Economic and Fiscal Overview: Progress for the Middle Class - Text Version

Chart 1a - Real Gross Domestic Product (GDP) Growth

Chart 1a
Real Gross Domestic Product (GDP) Growth
per cent, period to period at annual rates
Year Real gdp growth
2014 2.6
2015 0.9
2016 1.4
2016 Q1 2.7
2016 Q2 -1.2
2016 Q3 3.8
2016 Q4 2.6
Source: Statistics Canada.

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Chart 1b - Index of Monthly Real GDP by Sector

Chart 1b
Index of Monthly Real GDP by Sector
index, December 2014 = 100
Date Total All other sectors Energy-related goods-producing industries
Dec-2014 100 100 100
Jan-2015 99.6 99.8 98.4
Feb-2015 99.6 99.8 97.2
Mar-2015 99.5 100 94.7
Apr-2015 99.4 100 93.4
May-2015 99.3 100 93.3
Jun-2015 99.8 100.3 94.6
Jul-2015 100.1 100.6 95.1
Aug-2015 100.3 100.8 95.2
Sep-2015 99.8 100.7 91.2
Oct-2015 99.8 100.7 91.1
Nov-2015 100.3 101 92.7
Dec-2015 100.4 101.3 91.9
Jan-2016 100.9 101.8 92.8
Feb-2016 100.8 101.7 91.3
Mar-2016 100.6 101.7 90.7
Apr-2016 100.7 101.9 89.2
May-2016 100.2 101.8 84.8
Jun-2016 100.9 102.2 87.5
Jul-2016 101.3 102.3 91.4
Aug-2016 101.6 102.5 92.8
Sep-2016 101.9 102.7 94.5
Oct-2016 101.7 102.6 93.4
Nov-2016 102.2 103 94.4
Dec-2016 102.3 103.3 92.9
Notes: Real GDP at basic prices (2007 constant prices) by industry. Energy-related goods-producing industries include oil and gas extraction, support activities for mining and oil and gas extraction, and engineering and other construction activities. Last data point is December 2016.
Sources: Statistics Canada; Department of Finance Canada calculations.

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Chart 2a - Evolution of Employment Since December 2015

Chart 2a
Evolution of Employment Since December 2015
index, December 2015 = 100
Canada Major oil-producing provinces Rest of Canada
Dec-2015 100 100 100
Jan-2016 100 99.5 100.1
Feb-2016 100 99.5 100.1
Mar-2016 100.2 100.1 100.2
Apr-2016 100.2 99.6 100.4
May-2016 100.3 99 100.6
Jun-2016 100.4 98.9 100.6
Jul-2016 100.2 98.8 100.5
Aug-2016 100.4 99 100.7
Sep-2016 100.8 99.3 101.1
Oct-2016 101 99.4 101.4
Nov-2016 101 99 101.4
Dec-2016 101.3 99.1 101.7
Jan-2017 101.5 99.2 102
Feb-2017 101.6 99.4 102.1
Notes: Major oil-producing provinces are Newfoundland and Labrador, Saskatchewan and Alberta. Last data point is February 2017.
Sources: Statistics Canada; Department of Finance Canada calculations.

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Chart 2b - Change in Full-Time Versus Part-Time Employment Since December 2015

Chart 2b
Change in Full-Time Versus Part-Time Employment Since December 2015
thousands
Major oil-producing provinces Mar. Man. Que. B.C. Ont. Can.
Total employment -19.3 1.4 4.1 83.1 106.3 117 292.6
Full-time -45 -3.9 10.5 67.7 95.9 69.1 194.4
Part-time 25.7 5.3 -6.4 15.4 10.4 47.9 98.2
Notes: Major oil-producing provinces are Newfoundland and Labrador, Saskatchewan and Alberta. “Mar.” are the three Maritime provinces. Last data point is February 2017.
Sources: Statistics Canada; Department of Finance Canada calculations.

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Chart 3a - Growth in Nominal Retail Sales by Region

Chart 3a
Growth in Nominal Retail Sales by Region
per cent, year over year (December 2016)
Canada 4.3
Major oil-producing provinces 2.1
Rest of Canada 4.8
Note: Major oil-producing provinces are Newfoundland and Labrador, Saskatchewan and Alberta.
Sources: Statistics Canada; Department of Finance Canada calculations.

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Chart 3b - Growth of Real Household Consumption and Disposable Income

Chart 3b
Growth of Real Household Consumption and Disposable Income
per cent, period to period at annual rates
Real final consumption Real disposable income
2013 Q1 2.5 6.4
2013 Q2 3.6 1.3
2013 Q3 3 0.6
2013 Q4 2.6 3.7
2014 Q1 1.8 -2.4
2014 Q2 4 2.4
2014 Q3 2.6 3.5
2014 Q4 2.4 2.6
2015 Q1 0.3 2.3
2015 Q2 2 6.2
2015 Q3 2.7 1.7
2015 Q4 1.7 4.4
2016 Q1 2.3 -0.1
2016 Q2 2.1 2.7
2016 Q3 2.7 5.5(1)
2016 Q4 2.6 4.7
Note: Last data point is 2016 Q4.
Sources: Statistics Canada; Department of Finance Canada calculations.
(1)  CCB introduced in July 2016

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Chart 4a - Nominal Investment in Oil and Gas Extraction Industries

Chart 4a
Nominal Investment in Oil and Gas Extraction Industries
$ billions, unadjusted for seasonality
2013 Q1 19.3
2013 Q2 14.7
2013 Q3 18.0
2013 Q4 19.6
2014 Q1 19.8
2014 Q2 16.9
2014 Q3 19.6
2014 Q4 22.2
2015 Q1 15.6
2015 Q2 12.4
2015 Q3 13.2
2015 Q4 11.4
2016 Q1 10.1
2016 Q2 8.5
2016 Q3 9.7
2016 Q4 10.1
Note: Last data point is 2016 Q4.
Source: Statistics Canada.

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Chart 4b - Crude Oil Futures

The chart shows the evolution of actual West Texas Intermediate crude oil prices. It shows that monthly prices declined from about US$105 per barrel in mid-2014 to about US$30 in January and February 2016, before firming up through the rest of 2016 and early 2017 to just over US$50 as of February 2017.

It also shows what financial market expectations were at the time of Budget 2016 and as of Budget 2017.

The futures curve as of March 22, 2016 (when spot prices were just below US$40) showed an expected steady recovery in prices up to the US$50 range by December 2021.

The futures curve as of March 15, 2017 shows that prices are expected to remain relatively flat at around US$50 through December 2021.

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Chart 5a - Sales Volumes of Existing Homes

This chart shows Multiple Listing Service sales volumes of existing homes from January 2014 to February 2017 for Canada, Vancouver, Toronto, major oil-producing provinces and other provinces. The data are shown as indices, where January 2014 equals 100 for all series.

Sales in Vancouver increased sharply in 2015 and early 2016, fell sharply over March to August 2016, and are currently slightly below the level of January 2014.

In Toronto, sales have increased strongly over the period and are currently 45% higher than the January 2014 level.

In major oil-producing provinces, sales fell in late 2014 and remained generally soft thereafter. In other provinces, sales have been on a modest upward trend. For Canada as a whole, the trend in sales is similar to that of “other provinces”, though at a slightly faster pace.

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Chart 5b - Household Debt-to-Income and Debt Service Ratios

Chart 5b
Household Debt-to-Income and Debt Service Ratios
Household debt-to-income ratio (left scale)  Household debt service ratio (right scale) 
2007 Q1 136.6 14.1
2007 Q2 139.6 14.5
2007 Q3 142.0 14.8
2007 Q4 143.3 14.9
2008 Q1 145.1 14.8
2008 Q2 147.2 14.6
2008 Q3 148.0 14.4
2008 Q4 148.2 14.3
2009 Q1 148.4 14.1
2009 Q2 151.4 14.0
2009 Q3 154.3 13.8
2009 Q4 156.5 13.7
2010 Q1 155.2 13.7
2010 Q2 156.9 14.1
2010 Q3 158.0 14.0
2010 Q4 158.3 13.9
2011 Q1 157.7 14.0
2011 Q2 159.1 14.0
2011 Q3 159.7 14.0
2011 Q4 160.1 13.9
2012 Q1 159.2 13.8
2012 Q2 160.4 13.9
2012 Q3 161.1 13.8
2012 Q4 161.0 13.9
2013 Q1 159.9 13.9
2013 Q2 160.8 13.9
2013 Q3 161.4 14.0
2013 Q4 161.0 13.9
2014 Q1 160.5 14.1
2014 Q2 161.4 14.1
2014 Q3 162.7 14.1
2014 Q4 162.8 14.1
2015 Q1 161.9 14.1
2015 Q2 163.5 14.0
2015 Q3 164.5 14.0
2015 Q4 164.5 13.9
2016 Q1 164.1 14.0
2016 Q2 166.2 14.2
2016 Q3 166.8 14.1
2016 Q4 167.3 14.0
Note: Last data point is 2016 Q4.
Sources: Statistics Canada; Department of Finance Canada calculations.

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Chart 6a - U.S. Real GDP Growth Outlook

Chart 6a
U.S. Real GDP Growth Outlook
per cent, period to period at annual rates
Actual 2016 Fall Economic Statement Budget 2017
2016 Q1 0.8
2016 Q2 1.4
2016 Q3 3.5
2016 Q4 1.9
2016 1.6
2017 2.2 2.3
2018 2.0 2.3
Sources: U.S. Bureau of Economic Analysis; Department of Finance Canada September 2016 and December 2016 surveys of private sector economists.

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Chart 6b - U.S. Wage Growth and Unemployment Rate

Chart 6b
U.S. Wage Growth and Unemployment Rate
Average hourly wage growth (right scale, per cent year over year) Unemployment rate (left scale, per cent)
Mar-2007 3.4 4.4
Apr-2007 3.1 4.5
May-2007 3.5 4.4
Jun-2007 3.6 4.6
Jul-2007 3.3 4.7
Aug-2007 3.3 4.6
Sep-2007 3.1 4.7
Oct-2007 3.0 4.7
Nov-2007 3.1 4.7
Dec-2007 2.9 5.0
Jan-2008 2.9 5.0
Feb-2008 2.9 4.9
Mar-2008 3.0 5.1
Apr-2008 2.9 5.0
May-2008 3.1 5.4
Jun-2008 2.7 5.6
Jul-2008 3.1 5.8
Aug-2008 3.3 6.1
Sep-2008 3.3 6.1
Oct-2008 3.3 6.5
Nov-2008 3.5 6.8
Dec-2008 3.6 7.3
Jan-2009 3.6 7.8
Feb-2009 3.4 8.3
Mar-2009 3.3 8.7
Apr-2009 3.4 9.0
May-2009 2.9 9.4
Jun-2009 2.9 9.5
Jul-2009 2.7 9.5
Aug-2009 2.4 9.6
Sep-2009 2.4 9.8
Oct-2009 2.5 10.0
Nov-2009 2.1 9.9
Dec-2009 2.0 9.9
Jan-2010 2.1 9.8
Feb-2010 2.1 9.8
Mar-2010 1.8 9.9
Apr-2010 1.8 9.9
May-2010 1.9 9.6
Jun-2010 1.8 9.4
Jul-2010 1.8 9.4
Aug-2010 1.8 9.5
Sep-2010 1.8 9.5
Oct-2010 1.9 9.4
Nov-2010 1.8 9.8
Dec-2010 1.7 9.3
Jan-2011 1.9 9.1
Feb-2011 1.8 9.0
Mar-2011 1.8 9.0
Apr-2011 1.9 9.1
May-2011 2.0 9.0
Jun-2011 2.1 9.1
Jul-2011 2.3 9.0
Aug-2011 1.9 9.0
Sep-2011 1.9 9.0
Oct-2011 2.1 8.8
Nov-2011 2.0 8.6
Dec-2011 2.1 8.5
Jan-2012 1.8 8.3
Feb-2012 1.8 8.3
Mar-2012 2.1 8.2
Apr-2012 2.1 8.2
May-2012 1.7 8.2
Jun-2012 2.0 8.2
Jul-2012 1.7 8.2
Aug-2012 1.9 8.1
Sep-2012 2.0 7.8
Oct-2012 1.5 7.8
Nov-2012 1.9 7.7
Dec-2012 2.1 7.9
Jan-2013 2.1 8.0
Feb-2013 2.2 7.7
Mar-2013 1.9 7.5
Apr-2013 2.0 7.6
May-2013 2.1 7.5
Jun-2013 2.2 7.5
Jul-2013 2.0 7.3
Aug-2013 2.3 7.3
Sep-2013 2.1 7.2
Oct-2013 2.2 7.2
Nov-2013 2.2 6.9
Dec-2013 2.0 6.7
Jan-2014 2.0 6.6
Feb-2014 2.2 6.7
Mar-2014 2.1 6.7
Apr-2014 2.0 6.2
May-2014 2.1 6.3
Jun-2014 2.0 6.1
Jul-2014 2.1 6.2
Aug-2014 2.2 6.2
Sep-2014 2.0 5.9
Oct-2014 2.0 5.7
Nov-2014 2.0 5.8
Dec-2014 1.9 5.6
Jan-2015 2.2 5.7
Feb-2015 1.9 5.5
Mar-2015 2.2 5.4
Apr-2015 2.3 5.4
May-2015 2.3 5.5
Jun-2015 2.1 5.3
Jul-2015 2.2 5.2
Aug-2015 2.2 5.1
Sep-2015 2.3 5.0
Oct-2015 2.6 5.0
Nov-2015 2.4 5.0
Dec-2015 2.5 5.0
Jan-2016 2.5 4.9
Feb-2016 2.4 4.9
Mar-2016 2.5 5.0
Apr-2016 2.6 5.0
May-2016 2.5 4.7
Jun-2016 2.6 4.9
Jul-2016 2.8 4.9
Aug-2016 2.5 4.9
Sep-2016 2.7 4.9
Oct-2016 2.7 4.8
Nov-2016 2.7 4.6
Dec-2016 2.9 4.7
Jan-2017 2.6 4.8
Feb-2017 2.8 4.7
Notes: The shaded gray area for the duration of the U.S. recession goes from January 2008 to June 2009. Last data point is February 2017.
Sources: U.S. Bureau of Labor Statistics; U.S. National Bureau of Economic Research.

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Chart 7a - Real Canadian Non-Energy Goods Exports and U.S. Non-Petroleum Goods Imports

Chart 7a
Real Canadian Non-Energy Goods Exports and U.S. Non-Petroleum Goods Imports
index, 2014 Q2 = 100
More sensitive to the exchange rate Less sensitive to the exchange rate Canadian non-energy goods exports U.S. imports of non-petroleum goods
2013 Q1 90.0 94.4 92.4 92.0
2013 Q2 91.4 96.6 94.3 93.4
2013 Q3 91.1 93.6 92.5 93.9
2013 Q4 92.5 94.7 93.7 94.9
2014 Q1 93.2 92.2 92.7 96.2
2014 Q2 100.0 100.0 100.0 100.0
2014 Q3 100.6 101.4 101.1 99.9
2014 Q4 102.8 99.5 101.0 102.5
2015 Q1 103.6 96.7 99.8 104.4
2015 Q2 106.4 98.0 101.7 105.2
2015 Q3 109.9 98.6 103.6 105.0
2015 Q4 107.1 101.1 103.8 105.2
2016 Q1 109.2 103.0 105.7 104.6
2016 Q2 106.1 97.6 101.3 104.5
2016 Q3 108.5 99.8 103.7 104.4
2016 Q4 107.7 99.2 103.0 107.2
Notes: By 2016 Q4, the shares were 46 per cent for non-energy exports more sensitive to the exchange rate and 54 per cent for the less sensitive ones. Last data point is 2016 Q4.
Sources: Statistics Canada; U.S. Bureau of Economic Analysis; Bank of Canada; Department of Finance Canada calculations.

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Chart 7b - Canada’s Non-Energy Trade Balance With the U.S.

Chart 7b
Canada’s Non-Energy Trade Balance With the U.S.
$ billions
Non-energy trade balance Non-energy goods Services
2000 41.1 45.5 -4.4
2001 44.4 48.1 -3.7
2002 44.2 47.3 -3.1
2003 29.1 33.9 -4.8
2004 36.4 40.5 -4.1
2005 30.9 34.9 -4.0
2006 14.5 20.8 -6.3
2007 -0.9 7.0 -7.9
2008 -28.2 -18.3 -9.9
2009 -40.7 -29.4 -11.3
2010 -54.3 -39.3 -14.9
2011 -53.0 -38.1 -14.9
2012 -61.9 -47.4 -14.5
2013 -61.1 -45.9 -15.2
2014 -61.7 -47.5 -14.3
2015 -43.9 -31.6 -12.4
2016 -31.4 -20.1 -11.3
Notes: Non-energy goods exclude mineral fuels, lubricants and related materials (coal, coke and briquettes; petroleum, petroleum products and related materials; gas, natural and manufactured; and electric current). Last data point is 2016.
Sources: Statistics Canada; Innovation, Science and Economic Development Canada; Department of Finance Canada calculations.

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Chart 8a - 10-Year Government Bond Yields

The chart shows the evolution of Canadian, U.S. and German 10-year government bond rates since January 2013. 

The three series show bond yields declining gradually from late 2013 to mid-2016, aside from a temporary spike at the beginning of 2015.  In mid-2016, Canadian and U.S. bond yields troughed at 0.97% and 1.37%, respectively.  Yields on 10-year German bunds turned slightly negative from July to October 2016. 

Since then, yields on bonds rose by roughly 100 basis points for Canada and the U.S., and about 50 basis points for Germany.  At the time of Budget 2017, Canadian 10-year bond yields were slightly below 2%, U.S. yields were around 2.5%, and German yields were around 0.5%.

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Chart 8b - Evolution of Major Stock Markets

The chart shows the evolution of three daily equity market indexes (Canada S&P/TSX, U.S. S&P 500 and an emerging economy composite) since January 2016.

The three series show an upward trend through most of the period.

The data are shown as indices, where January 4, 2016 equals 100 for all series.

As of March 14, 2017, the Canada market, the U.S. market and the emerging economy composite had posted gains of 19%, 18% and 13%, respectively.

In recent weeks, all three indices have retreated from peaks recorded in late February or early March.

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Chart 9 - Federal Budgetary Balance Under Various Economic Growth Scenarios

Chart 9
Federal Budgetary Balance Under Various Economic Growth Scenarios
$ billions
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022
Budget 2017 survey -1 -23 -25.5 -24.4 -20.4 -18.7 -15.8
Budget 2017 survey (top four) -1 -22.7 -23.5 -20.8 -14.3 -11.1 -6.6
Budget 2017 survey (bottom four) -1 -23.4 -27.6 -27.9 -27.5 -27.3 -25.4
Notes: The Budget 2017 survey scenario is based on the average private sector economists’ projection for nominal GDP growth without any forecast adjustment. The top (bottom) four scenarios are based on the average of the most optimistic (pessimistic) projections for nominal GDP among the economists surveyed.
Sources: Department of Finance Canada survey of private sector economists; Department of Finance Canada calculations.

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Chart 10 - Federal Debt-to-GDP Ratio Under Various Economic Growth Scenarios

Chart 10
Federal Debt-to-GDP Ratio Under Various Economic Growth Scenarios
per cent of GDP
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022
Budget 2017 survey 31 31.5 31.4 31.3 31.1 30.8 30.3
Budget 2017 survey (top four) 31 31.4 31.1 30.7 30.1 29.3 28.4
Budget 2017 survey (bottom four) 31 31.5 31.7 31.9 32.4 32.5 32.4
Notes: The Budget 2017 survey scenario is based on the average private sector economists’ projection for nominal GDP growth without any forecast adjustment. The top (bottom) four scenarios are based on the average of the most optimistic (pessimistic) projections for nominal GDP among the economists surveyed.
Sources: Department of Finance Canada survey of private sector economists; Department of Finance Canada calculations.

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