Factory worker Nelson Claros has little time for talk of the Canadian economic miracle.
The 50-year-old was laid off last year from his job of 22 years at a bus-assembly plant northwest of Toronto, and has since applied for 130 jobs. His best offer: A job at $12 an hour, half his previous wage and not enough to pay his bills.
It wasn’t supposed to be like this. Canada’s recovery from a mild 2008-09 recession was quick and job-filled, and the country added nearly 900,000 jobs to take the jobless rate to 7.2% from 8.7% at the depths of the downturn.
No bank needed a government bailout, the housing market did not collapse and Finance Minister Jim Flaherty repeatedly boasted about how Canada was outperforming its partners in the Group of Seven rich industrialized economies.
But recent growth has consistently fallen short of expectations and a very rough patch late last year turned disappointment into dread. Economists had been betting on a quicker U.S. recovery to boost Canadian exports, as well as a pickup in business spending.
The slowdown could spell trouble for the Conservative government of Prime Minister Stephen Harper, which is showing signs of mid-term stress and losing ground in opinion polls to the third largest party, the Liberals.
Policy makers predict a brighter second half of 2013, but people like Claros and business leaders are not so sure.
"I don’t see any solution for the problem of people who are laid off right now," said Claros, a single father of four, who is living off his severance pay and is waiting for the 31 weeks of unemployment insurance he is eligible for.
Some 54,000 Canadians joined Claros in the ranks of the unemployed in March, the worst monthly job losses in more than four years.
Previous engines of growth – housing and consumer spending – are slowing, and businesses are shying away from investments.
And with the government striving to balance its budget and the Bank of Canada talking of rate hikes rather than cuts, official stimulus programs are off the table, at least for now, leaving resource-rich Canada hitching its economic star to uncertain hopes of a strong energy sector and a U.S. recovery.
The labour market is far healthier than that of the United States, but job growth has lagged population growth, making the recovery incomplete. There are 1.4 million unemployed Canadians competing for jobs compared to 1.1 million prior to the crisis.
Wage growth has been decent at 2% a year, but experts say nervous consumers won’t spend enough to provide a significant boost to the economy, especially as households have a record $1.65 of debt for every dollar earned.
As for housing, most are pleased to see an end to the overheated prices of a year ago. But a slowing housing market is dampening growth and raising fears of a U.S.-style crash.
Related Stories
