CHAPTER 5 Media Article

Weak output, strong hiring puzzle StatsCan Establishes task force,

National Post, Thursday, February 01, 2007

In summary, this article states that a task force has been created by Statistics Canada to investigate on the odd relationship between the lack of gross domestic product (GDP) growth that should be correspondingly growing as employment has been. However, governor of the Bank of Canada, David Dodge, suggested that this may be because the GDP might not be accurately reflecting economic growth in Canada, seeing as growth is difficult to measure as prices fluctuate. Large employment growth has been seen in the health care, energy, natural resources sectors, but in these sectors output difficult to measure, or productivity is inhibited because of a shortage of skilled employees, or output takes time to become significant, among other problems. Philip Cross, the director of current analysis at Statistics Canada, is puzzled about the reasons for these results; the task force is going to look at the GDP’s “measurement of output, employment and productivity across the economy.”

Connection to Chapter 5- Macroeconomics, Gross Domestic Product (GDP), employment, employment rate, unemployment rate

This article deals with the chapter 5 concept of macroeconomics. Macroeconomics looks at the overall view of an economy instead of individual markets, which, in a way, is what the Gross Domestic Product (GDP) measure does for a country. GDP measures economic activity. In this article, figures for different months in Canadawere mentioned, as they discussed about Canada’s low GDP growth. Moreover, this article also focused on employment, the employment rate, and it briefly mentioned the unemployment rate. On employment, they discussed the sectors where employment has been increasing, and the effect it had on GDP. For example, the article pointed out that the employment was “up 10.9% year-over year in December” in the natural resources sector, “while productivity in . . . new oil and gas wells” has declined, affecting GDP negatively. Furthermore, the article also stated that the employment rate grew to 2.2% last year, while specifically in December, of last year, the unemployment rate declined to 6.1%, the lowest in 30 years.

Personal Reflection

As long as inflation is occurring, a country’s GDP rate should increase at least as much as the inflation rate or the country’s GDP would be decreasing. A low GDP rate isn’t good for the country or even to me, personally. A low GDP discourages investment in current businesses, and the start up of new businesses. This would lead to fewer new job positions, and maybe even to layoffs. In turn, people would spend less which isn‘t good for the economy either. Although employment is high (and unemployment is considered low) now, it could easily turn the other way around if company’s feel that they aren’t going to make enough profits to exceed their wages expenses. Businesses take GDP into account when making decisions. Moreover, if job growth is hindered there will be fewer opportunities for people like me who have very little experience. Will the task force be able to find out the reason for low growth rate of Canada's GDP and be able to correct it? Or has it just been a bad year, and the task force is just a waste of money which could have been spent on health care and the like?

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