The Canadian economy: looking back while moving forward


Throughout the last calendar year, the Canadian Economy has had its share of ups and downs as we continue to rely on oil and our relationship with the U.S. to define ourselves and our economic potential. While 2014/2015 itself saw little gains for the Canadian economy, it did help to pinpoint what areas are the most pivotal in the future of Canadian Economics.
Oil has greatly affected the economy as seen in the multiple layoffs in the industry in 2015, mainly in Alberta. This is a direct result of the drop in value of oil, which is expected to be sitting at approximately $40 a barrel by mid-summer, according to various predictions by economists.
While this drop in oil has created a ‘cushion’ of spending power, as it has been referred to by economists for Canadians, it is important to note that the overall effects of oil are long-reaching and will be seen in Canada eventually.
“The rapid fall in oil prices will have both positive and negative effects on different sectors of the Canadian economy,” said Rhys Mendes, an economist at the Bank of Canada in an interview with Business Financial.
“The bottom line is that the sizable decline in the price of oil since June 2014 is unambiguously negative for the Canadian economy,” he said at a conference in Ottawa.
“The energy price decline will reduce aggregate income. Indeed, even though real GDP grew by 2.4 per cent in the fourth quarter of 2014, the real incomes of Canadians contracted. This occurred because the world price of an important export product declined. And that means a loss of purchasing power for Canadians.”
Closures and mergers have also been a major factor in Canadian economics this year, with various companies choosing to outsource to America (Tim Hortons and Future Shop) or simply close their doors forever like Target.
In Target’s case, all stores will be closed by Apr. 12, a month ahead of schedule, leaving thousands of its employees from its 133 stores unemployed.
“We are pleased with the results of the liquidation sales to date and the speed at which we have moved through the wind-down process,” said Target Canada CEO Aaron Alt.
Various debtors who are still owed exorbitant amounts of money, however, will most likely not see any of it any time soon as Target filed for protection under the Companies’ Creditors Arrangement Act, essentially making their money untouchable until they have liquidated all of their assets and come before a court.
In the case of Future Shop, after 14 years of operating in Canada as a subsidiary of American retailer Best Buy Co., it will cease all activities in Canada permanently or temporarily as it converts store locations over to Best Buy’s.
According to Best Buy, the decisions came as a result of “Its real estate footprint”,which showed that most Future Shops were located very close to Best Buy store location, often being in the same complexes.
In fact, President and COO of Best Buy Canada Ron Wilson, stated in an interview that 80 per cent of the company’s customers are within a 15-minute drive from one of their stores, and this move won’t affect that statistic’s according to CTV News.
As for the Future Shop employees, over 1,500 will lose their jobs; nearly 500 full-time and 1,000 part-time workers. Despite this, Best Buy has reassured those affected that they will receive some form of severance pay, as well as employee assistance and outplacement support.
Overall, 66 Future Shop locations have been closed effective immediately, and another 65 stores will be closed temporarily to convert them into Best Buy’s. This gain will bring the overall amount of Best Buy’s in Canada to almost 200 locations across the country.
As for existing product orders, service appointments and warranties, Best Buy will take over all prior commitments made by Future Shop to its customers and those who look online for Future Shop will be re-directed to Best Buy’s official site.
Addressing the Conservative budget
Finance Minister Joe Oliver’s newly announced budget has caused great controversy, with various dissenters challenging the last 10 years of governance by the Conservatives.
In what former Prime Minister Paul Martin calls “an absolute disgrace” and “nonsensical”, Martin told CBC that Canada is currently in a “very serious” economic situation, further stating that the government has done nothing about it.
“The government is not doing the right things now and we have not been doing the right things for the last decade,” said Martin.
Martin, who served as Finance Minister before becoming Prime Minister, argues the government should be investing in infrastructure, education and what he referred to as “discovery research” instead of solely looking at balancing the books.
“We have cut back substantially on the number of scientists out there working on issues that could be generating the industries of tomorrow. If you don’t invest in the future, you will be running perpetual deficits,” said Martin.

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