Canada’s unemployment rate will be higher than that in the U.S. in 2014, a recent Bloomberg News survey predicted.
The survey of 15 economists found the median estimate for Canada’s unemployment rate for 2014 is seven per cent, slightly higher than the 6.9 per cent forecast for the United States.
That’s a small difference, but one with a potentially powerful psychological effect that could impact Canadian consumers’ decisions on everything from buying a new house to taking a vacation.
“It is an important symbolic event if Canada’s unemployment rate exceeds the U.S. rate,” economist Erin Weir told Bloomberg. “There has been this idea that Canada is dramatically outperforming the U.S. and we may well be seeing the end of that.”
Some economists question how good Canada’s job market has been to begin with.
In a column at the Globe and Mail, McGill University economist Christopher Ragan notes that Canada’s employment rate — the percentage of the population with a job — is nearly two percentage points lower than it was before the Great Recession.
Canada’s overall unemployment rate may never have reached the double digits seen in the U.S., but plenty of discouraged workers have given up looking for work, and no longer appear in the statistics as “unemployed.” That causes the unemployment rate to fall, even if the job situation isn’t improving.
Ragan says long-term unemployment has become a larger problem in Canada. Some 20 per cent of unemployed people today have been jobless for more than six months; prior to the Great Recession, that number was around 12 per cent.
One thing that could see Canada still have a lower unemployment rate next year is if the U.S.’s government shutdown goes on for much longer, as that could negatively impact the U.S. economy.
And if there is no deal in Congress before the Oct. 17 debt ceiling deadline, it could cost the U.S. economy some four per cent of its GDP, “enough to cause a recession if it persisted,” CIBC World Markets predicted on Tuesday.
In a report released last week, the Canadian Centre for Policy Alternatives raised the alarm about youth unemployment in Ontario, noting that the jobless rate for youth in Canada’s largest province is higher than in many U.S. Rust Belt states, and comparable to some Eurozone countries — hardly the picture of economic health some politicians and pundits like to describe.
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Canada’s jobless rate has been volatile lately, with large leaps between job growth and job loss from month to month.
Some months the numbers have been impossible to parse. StatsCan’s labour force survey for July showed Canada losing 39,000 jobs, but its payroll and employment survey, released a few months later, showed job growth of 60,000 for the same month.
The difference between the Canadian and U.S. unemployment rates peaked in November, 2010, when Canada's rate was 2.2 percentage points lower than the U.S.'s. The spread has been narrowing ever since.
"Before 2008, the last time Canada had lower unemployment in any month was August, 1981, when Pierre Trudeau was prime minister and Ronald Reagan was president," Bloomberg reported.