Jagmeet Singh vs. Big Telecom
The federal NDP have unveiled a telecom policy that calls for a cap on cellphone bills and the establishment of a “Telecom Consumers’ Bill of Rights” as part of an effort to limit how much Canadians spend on calling, texting and surfing. “Telecom companies are making billions of dollars on the backs of Canadian families. It doesn’t have to be this way,” party leader Jagmeet Singh said in a statement. The NDP plan also promises to “put an end to the egregious and outrageous sales and services practices of the telecom companies.” Canada is known for its high telecom costs and its very profitable wireless sector, which makes more money for every gig of data sold than telecoms anywhere else.
Watch: Canadians, here’s why your cellphone bills are so insanely high. Story continues below.
Are Canada’s trade deals making the trade deficit worse?
Canada has signed on to a number of trade deals in recent years, but Canadians seem to be doing much of the buying, and not much of the selling. The CPTPP trade deal, which gives Canada duty-free access to 10 Pacific Rim countries, came into force this year, and in the first four months, exports to those countries fell while imports grew, National Bank of Canada economist Krishen Rangasamy said in a recent client note. Meanwhile, imports from the European Union have grown three times as fast as exports since that trade deal came into force in 2017. “How well is Canada exploiting its trade deals? Not very well,” Rangasamy concluded. But before we go blaming ourselves, it’s worth noting that the recent spate of tariff wars is wreaking havoc on global trade patterns.
Canada’s job market isn’t the only one kicking butt
Canada’s jobless rate hit 5.4 per cent in May, the lowest in comparable records going back to 1976, but our neighbours to the south are no slouches when it comes to job creation. In a stark illustration of how strong the U.S. labour market is, the Wall Street Journal reports that the number of job openings in the U.S. now outnumbers the number of job-seekers by the largest number on record. There were 7.449 million unfilled jobs at the end of April, and 5.824 million people looking for work. Part of the issue (both in the U.S. and Canada) is baby boomers leaving the workforce as they age. Canada has responded to the labour shortage by increasing immigration levels. It’s unlikely the Trump administration will follow suit.
CIBC predicts interest rates are coming down
Strong job numbers or not, signs are mounting that the U.S. economy is slowing, and investors in the bond markets are now betting that the U.S. Federal Reserve is going to cut interest rates twice this year to stimulate growth. If Canada doesn’t follow suit, this will cause the loonie to rise, CIBC senior economist Avery Shenfeld wrote in a client note. A rising loonie would be bad for the country’s already unimpressive trade situation (see above), so the Bank of Canada will likely follow suit and cut rates itself, Shenfeld predicted. That prediction goes against what many other prominent analysts are saying: That the Bank of Canada will stand pat on rates in the coming months. If CIBC’s prediction is correct, Canadians could see even lower mortgage rates, which have already hit two-year lows.
The ‘R’ word keeps coming up
You can’t spend much time scanning the Canadian news headlines without the word “recession” coming up these days, but so far it’s mostly talk. The latest talk, telegraphed by the Globe and Mail, involves an RBC economist declaring that Canada will have it much worse than the U.S. in the next recession, basically because Canadians are carrying a lot more debt and so have less of a financial cushion if things go wrong. Meanwhile, real estate blog Better Dwelling notes that residential investment in Canada (meaning construction, renovation and ownership transfer) has shrunk for the fifth quarter in a row. In country as dependent on real estate for economic growth, that typically signals recession, Better Dwelling asserts. Given all this, couldn’t say we blame you if you switch back to Raptors coverage.