This week, Canada’s Parliamentary Budget Office (PBO) released the 2021 economic and fiscal update report for parliamentarians.
The reports tells us that since the start of the Covid-19 pandemic, the government has spent, or has planned to spend, $541.9 billion in new measures over 2019-20 to 2026-27, of which $176.6 billion (or about one third) is not part of the Covid-19 Response Plan.
The PBO also notes there is $57.8 billion in new spending that will be related to the Liberals 2021 election platform.
One interesting observation from the PBO is Canada has now recovered 106% of jobs that were lost at the outset of the pandemic.
Despite this positive news, the PBO notes the government has also dropped previously announced plans to wind down stimulus spending by the end of the 2021-22 fiscal year.
Noting the labour market in Canada has now recovered, the PBO questions the need to continue to spend billions on stimulus spending despite previous plans to wind that spending down.
From my perspective locally, one of the most frequent concerns I hear is from pensioners and families who are struggling to keep up with inflation at the gas pumps and at the grocery stores.
I have also heard from owners of small- and medium-sized businesses about the difficulty they have filling jobs, and worsening supply chain issues leading to shortages that lead to increased prices for goods and services.
Many are worried more stimulus spending may only further increase inflationary pressures making goods even less affordable.
Given Canada’s current employment numbers, low interest rates, coupled with higher levels of government spending both in Canada and the United States during a time where we have seen continued supply chain issues, leads to bigger questions around inflation.
Statistics Canada recently reported Canada’s inflation in December was 4.8%.
Economists noted that that was the largest surge of inflation we saw in 30 years.
My question this week relates to stimulus spending and its role in the economy.
This weeks’s question is:
While the debate in Ottawa will continue about the need for more stimulus spending versus winding it down, what is your opinion here locally on stimulus spending?
I can be reached at [email protected] or call toll free 1-800-665-8711.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.