June 2012 Canadian Economic Fundamentals

[Ally]

Despite economic growth and job gains, family incomes stagnate



Incomes in British Columbia and across Canada have been stagnant since 2008 despite a growing economy, a new report from Statistics Canada shows.





The median after-tax income for families of two or more people in B.C. remained unchanged between 2008 and 2010, after adjusting for inflation, said Wendy Pyper, analyst at Statistics Canada. There was a slight increase between 2007 and 2008, from $66,400 to $69,900, but since then incomes have remained unchanged at about $67,000.





Nationally, Statistics Canada reported Monday that median, after-tax income for families of two or more amounted to $65,500 across the country in 2010, virtually unchanged from 2009 or the year before after adjusting for inflation. The median is the level at which half the population had higher incomes and half lower, hence is considered a reliable indicator of the overall trend in the country.





Read the full article here.

 

[Ally]

Why inflation remains a threat - and what to do about it



Inflation may be fading, but it`s far from tamed ` and investors need to safeguard their portfolios against this serious threat to longer-term returns, one of the world`s biggest bond investors says.





`We expect global inflation over the next three to five years ` or even the next five to 10 years ` to be higher than it has been over the last 20 years. While we do not expect double-digit inflation, we do see inflation gradually climbing higher than the close to 2-per-cent core numbers that we have gotten used to in much of the developed world,` said portfolio manager Mihir Worah, head of real-return portfolio management at Pacific Investment Management Co. LLC, the bond-investing giant cofounded by famed money manager Bill Gross.





`Thinking about inflation and structuring portfolios in an attempt to guard against high inflation should be a central element of any investment strategy,` Mr. Worah said in an interview posted Monday on Pimco`s website.





Read the full article here.

 

[Ally]

Canadian housing boom to grind to a halt




TORONTO ` Canada`s housing boom will grind to a halt next year, stopped by price declines in the condominium-saturated markets of Toronto and Vancouver, according to a Reuters poll, raising the risk of a broader economic slowdown.




On a national basis, Canadian house prices are expected to rise 2.0% this year before stalling next year with a negligible 0.5% gain, according to median results of the poll, which was conducted last week.




House prices have increased 37% since their trough in January 2009, The Canadian Real Estate Association index showed. All 15 respondents in the poll said the market was expensive, by varying degrees.





Read the full article here.

 

[Ally]

Oil sands carbon: When money and morals align





Weaver and Swart's research, which appeared in the prestigious scientific journal Nature Climate Change, was straightforward enough: burn every single barrel of bitumen buried in northern Alberta -- itself, a virtually impossible task -- and you'd raise average global temperatures by 0.36 degrees Celsius. (Bump that figure to 0.42 degrees, if you include the carbon impact of extracting, upgrading and transporting that bitumen.)



Burning all of the world's estimated coal reserves, the paper concluded, would result in 40 times more warming: nearly 15 degrees Celsius, drastically exceeding the two degree threshold deemed safe by scientists and political leaders. "Canada's oil sands: not so dirty after all," read one prominent news headline. "Climate expert says coal not oilsands real threat," read another.






Read the full article here.

 

[Ally]

Could Alberta's 'tar' pave the way to a green Canada?




"There's this clichà that the environment is tugging in one direction and economics are taking you in another," he observes.




Nenniger, along with many others I spoke to in researching this series, believes instead that the acrimonious "pro-oil" vs. "pro-environment" divide obscures a promising, if under-explored, possibility: that real-world policies and technology could one day reconcile the vast wealth of Alberta's oil sands resource with the survival of its Boreal forests and the stability of the global climate.




The small company Nenniger founded and now leads, N-Solv Corp, claims to be demonstrating that path with technology could virtually eliminate water usage and carbon emissions for new oil sands operations -- and make them twice as profitable.





Read the full article here.

 

[Ally]

'The end of growth'...And then what?




His premise is that economic growth -- creating more wealth to support more people at a higher standard of living -- is absolutely essential. He goes on in the same interview to admit that "growth policies are often politically very challenging as well." In all this Harper is profoundly orthodox, as he was in his 1991 master's thesis criticizing Keynesian economics.




Questioning economic growth started at least 40 years ago, but never gained traction. Vancouver environmentalists in the early 1970s were fond of saying, "Unlimited growth is the philosophy of the cancer cell." The idea faded out with the 1973 oil shock and the recession that followed it.





Read the full article here.

 

[Ally]

Jim Flaherty, Finance Minister, to address economy after expected weak GDP data




OTTAWA - The Canadian economy shrank in the second quarter as a number of one-time shocks rippled through the economy, taking their toll on the key exports sector.




But economists said Wednesday that it was unlikely the country would make a second misstep and slip back into a recession as growth is forecast to return in the second half of the year ` albeit modestly.




Finance Minister Jim Flaherty said that despite the weak second- quarter numbers they were "broadly consistent" with expectations in the budget and he expected modest growth in the third and fourth quarters.




"As we all know, global economic growth has been softer in recent months and this impacted Canada as part of the global economy," he said in Toronto.





Read the full article here.

 

[Ally]

The oil sands will determine Canada's future





In late 1998, when the fate of Apple was in doubt, Steve Jobs made a prophetic statement. `Innovation is not about money,` he told Fortune magazine. `It`s about the people you have, how you`re led, and how much you get it.`




When you look at our country`s comparative advantages with the rest of the world, and note that we languish near the bottom of the G8 when parlaying our research and development investment into successful products and usable services, Jobs` remark about innovation hits close to home.




If that statement was applied to Canada, people would refer to our blessings of copious natural resources, the orderly development of which continues to sustain a social infrastructure based on education, health care and security of person that leads to confident, committed and compassionate citizens ` a citizenry that remains the envy of much of the world. As to how it is led, political stripes aside, stable and open Canadian governance ensures transparency in law, solid financial management and a working balance of interests across ethnic, ideological and social boundaries.






Read the full article here.

 

[Ally]

Working with investors pays off




Help someone buy a house and hope for repeat business when they decide to sell several years down the road. Or help someone buy a house and get repeat business several times in the same year. How? Become a Realtor who specializes in working with investors.




Realtor, speaker, developer and author Tahani Aburaneh shares her secrets about this lucrative niche market in her new book, Real Estate Riches: A Canadian Investor`s Guide to Working with the Right Agent.





Read the full article here.

 

[Ally]

Toronto condo boom prompted new mortgage rules, Flaherty says



Jim Flaherty is singling out Toronto`s overheated condo market as one of the main reasons Ottawa is tightening the rules for insured mortgages.





The average price of a Toronto condo ` $334,952 ` was up in the first quarter of the year, as were total condo sales. In spite of anecdotal evidence of some cooling since, Canada`s Finance Minister decided it was time to step in.





On Thursday, Mr. Flaherty announced a tightening of mortgage rules that he hopes will discourage Canadians from taking on too much debt and prevent a real-estate-driven hit to the broader Canadian economy.





Read the full article here.

 

[Ally]

Number of EI claimants drops



Statistics Canada says the number of people receiving regular EI benefits dropped for the third consecutive month in April, down 28,600 to 513,700.







The agency says the number of beneficiaries fell in nine provinces, with the largest percentage declines occurring in Ontario, Quebec, Alberta and Saskatchewan.







To receive EI benefits, individuals must first submit a claim and the number of claims provides an indication of the number of people who could end up on EI.







Read the full article here.

 

[Ally]

Police dispose of selected explosives




Calgary Police say that a landlord did the right thing by calling 911 when he found what appeared to him to be a bucket full of dynamite.







When they first got the call about the suspected explosives, police cleared the area around the Penbrooke home at around 6 p.m. on Wednesday.







They brought in the tactical unit along with bomb technicians to deal with the problem.







Ted Vizlai said his son had a hard time getting home because of the incident.





Read the full article here.

 

[Ally]

Labour shortage, not Dutch disease, biggest threat for manufacturers




The salvation of Canada`s manufacturing sector lies in taking advantage of opportunities in the natural resources sector and emerging markets through enhanced productivity, says one of Canada`s foremost authorities on the industry.




Jay Myers, president of Ottawa-based Canadian Manufacturers and Exporters, said during a BMO-hosted panel discussion today that if Canada`s manufacturing industry is to continue its upward trend, it will need to seize opportunities in Alberta`s oil sands, Quebec`s Plan Nord projects and natural resource-related initiatives in Newfoundland.





Read the full article here.

 

[Ally]

CIBC to wind down FirstLine mortgages unit




TORONTO ` CIBC has failed in its attempt to sell its broker mortgage brand, FirstLine Mortgages, one of the rare occasions in recent history in which a bank has not been able to find a buyer for one of its assets.




As a result, the entity, which at one stage was the country`s largest mortgage broker, will be gradually wound down.




Some staff will become CIBC employees while others be offered packages.




`We conducted a review of our strategic options concerning FirstLine Mortgages, including a potential sale of the origination platform while keeping the portfolio and focusing on renewals through the CIBC branch network,` a CIBC spokesman said in an e-mail. `We determined that an acceptable deal to sell FirstLine`s mortgage origination platform could not be reached and concluded that it is preferable to cease originations from this brand.`





Read the full article here.

 

[Ally]

Why stocks may be even riskier than you think




NEW YORK (AP) ` Job growth in the United States is slowing. Sales at stores have stopped growing. The economies of India, Brazil and China are cooling. Europe is crippled by government debt and bad bank loans.




But there's not much to worry about ` at least if you ask the Wall Street analysts who give advice on which stocks to buy and sell.




This famously cheery group says earnings at the biggest U.S. companies, which appear at a standstill today, will start growing again this summer, then leap 15 percent in the last three months of 2012 from a year earlier.





Read the full article here.

 

[Ally]

Living off of borrowed money not sustainable: BoC




HALIFAX -- Canada's relatively healthy economy has been largely based on borrowed money but the situation cannot go on indefinitely, Bank of Canada governor Mark Carney warned Thursday.




His stern words to a business audience in Halifax came just hours after federal Finance Minister Jim Flaherty moved to clamp down on household lending by reducing the amortization period on mortgages to 25 years from 30, and by limiting home-equity loans.




Carney made clear he endorses the moves, calling them "prudent" and "timely" to support the long-term stability of the housing market and guard against financial excesses.





Read the full article here.

 

[Ally]

Canada's debt-fuelled economy running out of fumes






HALIFAX ` Canada's relatively healthy economy has been largely based on borrowed money but the situation cannot go on indefinitely, Bank of Canada governor Mark Carney warned Thursday.




The central bank governor's stern words to a business audience in Halifax came just hours after federal Finance Minister Jim Flaherty moved to clamp down on household lending by reducing the amortization period on mortgages to 25 years from 30, and by limiting home equity loans.




Carney made clear that he endorses the moves, calling them ``prudent'' and ``timely'' to support the long-term stability of the housing market and guard against financial excesses.





Read the full article here.

 

[Ally]

New mortgage rules welcomed by many




The federal government took direct aim at Canada`s hot housing market on Thursday. Finance Minister Jim Flaherty unveiled a number of new rules on insurance-backed mortgages that economists and commentators say will tame what many are now calling a housing bubble.




Many commentators say it`s about time the federal government took action on soaring home values.




Louis Gagnon, associate professor of finance at Queen's University, tells BNN that the move was `long overdue`.




`Canadians keep borrowing in spite of the signals and in spite of the warnings from the Bank of Canada,` he says. `It`s high time these rules were implemented.`





Read the full article here.

 

[Ally]

Inflation rate plummets 2.1% in May





OTTAWA ` Statistics Canada says annual inflation tumbled to 1.2 per cent last month, the lowest the consumer price index reading in almost two years.




Economists had expected the consumer price index to fall to 1.5 per cent in May from the previous month`s two per cent due to declining gasoline prices from a year ago. Gasoline prices did indeed fall in May, by 2.3 per cent from last year at this time, the first year-over-year decline in 23 months.




Meanwhile, Statistics Canada says decreases in women`s clothing and slower prices at auto dealerships were also factors.






Read the full article here.

 

[Ally]

Mortgage repayment changes will do little to make homes affordable





If you have even the vaguest idea of what went wrong with the American real estate market, you`ll understand that policy-makers do citizens no favours when they make it easy for people to get in over their heads financially.




I think Finance Minister Jim Flaherty realized he and his colleagues came perilously close to creating such a debt trap before the 2008 recession when the rules were loosened to allow mortgage amortization periods of up to 40 years instead of just 25. And I have no doubt this was very much on his mind when he subsequently shortened the period to first 35 years, then to 30 and now, as of July 9, back to 25.




But another set of policies can be just as damaging as too-easy credit. It`s the convergence of market forces and policy factors that make it impossible for people of ordinary means, especially young people, to buy into the communities where they live and work.




Read the full article here.