There are signs the federal government’s economic plan is falling out of step with the realities of the Canadian economy.
This has been a relatively easy run for the federal government. Growth was steady, largely because the Ontario and federal government spending was a stimulus hiding underlying problems. But now some of those problems are starting to become more visible.
The latest report on the economy shows growth dropped from three per cent to two per cent in Q3, prompting RBC Royal Bank to suggest further slowing – to one per cent – by the end of the year.
That has many predicting the Bank of Canada will pause its interest rate increases.
One of those problems is falling investment – both business and residential investment. That is a signal that confidence is wobbling and faith in the plan is evaporating. The business decline was larger than expected, principally in the oil patch. Plus, this report came out before GM announced it was abandoning its Oshawa plant, a further sign of erosion in investment levels.
Compounding investment declines and consumer spending nationally fell. Saskatchewan was the only exception on that front.