Things are ticking along okay here in B.C., at least as far as the economy goes.
Our unemployment rate is lower than the Canadian average by almost a full percentage point. We aren’t doing so bad on home construction, and if there’s been any bad economic news, it hasn’t affected the price of housing.
But Canada just weathered a brief blip of a technical recession, and we aren’t doing as well as our neighbours down south when it comes to unemployment and growth.
And now the head of the Bank of Canada, which backstops much of our financial system, says he’s prepared to offer negative interest rates.
That would mean institutions parking their money with the Bank of Canada would be charged for doing so. The reverse would be the equivalent of being paid to hold a mortgage. (Don’t hold your breath waiting for your local bank to offer this one.)
If Canada is in generally good shape, but a bit battered, why is one of our top economic wizards considering the use of increasingly powerful economic stimulants?
The first reason is Alberta. For decades, one of Canada’s wealthiest provinces relied on oil and not much else to power its economy. Now oil is increasingly cheap – under $40 a barrel as of this week – and it’s uncertain when, or if, it will ever rebound to $100 again.
The second reason is a general sluggishness in the economy. When the Canadian dollar drops, our goods are supposed to become more attractive to the U.S. in particular and the rest of the world in general. But resources are in a slump, and our manufacturing sector isn’t exactly picking up much of the slack.
Currently, the extreme measures contemplated by the Bank of Canada aren’t being pulled out. But the fact that officials are talking about them, getting them ready, is a signal that they want to be sure we can avoid something bad that may be coming.