January 15, 2003

Another Dead Last for BC

Campbell's drunk driving story has hidden the story on the failure of the government's economic policies. On the same day BC's Premier was getting bailed out of jail, Statistics Canada released the December Labour Force Survey. On a seasonally adjusted basis, BC has lost jobs every month since September for a total drop of 8,300 jobs. The real, unadjusted, employment numbers have been declining since August for a drop of 58,200. Going back a year, BC lost 63,300 jobs on a seasonally unadjusted basis between August and December 2001; that was during a period that was later recognized to be a recession. At the end of 2002 BC was not doing much better than it did during the 2001 recession.

On a seasonally unadjusted basis, BC always loses jobs between August and December but the loss is usually not as high as it was in 2002. Over the last 22 years the average loss in that period was 45,000 jobs . The loss was 20,400 jobs in year 2000; it was 27,300 in 1999. In the last decade, BC experienced jobs loses between August and December greater than those of 2002 in only three years, 2001, 1995 and 1990. For those who want to make politics out of economic performance, the NDP was in power from August to December during only one of those years.

On Saturday, January 11, the Vancouver Sun carried a misleading front page story about job creation in Vancouver under the story that carried mug shots of the Premier. Those reading the Sun's spin on jobs in Vancouver would never know that British Columbia was the only province in Canada to lose jobs in December. Once again BC rated dead last. Sunday's Vancouver Province carried news about the job loss BC has faced in recent months but the story was buried on page D4.

Gordon Campbell's disgrace may temporarily distract attention from the negative results his government is achieving, but on February 18, 2003, another budget will have to explain why $2.2 billion in tax cuts have not paid for themselves, and have failed to stimulate the economy. It may be difficult for a wounded leader to correct failed policies.

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December 11, 2002

Economic Performance - Reality vs. Forecasts

On the afternoon of July 30th, 2001, Gary Collins stood in the BC Legislature, delivered his fiscal update, and proclaimed that because of business confidence spurred on by tax cuts economic growth would be 2.2% in 2001 and 3.8% in 2002. On December 9th, 2002, almost 18 months later, BC's Ministry of Finance issued a news release that claimed "At 1.9 per cent for 2002, British Columbia has outperformed its independent Economic Forecast Council's 0.7 per cent forecast of last January." After being so wrong in his first mini-budget speech, Collins appears to have learned nothing. Once again Collins is counting his chickens before they are hatched.

Preliminary figures showing national economic growth for 2002 will not be released by Statistics Canada until February 28, 2003. Provincial figures for 2001 were not released until April 26, and they were substantially revised in November 2002. Don't expect to see preliminary provincial figures for 2002 until at least the end of April 2003. The Ministry of Finance's news release confused a revised economic forecast with actual economic performance. The revised forecast was up from the January forecast but still only half of the rate Collins predicted in his first big financial statement.

There is reason to believe 2002 will close on a down note for the BC economy. The November Labour Force Survey estimates of employment showed BC going in the opposite direction from the rest of the country. On its "positive economic indicators" website, the BC government had to lower its boast of job gains. The full picture of changes in employment over the past two years is shown in the following graph. Employment peaked at the time of the election. BC headed into what revised GDP estimates finally documented as a recession. Recovery was good in the early part of 2002 only to slow by year end. It is true that BC gained jobs between the low point of the 2001 recession and now, but it is also true that employment in BC today is the same as it was at the time of the 2001 election. Picking which past period to look at might be a matter of political spin, but forecasters have to worry about what lies ahead. The Second Quarter Financial Report released by the Ministry of Finance on November 28th said "After turning up in the first six months of the year, economic indicators in British Columbia were mixed during the July to September quarter." As shown in the graph, indicators for October and November have not made for a more rosy outlook.