By Dian Cohen
When I was a kid in 1940s Winnipeg, going to the beach in the summer was a long-awaited treat. There were lots of beaches to choose from—Bird’s Hill, Gimli, Grand and Winnipeg were just an hour’s drive away. Winnipeg Beach was not my favorite because it had a roller-coaster, and even the thought of it made me nauseous.
I’ve had that same sick feeling these past two years on the metaphorical COVID rollercoaster. One week we’re basking in a fresh sense of recovery and the potential for a return to normalcy and the next we face the ghastly prospect of yet more lockdowns, closed borders and anxious consumers.
It’s hard to say what the facts are because the virus has changed everything. It’s still the headline news, but the broad measure of employment is back to the pre-pandemic trend and job creation statistics for November were much higher than expected. We seem not to want to accept this because our sense is that the economy is totally out of whack. Part of our discomfort with contradictory news may be because people are classified differently compared to before the pandemic. Or it may be that the way the economy is measured doesn’t reflect what’s happening on the ground.
Statistics Canada is our national statistical office. The Government of Canada created it 50 years ago to produce statistics to help better understand Canada, its population, resources, economy, society, and culture. Interestingly, StatCan has acknowledged how much the pandemic has interfered with how its statistics are designed and are being interpreted. Statisticians have been surveying different segments of the population in an effort to understand how much and how permanently the virus and its many descendants may have changed how we understand the economy to work. Quoting from the StatCan website, “…as the recovery unfolds, Statistics Canada continues to report on its impacts on specific populations within Canada. From the beginning of July to early August, Statistics Canada conducted the Canadian Survey on Business Conditions to better understand the ongoing effects of the pandemic on businesses and business expectations moving forward.”
In one of the latest surveys, dated November 2021, over three-quarters of businesses owned by women, most prevalent in retail and food/accommodations fields indicated that they have an optimistic future outlook over the next 12 months, up from just over two-thirds in the second quarter. Over one-third also expect to face challenges in recruiting skilled employees, slightly higher than all private sector businesses, and that the rising costs of inputs will be an obstacle. This latter expectation about inflation is shared by 40 per cent of all private sector businesses.
Statistics Canada has also launched the Real-time Local Business Conditions Index as an experimental statistic to measure business activity in real time during the pandemic and beyond. The Index tracks business conditions in Calgary, Edmonton, Montreal, Ottawa/Gatineau, Toronto, Vancouver and Winnipeg. To do this in real time, StatCan uses traffic flows, both foot and road traffic. “While it is likely that the rapid expansion on e-commerce and online sales brought about by the COVID-19 pandemic has weakened this correlation, traffic flows are expected to remain a key determinant of economic performances of commercial districts as well as key determinants of broader economic vitality of a neighbourhood.” Every one of these cities show significant increases in business activity since the middle of the pandemic. Montreal, for example, showed an 81 per cent increase in business activity, even though it was very uneven through the whole period of August 2020 to November 2021.
The Americans are having a similar perplexing issue. Their “establishment” statistic for new jobs created in November came in at less than half their expectations. Yet the unemployment rate went down and the number of Americans participating in the labor force rose. The world reacts to the headlines: with all the “breaking news” stories about how bad things are, the price of oil has slumped and the stock market is on a roller coaster of its own.
It’s hard not to get caught up in the gloom. I’m pretty sure of two things – first, the economy is going in the right direction and we need a little help to understand it better and then decide on the right policy prescriptions; second, the stock market is wildly overvalued.
Dian Cohen is an economist and a founding organizer of the Massawippi Valley Foundation.