A recent TBnewswatch story reported the estimated value of building permits in Thunder Bay in 2017 was up substantially from the year before at 146 million dollars. Based on the numbers presented in the story, the increase in 2017 can be calculated at approximately 55 percent. This is of course an upbeat year end story. Given the coming year will see both a provincial and municipal election, one can expect these types of numbers to be presented by local politicians as evidence that Thunder Bay's economy is doing well. However, it is important to adjust these kinds of number for inflation - that is present them in real dollars - as well as look at more than two years of data.
This is done in Figure 1. Using annual total value of building permit numbers from Statistics Canada for 1998 to 2016 and adding the 2017 estimate from the City of Thunder Bay's Chief Building Official and then deflating using the CPI, the real value (in 2016 dollars) of total building permits is presented. The good news is that 2017 is indeed up from 2016 but there has been an overall downward trend from peaks in real value reached in 2012 and 2013. Over a longer term view, a fitted linear trend suggests that there has been a slight increase in the real value of permits since the late 1990s but the 2017 performance is really not much higher than a decade ago or even two decades ago.
One can view the above chart as good news in the sense that construction activity over time in Thunder Bay over the long haul has been reasonably stable and perhaps even characterized by some very modest growth. It should be noted that this activity is composed mainly of residential followed by institutional and government construction projects. Indeed, the peaks in Figure 1 are much less impressive once you remove the government and institutional permit values.
The composition of these permits is provided in Figures 2 and 3. Figure 2 presents an area graph based on annual numbers while Figure 3 simply aggregates all the permits since 1998. Nearly thirty percent building permits since 1998 are of institutional and public sector origin. Industrial permits are below 10 percent. Commercial permits have been surprisingly large as a proportion of the total which is actually a cause for some optimism given that they reflect private sector perceptions of economic opportunities in Thunder Bay.
Northern Economist 2.0
Wednesday 27 December 2017
Thursday 14 December 2017
Thunder Bay Employment Flat for Forty Years
My recent
Fraser Institute Blog post on employment growth in Canada at the provincial and
CMA level since 2007 appears to have attracted a fair amount of interest if
only based on the hits via my Linkedin page.
The article was posted on the Fraser Blog on December 4th and
by December 14th, it had garnered 1,515 views. The interest has been quite pronounced from
Linkedin profiles in Ontario and of course particularly from the Thunder Bay
area. As a follow-up, I decided to look at employment levels in Thunder
Bay and Greater Sudbury from a longer-term perspective using data from
Statistics Canada.
Now
Statistics Canada has annual province level unemployment rates and employment
data available on its site from 1976.
Its annual CMA level data only appears to go back to 1987. So, in order to generate CMA employment
levels and unemployment rates for Thunder Bay and Greater Sudbury prior to
1987, what I did (acting on the suggestion of my Lakehead colleague Rob Petrunia) was run regressions of CMA level employment and unemployment rates
for both cities on the Ontario data along with a time trend
variable. The assumption is that
employment levels and unemployment rates in the two cities should reflect what
is going on in the province as a whole. The regression results were then used
to estimate fitted values for Thunder Bay for the period 1976 to 1987 and for
Sudbury from 1976 to 1990 (Sudbury data starts in 1990).
The results
are intriguing. Figure 1 plots the
unemployment rates in the two cities from 1976 to 2016 and there seems to be
some good news here. While unemployment
rates in both cities fluctuate a great deal over time, they have generally
trended downwards since the late 1970s.
The average unemployment rate in Thunder Bay between 1976 and 1985 was 9.7
percent while in Sudbury it was 11 percent.
Over the period 2010 to 2016, Thunder Bay’s unemployment rate was 6.1
percent while over the same period in Sudbury it was 7.5 percent.
However,
the good news seems to end when employment levels are examined in Figure 2 – at least for
Thunder Bay. Sudbury has seen its
employment grow over time while Thunder Bay has essentially remained flat. In
1976, estimated total employment (full and part time) in Thunder Bay was 61,224 and in Sudbury it was
60,475. By 2016, Thunder Bay’s
employment was 60,100 while in Sudbury it was 81,700. In other words, over 40 years Thunder Bay has
essentially remained flat in terms of its employment level – indeed there has
been a slight decline of 2 percent since 1976.
As for Sudbury, its employment level has grown by 36 percent since its
estimated 1976 value.
A declining
unemployment rate when total employment is growing can be seen as good news. A declining unemployment rate when total
employment is declining means that your labour force is actually shrinking
faster than your employment level. For
Sudbury, a lower unemployment rate is good news given that it has been
accompanied by rising employment. For
Thunder Bay, a declining unemployment rate is a misleading indicator and masks
the moribund nature of its economy given that its employment level has been essentially
the same for 40 years.
Saturday 9 December 2017
Economic News Around the North, December 9th Edition
Winter finally arrived here in Thunder Bay this week with a plethora of snow, cold and ice. I left for a short trip to Montreal on Monday afternoon with rain and warm temperatures and returned the next evening to a winter wonderland. What better way to spend a cold Saturday here than by warming up the house with homemade pizza....
Without further ado, here are some of the stories making the economic news recently in northern Ontario.
Rising tourism boosts local economy. TBNewswatch, November 25th, 2017.
This is yet another positive economic impact story. However, tourism falls far short of the economic impact of Lakehead University as one recalls from this past story.
The Ring of Fire and its associated "production facility" have also been making the news again in the region.
Sault mayor confident in Ring of Fire Smelter pitch. Northern Ontario Business. November 21st, 2017.
Smelter won't go where it's not wanted, Noront. Northern Ontario Business, December 6th, 2017.
The smelter (or the "production facility") is seen as providing volume that would make the troubled Ontario Northern Railway more viable....
Noront facility could make ONR viable: Timmins councillor, Sudbury Star. December 9th, 2017.
Of course, if you don't get the smelter, there is always the option of storing nuclear waste. Ignace, Manitouwadge and Hornpayne are all still in the running along with two sites near the Bruce Reactor - South Bruce and Huron-Kinloss.
Nuclear fuel bunker shortlist includes 2 sites near Bruce reactor. CTV News Kitchener. December 6th, 2017.
Despite the allure of smelters and nuclear waste disposal sites, there is still a search for economic visions in the north. The Sault is obviously taking the lead in what is one of northern Ontario's booming sectors - economic development consultants.
Sault Ste. Marie seeks economic development vision. TheSudburyStar.com. December3rd, 2017.
And another economic development vision seems to be in the offing in Timmins....
Bolivian economic development group in Timmins. Timminspress.com. November 27th, 2017.
On a positive note....
Sudbury adds 600 jobs in November. TheSudburyStar.com. December 2nd, 2017.
However, Sudbury's unemployment rate edged up slightly to 6.2 percent from 6.1 percent. Meanwhile, Thunder Bay's rate also went up to 6.1 percent from 5.8 percent the previous month.
Another item of relevance to northern Ontario.
Indigenous youth key to Canada's economic growth. Business Vancouver. December 5th, 2017.
Have a great weekend! Its time to enjoy the pizza.
Without further ado, here are some of the stories making the economic news recently in northern Ontario.
Rising tourism boosts local economy. TBNewswatch, November 25th, 2017.
This is yet another positive economic impact story. However, tourism falls far short of the economic impact of Lakehead University as one recalls from this past story.
The Ring of Fire and its associated "production facility" have also been making the news again in the region.
Sault mayor confident in Ring of Fire Smelter pitch. Northern Ontario Business. November 21st, 2017.
Smelter won't go where it's not wanted, Noront. Northern Ontario Business, December 6th, 2017.
The smelter (or the "production facility") is seen as providing volume that would make the troubled Ontario Northern Railway more viable....
Noront facility could make ONR viable: Timmins councillor, Sudbury Star. December 9th, 2017.
Of course, if you don't get the smelter, there is always the option of storing nuclear waste. Ignace, Manitouwadge and Hornpayne are all still in the running along with two sites near the Bruce Reactor - South Bruce and Huron-Kinloss.
Nuclear fuel bunker shortlist includes 2 sites near Bruce reactor. CTV News Kitchener. December 6th, 2017.
Despite the allure of smelters and nuclear waste disposal sites, there is still a search for economic visions in the north. The Sault is obviously taking the lead in what is one of northern Ontario's booming sectors - economic development consultants.
Sault Ste. Marie seeks economic development vision. TheSudburyStar.com. December3rd, 2017.
And another economic development vision seems to be in the offing in Timmins....
Bolivian economic development group in Timmins. Timminspress.com. November 27th, 2017.
On a positive note....
Sudbury adds 600 jobs in November. TheSudburyStar.com. December 2nd, 2017.
However, Sudbury's unemployment rate edged up slightly to 6.2 percent from 6.1 percent. Meanwhile, Thunder Bay's rate also went up to 6.1 percent from 5.8 percent the previous month.
Another item of relevance to northern Ontario.
Indigenous youth key to Canada's economic growth. Business Vancouver. December 5th, 2017.
Have a great weekend! Its time to enjoy the pizza.
Tuesday 5 December 2017
Recent Policy Posts: Employment, Currencies and Recessions
Along with Northern Economist, I also blog on the Fraser Institute website as well as Worthwhile Canadian Initiative and from time to time my thoughts also find their way to other sites. For my most recent contribution to the Fraser Institute on employment growth across Canadian CMAs over the last decade, take a look here. This post seems to have garnered a lot of interest on my LinkedIn page particularly from my Thunder Bay connections though there have been alot of Toronto visitors too. Then there is my contribution on digital currencies and bitcoin which was published on the Focus Economics Blog. I join a number of other economists and analysts in presenting our thoughts on what the future may hold for currencies and central banking as a result of developments such as Bitcoin. Then there is my most recent post on Worthwhile Canadian Initiative dealing with the ways in which we can deal with the next recession given current monetary and fiscal policy. Finally, my contribution to the 2018 compendium of economic charts put out by Maclean's - 91 charts in total this year - deals with the federal share of total government spending and can be found here. As always, enjoy!
Monday 4 December 2017
So What Happened to Free Trade with China?
Well, the news this morning was that the anticipated start of free trade talks between Canada and China has now been put off and the two countries will continue to explore whether to launch negotiations. Given the hoopla that seemed to surround Prime Minister Trudeau's departure for China, it does seem a remarkable turn of events and somewhat of a loss of face. According to the Globe and Mail, Mr. Trudeau declined to say what had stalled the free trade talks but said that Canada was holding out for a better deal. Indeed, Canada may also be more wary in the light of reports that competition from Chinese manufacturing has had a negative effect on Canadian manufacturing employment and part of the delay is Trudeau playing to a domestic audience.
Of course, there is probably more to the story. On the one hand, this could be the Prime Minister once again demonstrating to the Americans on the eve of the NAFTA talks in Montreal that Canada is prepared to walk away from a trade deal if it does not get a good deal. Indeed, the Globe story noted that Canada wants a broader deal with China whereas China seems interested in a more "pared-down" deal. If this is the case, then China will no doubt not be amused by being used as a negotiating ploy thereby making future negotiations more prickly.
Still perhaps the stumbling point was more on China's side. From China's perspective, if they expect NAFTA to fall through then they may see it as improving their bargaining position with respect to Canada in any trade talks. Waiting out the NAFTA negotiations to see if they fall through is a prudent strategy from their perspective and swooping in afterwards when Canada "needs" the deal more can be to their advantage if indeed what they want is a pared-down deal.
In any event, Canada is a small open economy and quite dependent on international trade. Playing these type of negotiating tactics - if that is what they are - may actually make our life more difficult on the international stage. On the other hand, what is going on here may simply be beyond Canada's control and Trudeau is simply reacting as best he can to moves on the part of both China and the United States acting in their own perceived best interests.
Of course, there is probably more to the story. On the one hand, this could be the Prime Minister once again demonstrating to the Americans on the eve of the NAFTA talks in Montreal that Canada is prepared to walk away from a trade deal if it does not get a good deal. Indeed, the Globe story noted that Canada wants a broader deal with China whereas China seems interested in a more "pared-down" deal. If this is the case, then China will no doubt not be amused by being used as a negotiating ploy thereby making future negotiations more prickly.
Still perhaps the stumbling point was more on China's side. From China's perspective, if they expect NAFTA to fall through then they may see it as improving their bargaining position with respect to Canada in any trade talks. Waiting out the NAFTA negotiations to see if they fall through is a prudent strategy from their perspective and swooping in afterwards when Canada "needs" the deal more can be to their advantage if indeed what they want is a pared-down deal.
In any event, Canada is a small open economy and quite dependent on international trade. Playing these type of negotiating tactics - if that is what they are - may actually make our life more difficult on the international stage. On the other hand, what is going on here may simply be beyond Canada's control and Trudeau is simply reacting as best he can to moves on the part of both China and the United States acting in their own perceived best interests.
Tuesday 28 November 2017
Is Income Inequality Responsible for Thunder Bay's Deteriorating Social Fabric?
Thunder Bay has seen a number of
deteriorating social indicators over the last few years which include rising homicide rates, tragic deaths of indigenous people and increasing use of foodbanks. In looking at the causes of what
appear to be increased poverty and violence, one might consider that these
trends are the result of rising income inequality. Income inequality in both Canada and the
United States has been rising over the last few decades and researchers have
been drawing links between health status and economic inequality as well as the
role of inequality in fostering environments conducive to crime and violence.
We had a talk last week at Lakehead
University from Martin Daly whose book Killing the Competition makes the case
that most homicides are the result of competition between males over goods that are
distributed inequitably. In other words, economic inequality drives the homicide rate and all things given one would expect more unequal societies to have higher crime and homicide rates. Of course, this
raises the question as to what income inequality has been like in Thunder Bay
over the last few years and whether it too has trended up.
Needless to say, information on income
inequality at a CMA level is not easy to obtain or construct. However, there is tax filer data available
from Statistics Canada obtained from Revenue Canada and it is possible to
obtain annual data on median total tax filer incomes for the top 1 percent as
well as the bottom 50 percent and construct a ratio. One can construct a simple
dispersion or inequality measure by taking the ratio of the median income of
the top 1 percent to the median income of the bottom 50 percent on the tax filer
total income distribution. If this ratio
goes up over time, it implies increasing income inequality while if it goes
down it implies decreasing inequality.
The figure below plots this measure of income
inequality for the period 1982 to 2015 for Thunder Bay as well as Greater
Sudbury and Ontario. The results are
intriguing. In 1982, the median total
income of the top 1 percent of tax filers in Thunder Bay was 11.9 times that of
the median for the bottom 50 percent - $78,200 versus $6,600. By 2015, the ratio was 12.34 - $236,900
versus $19,200. While income inequality in Thunder Bay has gone up somewhat
over time, much of the increase was actually between 1982 and 2001 when the
ratio rose from 11.9 to 14.2 and has actually moderated since.
Given that homicide rates in Thunder Bay
trended downwards from the early 1980s to 2007 and surged since 2007, there
does not seem to be much correlation here.
Moreover, Figure 1 also plots the same inequality measure for Greater
Sudbury as well as Ontario as a whole.
Since the late 1990s, Greater Sudbury has actually been more unequal
with respect to this inequality measure than Thunder Bay and yet its homicide
rate is now lower. As well, both Thunder
Bay and Sudbury have a much more equal distribution of tax filer income than
Ontario as a whole which saw its ratio rise from 15.3 in 1982 to peak at 24.9
in 2006 before declining to 22.2 in 2015.
So whatever is disturbing the social fabric
of Thunder Bay, income inequality does not appear to be the obvious culprit.
Thursday 23 November 2017
Homicide Rate Up Again in Thunder Bay
Statistics Canada released its 2016 homicide statistics yesterday and for Canada as a whole, the total number of homicides actually declined slightly with the national homicide rate falling by 1 percent to 1.68 per 100,000 of population. Of course, when Canada's urban areas are examined, there is quite a bit of fluctuation around this national average. For Canada's CMAs, the homicide rate in 2016 ranged from a high of 6.64 per 100,000 of population in Thunder Bay to a low of 0 in three cities: Trois Rivieres, Kingston and Greater Sudbury (See Figure 1)
If you look at the percentage increase in the homicide rate, the rankings change somewhat. The largest percent increases in the homicide rate were in Ottawa, Gatineau and Thunder Bay. Fifteen CMAs saw an increases in their homicide rate, two saw no change (Brantford actually had zero murders in 2015 and 2016) while the remaining 17 CMAs saw declines in their homicide rates. (See Figure 2).
Thunder Bay is up again after a decline in the homicide rate in 2015. If you need a refresher on long-term trends in Thunder Bay's homicide rate, here it is down below. Thunder Bay's homicide rate trended downwards from 1981 to about 2008 and then began to trend up. For a local media take on this story, see here.
If you look at the percentage increase in the homicide rate, the rankings change somewhat. The largest percent increases in the homicide rate were in Ottawa, Gatineau and Thunder Bay. Fifteen CMAs saw an increases in their homicide rate, two saw no change (Brantford actually had zero murders in 2015 and 2016) while the remaining 17 CMAs saw declines in their homicide rates. (See Figure 2).
Thunder Bay is up again after a decline in the homicide rate in 2015. If you need a refresher on long-term trends in Thunder Bay's homicide rate, here it is down below. Thunder Bay's homicide rate trended downwards from 1981 to about 2008 and then began to trend up. For a local media take on this story, see here.
Wednesday 22 November 2017
Bigger Deficits in 2016
Statistics Canada has released its 2016 Consolidated Government Finance Statistics and the combined deficit of all
three levels combined – federal, provincial-territorial and local – was $18.1
billion in 2016 which was up from $12.9 in 2015. According to Statistics Canada, the increase
in the combined deficit was attributable to expenses rising faster than
revenue. Government spending in Canada
in 2016 was up by 2.6% while revenues were up by 1.0 percent. The accompany chart from Statistics Canada summarizes
the picture nicely.
The federal government saw an especially
pronounced deterioration. The net
operating balance deficit for the federal government was $10.0 billion in 2016,
compared with a $2.1 billion surplus the previous year. Total federal expenses
grew 4.2%, due to an increase in social benefits (old age and family
allowances) and grants to provinces and territories expenses, while revenue actually
was down 0.1%. A big component of that revenue drop incidentally was from income tax revenue – despite the increase in personal income rates on higher earners that kicked in. For a longer term take on federal finances,
you might want to check another post of mine here.
As for the provinces, net operating
balances in deficit were reported in 9 of 13 jurisdictions with Alberta (-$9.9
billion), Manitoba and Ontario (each -$1.7 billion) having the largest deficits
in 2016. While still in deficit,
Ontario's net operating balance improved the most, due to higher revenues from corporate
income taxes and taxes on goods and services – but then Ontario’s economy in
2016 did see an improvement. As for the
largest surpluses – meet the new poster children for fiscal responsibility in
Canada in 2016: British Columbia (+$4.9
billion) and Quebec (+$4.4 billion).
Friday 17 November 2017
Why Are Northern Ontarians So Happy?
I recently came
across a Statistics Canada Report from 2015 on life satisfaction across Census
Metropolitan areas and economic regions that presented ranked scores based on
the responses to the Canadian Community Health Survey and General Social
Survey. The responses are over the period 2009 to 2013 and the key question
was:
“Using a scale of 0 to 10, where 0 means “very
dissatisfied” and 10 means “Very satisfied”, how do you feel about your life as
a whole right now?”
There were
nearly 340,000 respondents to the survey and the results for the CMAs had
samples of at least 1,800 to 2,000 respondents.
Average life satisfaction from 2009 to 2013 across Canada’s 33 CMAs (as
shown in Chart 1 below taken from the report) ranged from a low of about 7.8 in
Vancouver, Toronto and Windsor to a high of 8.2 in St. John’s, Trois-Rivieres
and Saguenay. More interesting is that
both Sudbury and Thunder Bay are in the top ten in terms of life
satisfaction. Moreover, the proportion
of individuals reporting a 9 or 10 – the highest rankings – is highest in
Sudbury and Thunder Bay and lowest in Toronto and Vancouver (As shown in Chart 2). Even when the results are adjusted for
individual-level socio-economic characteristics such as income, life satisfaction
remains higher in smaller communities like Thunder Bay or Sudbury.
I guess it
bears repeating that economic success and achievement and life in the big city
may not be all it is cracked up to be. Given
the surge in rents and housing prices in places like Toronto as of late, and the increased congestion and traffic, one
would expect these life satisfaction rankings results would persist if a survey
was done today. Even with slower
economic growth in northern Ontario, it remains that for many people there is an
advantage to living in communities where there is a more intimate and human
scale of life.
At the same
time, given the higher rate of aging populations in smaller communities and the
u-shaped relationship between life satisfaction and age the report notes, it may simply be demographics - an
older population seems to be a happier one.
While young people are striving and competing and making their
way in the world, older people have pretty much come to accept where they are
at and are comfortable in their own skins. Having a larger proportion of older people in a community may be the key to tranquility and happiness on a community level.
Nevertheless,
northern Ontario can use all the good news it can get. Residents of northern Ontario have apparently
decided to embrace Albert Einstein’s observation that: “A calm and modest life
brings more happiness than the pursuit of success.”
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