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Economy

As trusted economists and policy advisors to business and government leaders, the Council relies on sound, evidence-based analysis to inform its policy recommendations. Through diligent tracking of BC’s economic performance, we help identify the opportunities and challenges the province must navigate in order to reach its full potential.

 

Stock Markets at Record Levels, Improving GDP and Low Inflation…
How long will it last?

We head into the Labour Day weekend after digesting a recent barrage of mostly positive economic data for the second quarter of 2014 in North America.  In the United States, after a tough first quarter, the economy posted an impressive performance in Q2 with 4.2% (annualized) real GDP growth, along with low inflation and solid metrics across several other key indicators. This pickup in GDP growth corresponds with accelerating job creation and modest income gains for American households.   

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Mixed BC Inflation Readings Signal Stable Overall Picture

BC has recently seen some volatility in the monthly inflation numbers. The July all-items Consumer Price Index (CPI) was up 1.4% from one year ago, which was well below the 1.9% year-over-year increase recorded in June. So far in 2014 inflation has been trending higher after a period of very little change over the second half of 2013.

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Reducing Greenhouse Gas Emissions - The Costs Vary By Industry

Policy-makers in a growing number of jurisdictions are committed to taking steps to reverse – or at least slow the growth of – greenhouse gas (GHG) emissions that are believed to contribute to global warming.

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Job Market Improving…But Employment Growth in BC Remains Soft

July’s revised labour force report from Statistics Canada shows that employment growth remains sub-par in the province. The total number of people working did not change in July. But this sideways result follows an increase of 6,700 jobs the previous month. The past two months have seen a decent gain in the aggregate number of people working in the province and extends the modest positive trend that has been in place for seven or eight months.

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Finlayson: Vancouver’s Incomes are Low, But Costs are High (Vancouver Sun)

Spending time in the downtown Vancouver business district or in the tonier residential neighbourhoods scattered across the lower mainland can easily foster a misleading impression of the financial health of the households that comprise the region. That point was hammered home for me recently after reviewing the latest Statistics Canada data on incomes.

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BC’s Tourism Industry: Positioned for Growth

In BC, tourism supports and sustains jobs in every region and serves as the economic backbone of many smaller communities. Compared to other provinces, the tourism industry is proportionally larger in BC, a reflection of the province’s natural beauty and the diversity of both winter and summer activities offered here. Greater Vancouver’s international status as a desirable travel destination contributes to the prominence of the broader BC tourism sector.

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Debate Over the Minimum Wage Heats Up

Proposals to increase the minimum wage have been gathering speed on both sides of the Canada-U.S. border. In January, President Obama called on Congress to lift the federal minimum wage from $7.25 to $10.10 an hour, an idea quickly rejected by Republican Party leaders. But America’s national government doesn’t hold a monopoly on labour standards in that country; state and local governments also play a role. Since 2011, more than a dozen U.S. states and several cities have increased the minimum wages in their jurisdictions. Earlier this year, Seattle adopted a $15.00 an hour minimum wage, the highest among all big American cities.

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Finlayson: US may be poised for economic housing boost (Troy Media)

Is it possible that America’s economy might surprise us with a sustained growth surge? The question came to mind as I recently slogged through a series of blog entries and reports on the web site of the Harvard Joint Center for Housing Studies. The Center’s researchers keep close tabs on U.S. housing markets and have a particular interest in the factors believed to influence the demand for housing.

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Waiting for Better Days

Some of the optimism about the global economy evident in early 2014 has diminished in recent months, causing forecasters (including the Business Council) to revise down their growth projections. The change is not dramatic, but the tone has shifted in a more cautious direction.

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The Tsilhqot'in (William) Decision - a Diversity of Views on Implications

For the past three decades determining the extent and nature of aboriginal rights and title in Canada has been an increasingly important component of natural resource development. British Columbia, with its abundance of natural resources, diversity of First Nations and limited treaties, has been at the forefront of not only important legal decisions (Calder, Sparrow, Gladstone, van der Peet, Delgamuukw, Haida and now Tsilhqot’in) but also a rapidly growing number of collaborative economic initiatives between First Nations, government and industry that are designed to ‘reconcile’ economic activity with aboriginal rights and title interests.

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Interprovincial migration is again adding to BC's population

In the first quarter of 2014, BC saw 1,300 more people move into the province from other parts of Canada than leave to settle in other provinces.  This marks the first time in nearly three years that BC has experienced positive net in-migration from other provinces.  The shift from a net loss to a net gain is a positive sign because changes in interprovincial migration are driven largely by working-aged people.  A net inflow means there will be more workers available in the BC labour market and also suggests job opportunities are becoming more plentiful – relative to other provinces and in particular Alberta – than was the case over the past couple of years. 

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Finlayson: BC must up its productivity game (Troy Media)

A fundamental long-term challenge facing British Columbia is to improve upon the province’s lackluster productivity record.   B.C. trails the national benchmark on overall business sector productivity by around 10%.  In 2012, BC ranked sixth among the ten provinces in the level of productivity.  Moreover, the province has had very limited success in boosting productivity since the 1980s.  This is a worrisome trend, since higher productivity will be essential to raising real incomes and living standards as the growth of the workforce slows due to the effects of an aging population.  In the end there are really only two ways to expand the “economic pie”: i) higher productivity, and/or ii) greater “labour input” – i.e., more people working.  The size of the workforce is limited by underlying demographic patterns, whereas in theory there is no limit to future productivity growth.

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Metro Vancouver’s Transportation Choices: How the Mayors got it right and wrong at the same time

Last week the Mayors’ Council, representing 23 local governments in Metro Vancouver, released their long term vision for the region’s transportation system. On many aspects of transportation planning the Mayors’ proposed blueprint moved the region closer to a comprehensive vision that could, conceivably, pass the muster of a regional referendum. To their collective credit, the Mayors for the most part resisted the temptation to play politics with the priorities - the investment side of the plan displays a degree of reasonableness that has often been lacking in transportation debates in the region.

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What will $48 Trillion get you?

The strong correlation between energy use, economic growth (GDP) and improving standards of living is well documented. All societies that have significantly improved quality of life have relied heavily on energy and energy systems to do so.

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Finlayson: The New Canadian Pecking Order (Troy Media)

Canada’s economic pecking order is changing, at a pace that raises questions about the country’s economic future as well as the sustainability of current federal-provincial fiscal arrangements.  The picture is summarized in the accompanying table.  It shows where the six most affluent provinces rank on three common economic metrics: output or real gross domestic product (GDP) per person; average weekly earnings for people holding payroll jobs; and labour productivity in the business sector.  Note that the data for the four bottom ranked provinces – Manitoba, Nova Scotia, New Brunswick, and PEI – are not reported in the table.   

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A Note on Business Tax Competitiveness in British Columbia

It’s slightly more than one year since BC scrapped the Harmonized Sales Tax (HST) and returned to the former Provincial Sales Tax (PST) as the main tax on “consumption” in British Columbia. Now is therefore an opportune time to step back and assess the broader business tax structure and its impact on BC’s attractiveness as a place to invest and do business. This issue of Policy Perspectives considers several features of the tax system that impinge on business investment, expansion, and job creation. We do not examine the taxes paid by households – the focus here is on taxes that apply to enterprises and business activity.

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On the Size Rankings of National Economies – and Where Canada Stands

The World Bank has just released updated estimates of the size of all national economies for which reliable data could be collected. A much remarked finding of the Bank’s new report is that based on one set of projections, China will soon overtake the United States as the world’s biggest economy.

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D'Avignon: Livelihoods, lifestyle depend on stable supply of industrial land (Vancouver Sun)

Economic forecasters predict an additional million people will live in the Metro Vancouver region by 2040. That’s a population 40 per cent larger than today, and the people will all need housing, goods, retail and other services as well as government-funded services such as education and health care.

Population growth means we need to plan now to have the investment, resulting jobs and infrastructure to support these additional families and enable the region’s economy to grow and generate the revenues required to pay for publicly funded services.

One key challenge is to institute better planning and co-ordinated action to support the efficient movement of goods important to our daily lives, as well as to the foreign customers to whom B.C. and other western Canadian provinces export resources and other products through the Greater Vancouver Gateway.

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In 2013, BC's economy was stronger than estimated

According to figures recently released by Statistics Canada, BC’s economy grew by 2.0% in 2013.  Considering that prior to the official data being released the consensus estimate was that economic growth would come in at 1.4% in 2013, the above-expectations 2% expansion looks pretty good.  In a historical context and relative to other provinces, however, BC’s economic performance was more on the modest side.  Over the past decade and a half, real GDP growth has averaged 2.4% so 2013’s gain was a little subpar.  And in comparison to other provinces BC ranked fifth among the ten provinces.  

 

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Finlayson: Rebound in global trade augurs well for B.C.'s economy (Troy Media)

Economic growth has been tepid in B.C. in the past two years, with inflation-adjusted gross domestic product (GDP) eking out an average annual gain of barely 1.5 per cent.  But the picture should brighten over 2014-15, as consumer spending strengthens, some momentum returns to the job market, and the province’s export shipments continue to expand.   

The latter factor – stronger export growth – will be particularly important in creating a more positive economic environment.  According to the latest forecast from the World Trade Organization (WTO), the volume of global trade is on track to increase by 4.7 per cent this year, followed by a 5.3 per cent jump in 2015. This represents a significant turnaround from the sluggish 2.2 per cent annual pace recorded during 2012-13.  It’s also good news for the thousands of B.C. companies involved in selling various goods and services to foreign customers.

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