 billion a year in interest expense would total more than the combined federal budgets for education, energy, homeland security and the wars in Iraq and Afghanistan."


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