Economic Challenges Research

But as the U.S. continues to pare back its oil consumption, other economies will seek a bigger share of the pie from a near static world oil supply. With power shortages spreading in China and Japan, as well as India and Pakistan, demand for diesel fuel is soaring in power-starved Asia.

With little, if any usable excess capacity in OPEC, world crude demand is already on the verge of outpacing world supply. In the resulting zero sum world, conflicting trends in oil consumption between the world’s two largest oil consumers, the U.S. and China, will not be the exception but the norm.

If the Chinese economy is going to continue to increase its oil consumption by 10 per cent a year, another economy will have to cut back its oil consumption by a comparable amount to make room for the increase in Chinese demand. More and more, that place looks like America.

Canada would benefit just as much from the creation of a national electricity grid as it did from the development of the railway and the pipeline. As a nation-building effort, developing these grid connections would give provinces options to buy and sell power of all stripes. Unlike crude oil, it is a consumer product that can be used everywhere, and Canadian supplies of electricity are increasingly renewable in form. Such a project would increase the renewable power potential for Alberta and Saskatchewan by linking existing and future hydro development in Quebec, Ontario, Manitoba and British Columbia to these markets. While the distances here are excessive, the challenge is not insurmountable.

Many Canadians may not realize this, but most of Canada’s long-distance, high-capacity connections for oil and electricity run north-south, not east-west. In these key industries, we have focused almost exclusively on serving the U.S. This is one of the great strengths of our nation -- the ability of each province to create its own best strategy for developing revenue streams. It’s also a weakness, because lack of access to other provincial markets has effectively siloed our energy strategies along provincial lines, leading to a patchwork of development across the country that does not take advantage of potential synergies across regions.

Japan may face a shortage of green tea as radiation leaking from the crippled Fukushima Dai-Ichi power station tainted leaves, spurring the government to restrict shipments from four prefectures.

The government decided yesterday to curb shipments of dried tea leaves containing more than 500 becquerel per kilogram of radioactive cesium and ordered a halt in shipments from the eastern prefectures of Ibaraki, Chiba, Kanagawa and Tochigi where tainted produce was detected. Japan’s tea production, including fresh and dried leaves, was worth 102.1 billion yen ($1.3 billion) in 2009, according to the agriculture ministry.

The decision came after Shizuoka prefecture, Japan’s largest growing region representing about 40 percent of total output, declared its green tea was safe. Governor Heita Kawakatsu said last month tests on fresh leaves and drinks showed they contained cesium amounts well below the government levels. Still, cesium levels in dried leaves could be about five times higher than fresh leaves, said Yasuo Sasaki, senior press counselor at the Ministry of Agriculture, Forestry and Fisheries.

Higher-than-expected oil and gas drilling activity in Western Canada led the Canadian Association of Oilwell Drilling Contractors Wednesday to increase its forecast for the total number of wells to be drilled in 2011.

The forecast confirmed that more companies are drilling for oil, which has soared in price, and away from natural gas, where low price has stayed flat. Approximately 60 per cent of the wells being completed are directed at oil.

In the first three months of the year, exploration companies employed 68 per cent of the fleet of available rigs in western Canada, or 534 out of 788. That was 11 per cent higher than the Calgary-based CAODC's projection of 480 made last fall.

Aims to balance budget by 2014 without raising taxes

OTTAWA, June 3 (Reuters) - Canada's Conservative government will focus on jobs and growth while eliminating the federal budget deficit, it said on Friday as it unveiled a plan for the four-year mandate it won in last month's election.

"We will get back to work on the things that matter most to Canadians: good jobs, security for our families and a prosperous future," Johnston said on behalf of the government.

"We can and must re- imagine other food systems that take numerous social dimensions into account."

These are poverty, caused by trade policies that dump heavily- subsidised produce from developed countries on third world markets, thus rendering local farmers jobless; environmental degradation brought on by industrialised farming, which now accounts for nearly one-third of global green house gas emissions; and an epidemic of malnutrition caused by the colonising effects of mono-crops and a flood of processed food from the global north to the global south.

Agro-ecology, which includes systems that produce their own fertiliser using materials and waste from the surrounding environment, is being increasingly viewed as the only viable solution to the hunger crisis. Since prices of fertiliser doubled during the 2008 food crisis, continents like Africa that import 95 percent of their chemical fertilisers could see radically different outcomes in production by adopting agro-ecological techniques.

Almost everywhere there was growth at the bottom. But incomes at the top grew more quickly than incomes at the bottom. In effect, the rich were pulling away.

People who can handle the new technology on which most production is based are increasingly in demand and in many cases such brain (as opposed to brawn) workers are already well paid, so paying them even more only widens the income gap.

Across the OECD, the number of households with only one head has risen from 15% to 20% of the total. In calculating households’ real income, the statisticians try to factor in the economies of scale families enjoy. (Kids are cheaper by the dozen, yes, but also by twos and threes.) If more families are smaller and therefore not enjoying such economies of scale, more are going to be poorer.

And the income gap between richer and poorer areas is likely to widen further as government-spending cuts disproportionately hurt less prosperous parts.

In several places regional disparities have worsened over time. Start with America. Between 2007 and 2009 real GDP per head in the five richest states actually rose by an average of 2%, but fell by 3% in the five poorest.

But studies suggest that differences in productivity are far more important than differences in joblessness in explaining regional income gaps. This implies that governments also need to focus on improving education and skills in poorer areas. In Mississippi only 19% of those aged 25 or over have a degree, compared with 36% in Connecticut or 48% in the District of Columbia.

In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent.

While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone.

The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society.

Canada has spent years -- and a considerable amount of money -- trying to convince exporters to look beyond the mighty U.S. market and seek customers in fast-growing emerging economies, such as China, India and Brazil.

And to some extent, it’s worked. The United States accounted for 75 per cent of total exports last year, down from 85 per cent in the mid-1990s.

But a new forecast of long-term export trends by the Department of Foreign Affairs and International Trade suggests the United States will still be our dominant merchandise export destination in 2040, grabbing virtually an identical share as today, at 75.5 per cent.

We have learned this month that the Canadian government is resisting efforts by the United States to increase exemptions for cross-border travellers in both countries. We believe this is a mistake. Canada’s interests are generally better served by lower trade barriers with the United States.

First, under NAFTA, most products manufactured in the United States or Mexico are not subject to Canadian duties. Therefore, the duties collected are on the small fraction of goods manufactured overseas. Indeed, a 2007 Senate report noted that customs revenues amounted to just $95-million annually – just 0.04 per cent of federal revenues.

Cross-border purchases pressure Canadian retailers to be more competitive and provide better, cheaper services to Canadian shoppers.

Two-way trade between the United States and Canada amounted to nearly $750-billion in 2008 before falling to $600-billion in 2009, thanks largely to the decline in energy prices and weakness in the auto sector; in both areas, Canada is the United States’ largest foreign supplier.

Thus, Canada’s $100-billion drop in exports to the United States between 2008 and 2009 was three times as large as the decline in Canada’s GDP during that period.

The point is not that internal trade flows or barriers to them are unimportant: in large countries, in particular, internal trade is often significantly larger overall than international trade and therefore even relatively small impediments to it can matter a great deal.

The rise in the oil deficit did indeed greatly outpace the rise in the overall deficit for March – 22.78 percent versus 6.03 percent.  But the increase in the deficit for high-tech products also surged – by 17.00 percent.  And the manufacturing deficit grew by 6.24 percent.

In March alone, U.S. exports of high tech products jumped by 20.26 percent (from $21.01 billion to $25.27 billion), while manufactures exports overall rose even faster – by 21.57 percent (from $71.56 billion to $86.99 billion).  

But deficits in these sectors kept increasing because their much larger import levels rose robustly, too.  Meanwhile, for the first quarter of this year, the overall trade deficit is running  23.46 percent ahead of last year’s comparable total – which in turn was up 25.91 percent from the first quarter 2009 number.

Perry also said that, at $2.155 trillion, total U.S. manufacturing output is 45% higher than China's. Despite the increase in output, however, the number of jobs in the U.S. manufacturing sector is down more than 7 million since the late 1970s.

But when asked if large corporations have a responsibility during these tough economic times to buy American to create more American jobs, his answer was clear: No.

Some have argued the "Made in USA" label is too exclusive and can actually hurt the economy by discouraging consumers from buying goods that are not completely made within US borders, but which benefit the country by creating jobs or promoting innovation.

Despite two quarters of increasing affordability thanks to lower mortgage rates in the second half of 2010, housing affordability will remain an issue for Canadians in 2011, said a report by RBC Economics released Friday.

“We believe we have now entered a period of steady increases in homeownership costs, which will act to restrain growth in homebuyer demand in Canada for the quarters to come,”

Declining mortgage rates mean that the second half of 2010 showed improving affordability. The first quarter of 2011 saw mortgage rates remain flat, but house prices started to accelerate upward across Canada

OTTAWA—The national average home price rose by eight per cent last month even as housing sales fell by 14.7 per cent from the year before

National average home prices rose by eight per cent to $372,544 compared to last April — the third consecutive month in which the national average price rose by eight per cent from year ago levels, the Canadian Real Estate Association said.

the number of previously occupied homes sold in April fell to 17,230 from 18,745 a year ago.

Net employment gains in the month were a modest 15,100, below market forecasts of a 21,000 increase, said a Statistics Canada report.

he report disappointed hopes that hiring momentum in the previous two months would persist. Net job gains were 69,200 in January and 30,400 in December.

Canada has recovered jobs lost during the recession faster than the United States but the February data bucked that trend.

Derek Burleton, deputy chief economist with TD Economics, forecasts net job creation to slide to less than 200,000 in 2011, almost half of the 350,000 jobs created in 2010, before headwinds start to clear out in 2012.

This boosted the total share of service employment relative to overall employment to 78.1% in August 2010 from 74% in 1998.

Wage growth is also expected to remain "tepid," hovering at about 2% or around the rate of inflation in an environment of relatively high unemployment.

As of last month, the unemployment rate for Canadian-born people was 6.2 per cent, down from the same month a year earlier when it was 6.7 per cent. The jobless rate for all immigrants declined to 8.8 per cent from 9.9 per cent in April of last year, according to numbers crunched by the Toronto Immigrant Employment Data Initiative.

he unemployment rate for recent immigrants (landed within the last five years) is 13.9 per cent compared with 14.3 per cent last year. And it’s been consistently above the 12-per-cent mark since early 2009.