RIM's Tanking's Effect on the Ontario Economy

Certainly everyone has heard that about RIM's bad first quarter 2012 results. I'm not going to go over them although I will point out that I was predicting they were going to suck in April. People shouldn't have been surprised. Here's another tip, this quarter's results, ending today won't be good either, but we won't know precisely until the end of September. The final nail in the coffin was the delay in the BB10 operating system. Certainly RIM spending billions buying back shares looks particularly half-witted now.

RIM compared to the entire Ontario economy is obviously small, however considering Ontario under Dalton McGuinty has basically become a public sector based economy (like France, but without the multinationals partially owned by the state) it was an important part of the private sector economy in Ontario. Especially considering its importance to exports and the fact that RIM isn't like a hair dresser in that it doesn't have to be in Ontario. Beyond auto parts and in a sense banking services and mining, Ontario's exports have been moribund the past few years. This won't be good for Ontario's economy or tax revenues.

Fortunately for Hamilton, the effects of RIM imploding is minimal, apart from some locals living in Hamilton and working for RIM. KW is a different story. Sure there's a lot of high tech startups in Waterloo, but the majority of those will implode or stay small. Plus they don't pay remarkably well and are very engineer heavy and light everything else in terms of employment. Can the KW economy absorb all the soon to be former RIM employees? Sure the good people will find jobs but the dead weight that every big company builds up will have trouble. Expect a lot of vacant office space in KW.

Bad Quebec First Quarter GDP Growth

Here's a National Post article reporting Quebec's GDP growth in the first quarter:

The province’s gross domestic product grew by 0.2% in the first quarter of 2012, the same as the two quarters before, according to data released Thursday by Quebec’s government statistical agency. Its 0.6% annualized growth rate for the first three months of the year compares to 1.9% for Canada as a whole.

Wikipedia's reports Quebec's population growth rate at 0.7% a year in 2006. So for the last three quarters, GDP growth per capita in Quebec has been basically zero. Considering the student disruptions recently I can't see the second quarter number being that great either. Quebec has actually done a reasonable job in reducing their deficit, mainly by raising taxes. I'm wondering if this has been impacting GDP growth of late.

Hopefully Ontario's number for the first quarter will be out soon. I'm very curious to see that. Quebec's bad number is clearly dragging the Canadian number down. I doubt Ontario's number will be as bad as Quebec's, but you never know.

May Unemployment Report, Not So Hot

After two scorching months of job growth in Canada, the May numbers honked, coming in at only 7,700. Haven't seen the Ontario numbers anywhere, so I assume they were flat too. Since last month's Ontario's numbers were also flat that's not really great news for Ontario government revenues. I can't see June's numbers being great and with Europe going slowly down in flames, Ontario's 2012-2013 deficit will probably end up being higher than predicted.

National Post Article on Ontario Electricity

Here's a great article from the National Post about Ontario's electricity market answering the question why the price of electricity is going up in Ontario versus trending down in other places in North America. It needs to be read, but basically the cause is paying for green energy combined with decreasing electricity use.

This is depressing considering how few green electricity jobs have been created in Ontario. Also depressing is that this is basically a regressive policy where money is transferred from everybody, including the poor to those wealthy enough to be able to install solar panels.

Hooter's in Downtown Hamilton?

On Twitter there's rumours of a Hooter's opening downtown. Certainly people will have different opinions on this, but frankly I'm surprised that one hasn't opened years ago. I'm pretty sure it would have done well.

Canada GDP Growth 1.9% in Q1, Ontario's?

Well the news is out that Canada's GDP growth was only 1.9% in quarter one, below expectations. What does this number mean for Ontario? The last few quarters Ontario has underperformed the Canada number so we could easily be looking for a number between 1 and 1.5%. Considering the population growth rate is 1% (from Wikipedia) for Ontario, that's a per capita GDP growth rate of around zero. That can't be great for provincial revenues. Unfortunately we won't hear the Ontario number until some time in July.

One interesting thing about the Canada number is that its relation to the US number:

The growth matched the economy’s fourth-quarter performance, which was revised up from 1.8 per cent, as well as first-quarter growth in the United States.

Curiously Canada was more jobs relatively during that period than the US. Perhaps weaker productivity growth in Canada is leading to more jobs. Or maybe it heralds weak job growth to come in Canada. After the crappy US number released yesterday for May, Canada's number announced next week should be interesting.