The Past Entering The Future

"The potent one-two punch of a stronger U.S. economy and weaker loonie remains a key theme shaping the provincial growth outlook."
"After a challenging winter for the North American economy, all sights are now squarely on spring and an expected rebound in growth."
"A bumper crop and strength in the energy sector helped widen the West-versus-the-rest disparity last year [but] the door is open for improved, though still lagging, relative performance in Central and Atlantic Canada over the next two years."
Douglas Porter, chief economist, BMO Capital Markets, Canada

"In Saskatchewan, the labour market remains healthy with the lowest jobless rate in Canada and a robust oil industry, but uncertainty in the potash sector persists and spending growth is cooling. [British Columbia's housing market] has balanced out after enduring a soft patch."
BMO Blue Book

"Our agriculture sector continues to perform well with lots of expansion, land acquisitions and rising land prices."
"[Still], some agricultural producers have been adversely affected by the inability to move their grain by rail. We know that the backlog is now beginning to clear with improvement every week, but the reduction of cash flow is still causing some customers difficulty."
John MacAulay, BMO senior vice-president, Prairies-Central Canada

"Regardless of whether structural change is measured in terms of real output or hours worked, the sector that lost the most across provinces was manufacturing."
Statistics Canada

"One of the things that surprised me in the end, it wasn't that manufacturing was declining in terms of its relative importance, we've known that from other studies. It's that in places like Ontario, by the end of the [2000-2010] period we have gone from a place where finance was something like just over half that of manufacturing in terms of its share of output."
"But by the end, finance had increased its share in Ontario and manufacturing decreased its share so much that they're basically almost matching each other in terms of their overall importance for economy of Ontario."
"Just looking at GDP and just in the structure, you see -- like the rest of the country -- a tendency towards output in the construction sector and into retail trade as well."
"Also [there is] a declining output share in agriculture, forestry, fishing and hunting [sector], which is moving away from the very traditional resource-based industries. There is a significant shift out of manufacturing, as well."
Mark Brown, StatsCan economist

Photo: Logging & Sawmilling Journal

The agriculture sector lost out to the oil and gas extraction sector this past fall and winter. Grain was stored but it wasn't moving from the giant grain elevators in Saskatchewan and Manitoba. Preference was being given to a market that wasn't traditionally known for taking up space and priority on Canada's network of rail systems. And because rail cars were being diverted to moving fossil fuel products, there weren't enough to move the products they were usually depended upon to move; grains.

The latest release of BMO's Blue Book forecasted nationwide growth of 2.3% in 2014 and 2.5% in 2015. That's a fairly robust outlook for the future, coming off a 2% pace in gross domestic product in 2013. Alberta, according to the bank remains "head and shoulders above the pack" through its sturdy energy prices and increased capital spending. Alberta sees its financial future in its vast fossil fuels resources, snubbed as "dirty oil" in the U.S. and EU, but looking increasingly attractive due to Russia's intransigent threats.

A new study by Statistics Canada points to a "considerable structural change" in the country's economy in the past decade. Ontario, once considered the powerhouse of the Canadian economy has shifted into an emphatic downturn, its loss of smokestack production has created a large pool of unemployed and a dearth of manufacturing jobs. Turning Ontario in the last few years into one of the "not-have" provinces from its former status as a "have" province, with its premier agitating for a greater share of the federal transfer payments.

In Alberta, BMO has forecasted GDP growth of 3.5% this year, and 3.3% in 2014, quite the contrast with Newfoundland and Labrador, whose sluggish growth of 1% in 2014, with 2015 lapping behind at 0.8% is not looking too promising. Canada is returning to the past; its future resembling a situation that it once vowed to correct, when it was the country's vast natural resources, that made of us "hewers of wood and drawers of water", accustomed to trading raw resources rather than finished products.

Ontario's once-flourishing manufacturing base helped change that. That manufacturing base, much of it foreign-owed, has seen attraction in re-locating their factories in cheap-labour markets abroad, and China has primarily been the chief beneficiary of that, a phenomenon seen, in fact, across the world. For a while the burgeoning high-technology industry seemed to forge Canada into a new knowledge-based future, and then that became a burst bubble.

The future has given way to the past. And while Canada is not interested in trading on its vast resources of fresh water, blessed as it has been with a superabundance of lakes and rivers, in a world of scarcity, it is interested on trading on its energy resources. Our major trading partner has ample of its own resources it can now reach through fracking. Canada has turned to the greedy energy maw of China, the country that eclipsed all others, including Canada, in its ability to manufacture all manner of goods cheaper and sometimes better.