OTTAWA — After a "lost decade" in which Canadians` standard of living remained stagnant, rising levels of disposable income point to a measure of prosperity that will be unchallenged in the western world, says a new report from CIBC World Markets.
"Is there any place you want to be during this recovery?" asked the report`s author, senior economist Benjamin Tal. "It`s Canada."
The reason, he said, is that we are on the cusp of a virtuous circle in which rising disposable incomes and employment deliver higher consumer spending, greater economic growth, increased foreign investment and robust equity markets.
Tal`s research shows that in Canada, since 2005, each Canadian`s disposable income — the money left over after paying the bills — has grown at twice the pace of the U.S., to $2,600 Cdn versus $1,300 U.S. south of the border, after adjusting for inflation.
He expects this trend to continue as demand for Canada`s commodities recovers from the global downturn.
"The fact that the labour market improved so significantly over the past four years vis-a-vis the U.S. suggests we are in a much better position to enjoy this recovery," Tal said.
"We will outperform the U.S. when it comes to overall economic growth," he said, adding that a recovery in commodity prices "will be translated into higher incomes for all Canadians."
Behind the surge in disposable incomes has been Canada`s labour markets, which have outperformed the U.S. in several key respects since 2005.
For one, real wages — adjusted for inflation — have risen by 10 per cent in Canada but by less than half as much in the U.S. For another, overall employment climbed 5.5 per cent in Canada but remained flat in the U.S.
As well, the number of jobs created in high-paying industries, such as highly skilled trades, rose by more than 4.5 per cent in Canada but fell four per cent in the U.S.
While modest in relative terms, Canada`s income gains are unique in the western world, Tal said, with the U.S. strongly underperforming and the eurozone in even worse shape.
"This is a complete reversal of the trend seen in the 1990s when Canadian income stagnated compared to surging U.S. earnings," Tal said.
"So quick was the revival of Canadian income that in a short four-year span, per capita real income in Canada was able to wipe out no less than 15 years of income underperformance versus the U.S.; that`s a big story."
Tal ties this reversal in fortune to the rise in commodity prices, and energy prices in particular.
Read the full article here.
"Is there any place you want to be during this recovery?" asked the report`s author, senior economist Benjamin Tal. "It`s Canada."
The reason, he said, is that we are on the cusp of a virtuous circle in which rising disposable incomes and employment deliver higher consumer spending, greater economic growth, increased foreign investment and robust equity markets.
Tal`s research shows that in Canada, since 2005, each Canadian`s disposable income — the money left over after paying the bills — has grown at twice the pace of the U.S., to $2,600 Cdn versus $1,300 U.S. south of the border, after adjusting for inflation.
He expects this trend to continue as demand for Canada`s commodities recovers from the global downturn.
"The fact that the labour market improved so significantly over the past four years vis-a-vis the U.S. suggests we are in a much better position to enjoy this recovery," Tal said.
"We will outperform the U.S. when it comes to overall economic growth," he said, adding that a recovery in commodity prices "will be translated into higher incomes for all Canadians."
Behind the surge in disposable incomes has been Canada`s labour markets, which have outperformed the U.S. in several key respects since 2005.
For one, real wages — adjusted for inflation — have risen by 10 per cent in Canada but by less than half as much in the U.S. For another, overall employment climbed 5.5 per cent in Canada but remained flat in the U.S.
As well, the number of jobs created in high-paying industries, such as highly skilled trades, rose by more than 4.5 per cent in Canada but fell four per cent in the U.S.
While modest in relative terms, Canada`s income gains are unique in the western world, Tal said, with the U.S. strongly underperforming and the eurozone in even worse shape.
"This is a complete reversal of the trend seen in the 1990s when Canadian income stagnated compared to surging U.S. earnings," Tal said.
"So quick was the revival of Canadian income that in a short four-year span, per capita real income in Canada was able to wipe out no less than 15 years of income underperformance versus the U.S.; that`s a big story."
Tal ties this reversal in fortune to the rise in commodity prices, and energy prices in particular.
Read the full article here.
