Canadas Economy In 1996 :: essays research papers

Canada's Economy in 1996 To investigate the state of the Canadian economy, it is very useful to track Canada's six major economic goals: economic growth, economic stability, economic efficiency, economic equity, viable balance of payments, and low unemployment. At a given time, Canada is achieving some of these goals while falling behind on some of the others. When taken all into consideration, these goals give an indication of how well Canada has been doing and the stage of the business cycle the Canadian economy is in. In 1996-1997, Canada is in slight recession and is only meeting the goals of economic stability, and viable balance of payments. Canada can be said to be in a period of slight recession because there is a downswing in economic activity. To confirm a true recovery, "an economy must show no growth for two consecutive quarters." However, Canada is not in a true recession because there was a 3.0% growth in the third quarter, compared to 2.2% in the second quarter. Eventhough it is not true recession, the slow growth is a sure sign of a slight one. Low inflation is also is also prevalent and is symptomatic of a weak economy. A low inflation rate of 1.4% in November 1996 does not provide much of an indication for economic growth and expansion. A shrinking positive balance of payments indicates these are tough economic times. A fourth indication of a slight recession is the high unemployment rate. An unemployment rate of 10.0% in November 1996 is definitely not a sign of strong economic recovery. Canada is always trying to work towards the goal of economic growth. Economic growth is the percentage change of GDP over a period of time and is also known as the growth rate. In 1996, Canada's GDP has been increasing slowly since the first quarter. The GDP in the first quarter was 1.8%, then increased to 2.2% in the second quarter, and in the third quarter it rose to 3.0%. In this way, Canada has been experiencing steady growth. This goal is being met because of the increase in consumer spending inspite of the government cutbacks. Consumer spending levels tell producers what to produce, and how much to produce. If consumer spending increases, it gives a signal to the producers to produce more which causes the increasing GDP. The government cutbacks contribute does contribute to lower consumer confidence and, thus, slows the economic growth. Slow, growth causes few jobs to be created as it means a slower rate of expansion of industries. When there is slow growth, few jobs are being created,