A Tale of Two Economies...

[GRG55]

Re: A Tale of Two Economies...

When the Petro-Dollar agreement collapses and the dollar loses it's Reserve status, americans will be competing with the rest of the world for "our" oil. After a dollar devaluation, why would a Dakota oil producer sell their product to americans for three dollars when they can get a six dollar equivalent overseas? In a global economy energy goes to the highest bidder.

The only reason increased domestic production might increase energy security would be if the government is willing to nationalize the natural resource, and force it's sale at a lower than market price after a dollar devaluation. That won't happen except under very extreme circumstances.

Because crude oil from a Dakota oil producer is not directly usable. It has to be refined into usable end products, so the customers for the Dakota oil producer are the owners of refining capacity...and it has to be refining capacity that is technically capable of handling Dakota quality crude.

It is going to be very, very difficult for refiners outside of continental North America to compete for that crude supply on price. Landlocked North Dakota crude is pretty well stuck in North America.

As USA oil (and other energy) production rises the US Dollar is going to be a pretty formidable fiat currency. For a while.

[Fiat Currency]

Re: A Tale of Two Economies...

No argument here ...

Canada's Economic Growth To Lag U.S. For Years: CIBC

So much for Canada’s economic miracle.

After years of stagnation, the U.S. economy is set to outgrow Canada’s for at least the next two years, according to a forecast from CIBC World Markets.

It’s not all bad news: The bank sees Canada’s economy strengthening somewhat next year, thanks to that economic growth in the U.S. helping Canadian exports, and also thanks to a weaker loonie that will make Canadian products cheaper on the global market.

But it is a sign that Canada’s unusual economic resilience in the years since the Great Recession is coming to an end. CIBC predicts the U.S. economy will grow 3 per cent next year, compared to 2.3 per cent for Canada. It expects the two economies to grow at those rates again in 2015 as well.

Canada’s advantage in the job market also appears to be waning. A Bloomberg survey carried out this fall estimated Canada will have a slightly higher unemployment rate (7 per cent) next year than the U.S., expected to clock in at 6.9 per cent. (Canada’s unemployment rate has been at 6.9 per cent for the past two jobs reports.)

Unemployment rates aren’t easily comparable, though, because they don’t take into account the number of people who have left the workforce, unable to find work. It’s estimated a much larger proportion of the U.S. workforce dropped out in the wake of the recession than was the case in Canada.

The CIBC forecast sees good and bad on the horizon for Canada’s economy, with consumer spending and government spending decidedly on the “bad” side.

Consumers are tapped out from years of growing debt burdens, CIBC suggested. New numbers from StatsCan, released Friday, showed Canadian household debt rising to a record high of 163.7 per cent of annual income. That means Canadians owe, on average, nearly $1.64 for every dollar they earn.

The report notes that wage growth has been weak, making it hard for Canadians to take on more debt.

Austerity measures being carried out by the federal and many provincial governments will also be a drag on the economy, CIBC said, as growth in government spending will be weaker than overall economic growth.

Though CIBC calls the governments’ belt-tightening “austerity lite,” some would argue it’s more than that. A report from BMO recently noted that 5.3 per cent of all public sector jobs in Canada disappeared since the start of the year, more than 51,000 jobs in all. Job growth amounted to 1 per cent this year so far, but it would have been 1.4 per cent had it not been for government cuts, BMO said.

On the bright side, a sinking loonie and improving business conditions outside Canada will help exports, CIBC said. It noted that factory closures are dampening the good news for export-dependent manufacturing jobs, but expects there to be a pick-up in exports of machinery, lumber and metals.

“Add it all up, and Canada’s economy is yet again waiting for a helping hand from abroad to push growth forward in 2014,” the CIBC report said.

[GRG55]

Re: A Tale of Two Economies...

No argument here ...

Happy New Year...

[santafe2]

Re: A Tale of Two Economies...

"Consumer Prices in Canada are 17.91% higher than in the United States." When we first stayed in St. Andrews by the Sea we complained to our new Canadian friends that the cost for food was very high. They just laughed at us because everyone knows you drive across the border to the Super Walmart in Calais ME to go shopping. I think the limit was $200 a day and Canadian citizens were supposed to stay overnight in the US to avoid GST but it seemed like this regulation wasn't tightly enforced.

[Fiat Currency]

Re: A Tale of Two Economies...

Happy New Year…

And a Happy New Year to you good sir.

I honestly don't put a lot of stock in statistics much anymore. Apples, oranges, bananas.

Median Family Income in Canada $76,000 (source here)
Median Family Income in U.S.A. $52,100 (source here)

I'm sure the author of that slide included the cost of the USA's SNAP program feeding ~47M people, which is about ~140% of the entire Canadian population. Probably like you, I've been all over Canada, the USA (49 states for me) and Germany. Each beautiful in their own way.

Or, per another thread where EJ, jk, et al are discussing wealth and quality of life/happiness ...

One could go to the OECD website ...

http://www.oecdbetterlifeindex.org/#11111111111

… decide what things are important to them, visit a few countries, and decide where home will be.

Screen Shot 2014-01-02 at Thu2 9.00AM.jpg

[santafe2]

Re: A Tale of Two Economies...

And Vancouver BC real estate is still crazy expensive....

http://www.huffingtonpost.ca/melissa...b_3497990.html

[GRG55]

Re: A Tale of Two Economies...

From the "Never Waste a Good Housing Bubble" file:

Starts likely to reach second highest ever
SATURDAY, MARCH 15, 2014 02:00 AM MD

Canada Mortgage and Housing Corp. (CMHC) says housing starts in the Calgary Census Metropolitan Area (CMA) are trending to reach 15,000 units this year, using its six-month moving average of the monthly seasonally adjusted annual rates (SAAR).

If builders reach 15,000, it will be the second highest number of annual starts ever in the CMA, eclipsed only by the 17,046 starts recorded in 2006.

Builders started 1,270 new homes in the CMA in February, a 41.7 percent increase over February last year, supported by positive economic factors, says Richard Cho, CMHC’s senior market analyst in Calgary.

“Continued growth in employment, strong net migration and declines in new home inventories have supported the rise of new construction,” says Cho.

Strong might be an understatement for net migration, based on numbers from a Statistics Canada report covering the period of July 2012 to July 2013.

“Among Canada’s CMAs, Calgary recorded the strongest population growth (42.6 per thousand) during the 2012-2013 period,” says the report. “This was the highest popula- tion growth rate recorded by a CMA since 1996-1997.”

That compares to the national average of 15.3 per thousand. In hard numbers, the net migration was 45,168 to the Calgary CMA, which includes the City of Calgary, Rocky View County, Airdrie, Chestermere, Crossfield, Cochrane, Beiseker, the Tsuu T’ina Nation and Redwood Meadows.

The number of people coming to the area put the Calgary CMA’s population at 1,364,800 as of July 1, 2013.

Of the total migration, 23,817 were international arrivals, 17,786 came from other provinces (most from Ontario and the highest inter provincial migration in the country) and 3,565 people came from other parts of Alberta.

Most of the newcomers set up households inside Calgary city limits.

The city’s head count from April 2012 to April 2013 came up with a net migration of 19,067, which does not count May and June, the months when migration is usually at its highest, between the end of one school year and the beginning of another.

The Calgary CMA is the third youngest in Canada — the largest cohort at 34 percent of the total population is those aged 25 to 44, prime earning and spending years.

So, has the great inflow subsided?

Hard to say for sure — StatsCans’ figures are 7.5 months old and new information from the city arrives in July.

Anecdotal evidence says it isn’t over.

“Last month, Alberta saw an increase of 18,800 new jobs, adjusted for seasonality,” says Todd Hirsch of ATB Financial.
“The extraordinary performance in February brings the 12-month increase up 3.8% to 82,300. Alberta now accounts for 87% of all the jobs created in the entire country since February of last year.”

The growth has and will continue to affect the Calgary and area housing market.

Starts year to date are ahead of the same period in 2006, so not only is the 15,000 starts within the crosshairs, so might be the record.

[don]

Re: A Tale of Two Economies...

There seems to be some real fundamentals behind the Canadian RE bull market. Is the possible fly in the beer the debt to income ratio?

[GRG55]

Re: A Tale of Two Economies...

There seems to be some real fundamentals behind the Canadian RE bull market. Is the possible fly in the beer the debt to income ratio?

I had not quite appreciated how much of the in-migration to Calgary was from outside of Canada. Toronto, Vancouver and Montreal have been the traditional preferred cities for immigrants. Calgary is a bit of white-bread, redneck town by reputation and the climate is not a nice as Vancouver or Toronto, unless one really likes the mountains (Swiss, Austrian, and south German immigrants tend to migrate here after they get sick of Toronto).

Canadian debt to income ratios are stunning now. But I too am starting to wonder if that will ever matter??

[aaron]

Re: A Tale of Two Economies...

Canadian debt to income ratios are stunning now. But I too am starting to wonder if that will ever matter??

As long as Canada sells citizenship to foreigners who buy houses and as long as China is unlivable, those ratios may not matter. But, it is interesting that you are giving up now. That usually means we are near a top, no?

[GRG55]

Re: A Tale of Two Economies...

As long as Canada sells citizenship to foreigners who buy houses and as long as China is unlivable, those ratios may not matter.

Investor road to Canada hits a dead end with immigrant program’s closing

IAIN MARLOW - ASIA-PACIFIC CORRESPONDENT
The Globe and Mail
Published Tuesday, Feb. 11 2014, 10:35 PM EST
Last updated Tuesday, Feb. 11 2014, 10:53 PM EST

Even among those who immigrated to Canada through the federal government’s immigrant investor program, the initiative was viewed as a flawed, inefficient way to lure wealthy entrepreneurs who could benefit the economy.

Many criticized the program as a way for rich foreigners essentially to buy citizenship and live abroad without creating jobs or economic growth in Canada. The plan, which was ended in Tuesday’s budget, allowed foreigners with a net worth of more than $1.6-million to gain residency and potentially citizenship by lending the government $800,000 that would be paid back in about five years without interest...

But, it is interesting that you are giving up now. That usually means we are near a top, no?

What exactly am I giving up?

[aaron]

Re: A Tale of Two Economies...

What exactly am I giving up?

I was definitely unclear. My apologies. I was referring to this quote:

"But I too am starting to wonder if that will ever matter??"

When Mr GRG55 says something like that, I think that reality is so distorted that it cannot possibly continue for much longer.

[Fiat Currency]

Re: A Tale of Two Economies...

Hint: Look Up

The American Middle Class Is No Longer the World’s Richest

The American middle class, long the most affluent in the world, has lost that distinction.

While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.

After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.

The numbers, based on surveys conducted over the past 35 years, offer some of the most detailed publicly available comparisons for different income groups in different countries over time. They suggest that most American families are paying a steep price for high and rising income inequality.

Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it. Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several — including Britain, the Netherlands and Sweden — is much smaller than it was a decade ago.

In European countries hit hardest by recent financial crises, such as Greece and Portugal, incomes have of course fallen sharply in recent years.

The income data were compiled by LIS, a group that maintains the Luxembourg Income Study Database. The numbers were analyzed by researchers at LIS and by The Upshot, a New York Times website covering policy and politics, and reviewed by outside academic economists.

The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.

LIS counts after-tax cash income from salaries, interest and stock dividends, among other sources, as well as direct government benefits such as tax credits.

[ATTACH=CONFIG]5339[/ATTACH]


The findings are striking because the most commonly cited economic statistics — such as per capita gross domestic product — continue to show that the United States has maintained its lead as the world’s richest large country. But those numbers are averages, which do not capture the distribution of income. With a big share of recent income gains in this country flowing to a relatively small slice of high-earning households, most Americans are not keeping pace with their counterparts around the world.

“The idea that the median American has so much more income than the middle class in all other parts of the world is not true these days,” said Lawrence Katz, a Harvard economist who is not associated with LIS. “In 1960, we were massively richer than anyone else. In 1980, we were richer. In the 1990s, we were still richer.”

That is no longer the case, Professor Katz added.

Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation. The same measure, by comparison, rose about 20 percent in Britain between 2000 and 2010 and 14 percent in the Netherlands. Median income also rose 20 percent in Canada between 2000 and 2010, to the equivalent of $18,700.

The most recent year in the LIS analysis is 2010. But other income surveys, conducted by government agencies, suggest that since 2010 pay in Canada has risen faster than pay in the United States and is now most likely higher. Pay in several European countries has also risen faster since 2010 than it has in the United States.

Three broad factors appear to be driving much of the weak income performance in the United States. First, educational attainment in the United States has risen far more slowly than in much of the industrialized world over the last three decades, making it harder for the American economy to maintain its share of highly skilled, well-paying jobs.

Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

[ATTACH=CONFIG]5340[/ATTACH]




Finally, governments in Canada and Western Europe take more aggressive steps to raise the take-home pay of low- and middle-income households by redistributing income.

Janet Gornick, the director of LIS, noted that inequality in so-called market incomes — which does not count taxes or government benefits — “is high but not off the charts in the United States.” Yet the American rich pay lower taxes than the rich in many other places, and the United States does not redistribute as much income to the poor as other countries do. As a result, inequality in disposable income is sharply higher in the United States than elsewhere.

Whatever the causes, the stagnation of income has left many Americansdissatisfied with the state of the country. Only about 30 percent of people believe the country is headed in the right direction, polls show.

“Things are pretty flat,” said Kathy Washburn, 59, of Mount Vernon, Iowa, who earns $33,000 at an Ace Hardware store, where she has worked for 23 years. “You have mostly lower level and high and not a lot in between. People need to start in between to work their way up.”

Middle-class families in other countries are obviously not without worries — some common around the world and some specific to their countries. In many parts of Europe, as in the United States, parents of young children wonder how they will pay for college, and many believe their parents enjoyed more rapidly rising living standards than they do. In Canada, people complain about the costs of modern life, from college to monthly phone and Internet bills. Unemployment is a concern almost everywhere.

But both opinion surveys and interviews suggest that the public mood in Canada and Northern Europe is less sour than in the United States today.

“The crisis had no effect on our lives,” Jonas Frojelin, 37, a Swedish firefighter, said, referring to the global financial crisis that began in 2007. He lives with his wife, Malin, a nurse, in a seaside town a half-hour drive from Gothenburg, Sweden’s second-largest city.

They each have five weeks of vacation and comprehensive health benefits. They benefited from almost three years of paid leave, between them, after their children, now 3 and 6 years old, were born. Today, the children attend a subsidized child-care center that costs about 3 percent of the Frojelins’ income.

Even with a large welfare state in Sweden, per capita G.D.P. there has grown more quickly than in the United States over almost any extended recent period — a decade, 20 years, 30 years. Sharp increases in the number of college graduates in Sweden, allowing for the growth of high-skill jobs, has played an important role.

Elsewhere in Europe, economic growth has been slower in the last few years than in the United States, as the Continent has struggled to escape the financial crisis. But incomes for most families in Sweden and several other Northern European countries have still outpaced those in the United States, where much of the fruits of recent economic growth have flowed into corporate profits or top incomes.

This pattern suggests that future data gathered by LIS are likely to show similar trends to those through 2010.
There does not appear to be any other publicly available data that allows for the comparisons that the LIS data makes possible. But two other sources lead to broadly similar conclusions.

A Gallup survey conducted between 2006 and 2012 showed the United States and Canada with nearly identical per capita median income (and Scandinavia with higher income). And tax records collected by Thomas Piketty and other economists suggest that the United States no longer has the highest average income among the bottom 90 percent of earners.

One large European country where income has stagnated over the past 15 years is Germany, according to the LIS data. Policy makers in Germany have taken a series of steps to hold down the cost of exports, including restraining wage growth.

Even in Germany, though, the poor have fared better than in the United States, where per capita income has declined between 2000 and 2010 at the 40th percentile, as well as at the 30th, 20th, 10th and 5th.

More broadly, the poor in the United States have trailed their counterparts in at least a few other countries since the early 1980s. With slow income growth since then, the American poor now clearly trail the poor in several other rich countries. At the 20th percentile — where someone is making less than four-fifths of the population — income in both the Netherlands and Canada was 15 percent higher than income in the United States in 2010.

By contrast, Americans at the 95th percentile of the distribution — with $58,600 in after-tax per capita income, not including capital gains — still make 20 percent more than their counterparts in Canada, 26 percent more than those in Britain and 50 percent more than those in the Netherlands. For these well-off families, the United States still has easily the world’s most prosperous major economy.

http://www.nytimes.com/2014/04/23/up...hest.html?_r=0

[Slimprofits]

Re: A Tale of Two Economies...

From the article above (the link to "numbers, based on surveys"): The sample sizes of the underlying surveys vary from about 5,000 to 120,000 households.

The income category in the study is often referred to as disposable household income. It includes income received from work, from wealth and from direct government benefits, such as retirement or unemployment benefits. The measure then subtracts direct taxes paid, such as income taxes. The definition does not include sales taxes or noncash benefits, such as health care provided by a government or employer. (Americans tend to face lower than average sales taxes, but they also receive less comprehensive health benefits and thus must use more of their disposal income on health care.)

The income definition also does not include income from capital gains, a significant source of nonsalary income for many wealthy individuals. As a result, many of the estimates for top incomes are probably low.

I would be very careful making inferences and drawing conclusions from this limited sample.

[Fiat Currency]

Re: A Tale of Two Economies...

From the article above (the link to "numbers, based on surveys"): The sample sizes of the underlying surveys vary from about 5,000 to 120,000 households. I would be very careful making inferences and drawing conclusions from this limited sample.

Statistics, eh?

In my post #140 of this thread, I showed GRG55 another set of data that showed an even further gap (Canada>USA) than this data shows. It's a New York Times article … and skepticism is always a good idea with statistics. However, the general gist is that middle-class Americans are losing ground to countries around the world. There have been at least 2 new threads here on iTulip just in the last week that say the same thing - they are just more focused on the internal "class-divide".

I have business interests in both countries. My anecdotal evidence, that even when currency-normalized, I typically have to pay a Canadian more than an American to do the same job. But hey, anecdotal evidence and $2 will get you a crappy coffee.

FWIW - I'm not taking sides here - but GRG55, myself, and a few others (I think) are genuinely interested in the differences our 2 economies are seeing, while we are heading straight into the same financial tsunami.