Sunday, January 25, 2015

Martin Regg Cohn Ontario Economy is Great Watch, Climate Change Edition

One thing that Surly Hamiltonian loves to document is the Toronto Star's Queen's Park columnist Marty Cohn's endless predictions that good times are just around the corner for Ontario's economy. Some argue that the Toronto Star is the house organ of the Liberal party both federally and provincially and thus we end up with Cohn's sometimes delusional columns when referring to the Ontario economy.

Annoyingly for Hamiltonians, the fact that the Spectator is under the Torstar aegis means the paper doesn't have their own Queen's Park scribe, so we are stuck with Cohn.

Cohn has a column about the Ontario government coming back to the climate change issue. However he says:

"With the domestic economy rebounding, and global warming talks gaining momentum"

I assume that he's referring to the Ontario economy, since with oil's price crash, the overall Canadian economy isn't looking so great (although it doesn't seem like it will meet the technical definition of a recession).

However how great is the Ontario economy doing right now? Sure the dollar is down as are gas prices. However in fact for Ontario the economy has actually lost jobs in November and December, and the entirety of 2014 wasn't particularly impressive and similar to the previous moribund years after the worst years of the recent recession.

Now I suppose the low dollar and gas prices could mean that in 2015 Ontario will finally have a good GDP year (although maybe Cohn has above 2% GDP growth as his definition of good). People could travel less, both for cross border shopping and foreign vacations and Americans could visit Toronto more giving GDP a boost. I'm skeptical that manufacturing will make much of a turnaround, but rather continue its decline, although not as fast (note that the Mexican peso is also way down versus the US dollar).

The fact that oil is way down has to have some effect on Ontario's economy; the banks are all headquartered here and no doubt will feel some pain. The Canadian stock market performance certainly hasn't been great of late and I don't see it rocketing up anytime soon.

But more importantly, can Ontario's main industry, housing, continue as it has been the past decade? Even a slowdown would cause problems, because Ontario doesn't have a lot of GDP growth coming from other areas. I doubt it will collapse as the Ontario population continues to increase through foreign rather than intra-provincial migration, but the limits of people's ability to pay based on their income is being tested.

One final point. Cohn could possibly be right that the Ontario economy is rebounding. But he's banged that drum so long, that he's like an economist who has predicted n of the last m recessions, where n >> m.


No comments:

Post a Comment