At a time when the immediate economic outlook is exceptionally gloomy and uncertain, there's at least one important bright spot in the longer-term picture.
Canada's productivity performance, which has been a drag on the growth of prosperity for several years, finally seems poised to head higher and stay there, which should help to lift both economic growth and living standards.
More support for this encouraging view comes from yesterday's otherwise-grim Monetary Policy Report from the Bank of Canada.
Certainly the upbeat longer-term forecast is in sharp contrast to the outlook for the next year. The central bank's report warns that the economy has slowed to a crawl in the current quarter, which will help drag down total growth this year to 2.1% from the 2.8% the bank expected as recently as July.
And as activity struggles to recover from feeble momentum this year, the economy is now expected to expand by a meagre 1.9% in 2012, down sharply from the 2.6% previously forecast.
Nearly all of this is because of the severe economic problems being suffered in Europe and the U.S. These not only put a serious crimp in the earnings of Canada's big export industries, from autos to petroleum, but also help to undermine consumer and business confidence in this country.
Of course, this forecast is all based on a series of assumptions that could prove to be off the mark.
The central bank expects Europe to muddle through its financial troubles. If it doesn't, a severe bank crisis could darken the entire world's outlook considerably. On the other hand, the bank assumes that none of the U.S. job-creation measures being pressed by the Obama administration will go ahead. If one or two key measures do pass -- and many analysts think they will -- next year's U.S. picture will brighten.
But if you want something a little less uncertain, it's the longer-term picture that provides something to hang your hat on.
In Canada, as in most wealthy nations, the longer run has long been seen as challenging because of the aging baby-boom generation's arrival at retirement age.
As this very large group leaves the labour force, the fear has been that our economy would face a serious headwind to growth since there aren't enough younger workers to fill their shoes.
Really, the only way out of this demographic trap would be if we could somehow arrange for each worker to become substantially more productive, turning out more dollars worth of output for each hour she's on the job.
That's a particularly tall order in Canada because, for many years, productivity growth here has been poor and getting worse. Our last period of outstanding productivity gains was more than a decade ago, when this measure zipped ahead by an average of two per cent annually in the five years ending in 2000.
In the following five years, productivity growth slowed to an average of 0.8%, while in the five years ending in 2010 it barely budged, inching up by an average of 0.1%.
But this is changing rapidly, the Bank of Canada report predicts. Although Canada's potential for economic growth will be constrained by slower labour force expansion in the coming years, this should be more than offset by a doubling of trend labour productivity growth.
The motors of this revival? There are a few. A key one is that the high Canadian dollar has made it cheaper to import the latest computer technology and other forms of production equipment, bringing a "sustained recovery in investment spending" by businesses.
Another is the prod from international competition. Even if a Canadian firm doesn't try to sell abroad, it must compete at home with a growing number of highly efficient foreign firms.
Of course, this competitive pressure could have different outcomes. If Canadian managers don't react vigorously, it can simply wind up hollowing out our business sector.
Happily, that's not what seems to be happening. Instead, suggests research by the central bank, domestic firms are adopting best practices and catching up with changes in technology.
As a result, yesterday's report forecasts that productivity performance, which has already improved from the dreary stagnation of a few years ago to an estimated gain of 0.7% this year, will more than double over the next three years to 1.5%.
This improvement could be sustained, and perhaps even improved a bit, in the coming decades, Kish predicts. As a result, the slowing trickle of new workers will be offset by increased output from tomorrow's better-equipped labour force.
One pleasant implication is that living standards should be given a nice lift by the boost in productivity. This suggests that today's wall-to-wall economic distress, persistent as it has been, probably is not a harbinger of lower living standards for the next generation.
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