Economic outlook on the near and far horizon: dark clouds of misery and gloom – Commentary


The following is not news.

It’s not fake news, because it is accurate.

It’s just not news, per se, in that it’s just not surprising. It’s just not anything any business leader didn’t know or wouldn’t tell you.

Local businesses are anxious, many are wounded by the pandemic, most are concerned about the near future.

That’s not new information – the way we define news – but simply a matter of confirmed information gathered in April and early May and released Wednesday.

One of the most ambitious collections of data nationally by Statistics Canada’s Business Data Lab and the Canadian Chamber of Commerce, broken down into a more granular examination of 686 Metro Vancouver businesses across all size strata for the Greater Vancouver Board of Trade (GVBOT), provides the evidence of what had been anecdotally anticipated gloom.

Given that the data are more than a month old, it doesn’t take an economist to conclude things would be even more dire today. Good news on the economy has been hard to find lately.

And given that most economic indices suggest British Columbia has it better than the rest of Canada, and Canada better than most of the rest of the G7 and even G20, the notion that business owners are bracing for much worse should be bracing for the country.

But there it is in the report, the first of its kind for our region and something we can expect quarterly from now on: a basket of misery here and on the horizon.

Across every category surveyed, there are either profound impacts or profound impending ones: labour shortages, supply chain disruption, an inability to take on more debt, inflated costs.

It matters that one in four surveyed have boosted their training to attract, retrain or improve the skills of their workforces. It also matters that 30 per cent of those surveyed locally have introduced an innovation in their workplaces during the pandemic.

But it really matters that more than one-third say their businesses are in a worse overall position than 2019 – higher than the national average – and that four in 10 expect declining profits in the next three months.

The pessimistic cohort prevails as a compounding of conditions that include an expensive place to live and operate a business. No business loves taxes, but in British Columbia the two are in an arranged marriage.

Some details in the detailed survey set sail for turbulent waters.

Nearly two-thirds said it’s more difficult to recruit talent than it was a year ago. Nearly half of the managers and more than four in 10 staff are expected to work longer hours in the time ahead to cope with that.

More than 80 per cent expect supply chain challenges in the coming quarter, whether they are delivery delays, input price increases or basic shortages. Four in 10 think this is going to last at least another year. Canada doesn’t have a grand reputation for productivity, so this can’t help.

Interest rates are moving up, of course, but even when the survey was taken, a full one-third said they could not take on more debt and another two in nine weren’t sure. Probably today that number is higher.

If anyone thinks this is a business problem and not a consumer problem, consider that the survey found more than one-third of businesses – and 71 per cent in retail and 67 per cent in accommodations and food services – intend to raise the price of their goods and services in the three months ahead.

The inflation rate of 8.1 per cent in May in B.C. was the highest among large provinces in a country with 7.7 per cent inflation at its highest mark in four decades. There is no particular easing in the works.

We are in an era of an expanded public sector, ostensibly to contend with the challenges to personal and economic health in the pandemic, but even with the easing of restrictions and the reopening of society we are not seeing any receding of that workforce. Deficits are substantial, debt is growing, and the public spigot is still gushing.

At some point, one assumes, the focus of governments has to turn from spending to taxing. Which is what worries the GVBOT CEO and President Bridgitte Anderson. In conversation Wednesday for a podcast at biv.com, Anderson noted the incongruence at times in the economic figures (GDP growth, low unemployment, strong spending) and the on-the-ground reality. She shares the concerns many businesses have that governments will infer the figures are a green light for higher taxes or burdens on business, not a yellow or a red.

“Considerable economic uncertainty lies ahead,” she notes.

That’s not news to anyone living it, just an obvious reality.

 

 

Kirk LaPointe is publisher and editor-in-chief of BIV and vice-president, editorial, of Glacier Media.



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