00:00:00.000we have a rough idea as to what's going on in the economy. And the thing is that a lot of the stuff
00:00:04.700that matters to Canadians, clean air, clean water, good quality of living, the ability to enjoy
00:00:11.420leisure time, those things are highly correlated with GDP. So even if it's not perfectly calculated,
00:00:17.680if it's going up, there's a good indication that our standard of living is probably going up as
00:00:22.700well. So I don't think that it's the be all and end all of how to figure out what's going on in
00:00:27.080macro economy so that's also why i found it somewhat comical that we're debating about
00:00:31.320technical recessions and really you're missing the broader point if that's the debate that you're
00:00:36.040having today on true patriot love i'm lucky to have moshe lander senior lecturer at concordia
00:00:47.400university good morning hello so 11 days left so this has been an interesting couple weeks in
00:00:55.400politics 11 days left um you know last week we got the news we're in a technical recession
00:01:02.280uh the conservative party was clamoring away they want the government to stay around
00:01:07.080moshe and they want to debate and they want to figure out how to get this thing fixed um you
00:01:13.560know we're the only country in the g7 that apparently is in a technical recession according
00:01:19.240to them um you know give me your thoughts oh i have so many so if you if you look at the debate
00:01:28.760around a technical recession or not it almost seems like it's missing the point like who cares
00:01:33.160if we're in a technical recession or not i think what canadians want to know is is my standard of
00:01:37.880living improving or getting worse and i think there's no question that most canadians will say
00:01:42.200that their standard of living is getting worse so what difference does it make if we decide that oh
00:01:46.280oh, no, never mind. We weren't in a recession after all. The average Canadian is going to say
00:01:49.780that doesn't really change my life a whole lot. And so, you know, I hate the word, but the kids
00:01:55.620these days are using the word me session. And so the idea of the me session is that if I tell you
00:02:01.240that the economy is growing, but somebody looks around and says, I don't have a job. My family
00:02:05.040don't have jobs. My friends don't have jobs. And it really doesn't matter that I'm saying that the
00:02:09.120economy is growing. And the reverse would be true as well, that even if we accept we're in a
00:02:13.360technical recession, if you have a job or your friends have jobs or your family have jobs,
00:02:18.120you're going to say, how does this affect my life? And so I think the micro is much more
00:02:23.480important. And what's really clear is that the standard of living in Canada has deteriorated.
00:02:28.200But where Pierre Koulyev would tell you that this is 10 years of liberal rule,
00:02:32.880it's actually 35 years in which this has been happening. And that spans both conservatives
00:02:38.460and liberals that are responsible for the mess in which we find ourselves.
00:02:41.740You can only blame so much on Trump, and I'm certainly willing to put him near the top of the list for the recent events.
00:02:47.560But this is something that's been going on for a long time now, and it's really homemade.
00:02:52.820You know, I want to step back for a minute and, you know, really learn from you about GDP,
00:02:58.700because a lot of times we throw around GDP as a marker of the economy and a benchmark.
00:03:04.280Mark. And when I was going through my economics classes at U of T, they called it a basket of
00:03:11.800goods. And for most Canadians, they don't know. GDP is broken down by sector, which I want to
00:03:18.240talk through with you today a little bit about the different sectors and what's going on and really
00:03:23.320dive into it. But GDP, so how good a marker is it? How do they adjust it? Give me some thoughts on
00:03:33.000that? So let's start off with the most basic transaction. I go to Tim Hortons and I buy an
00:03:38.300ice cap. It's a perfectly Canadian exercise. So when I spend $3.50 on the ice cap, GDP then would
00:03:46.160be $3.50. It's the value of the goods and services that were produced. But the other angle at which
00:03:53.060we could look at it is that $3.50 is somebody's income as well. When Tim Hortons receives the
00:03:59.100$3.50, they pay their workers some of the money, they pay their shareholders some of the money,
00:04:02.540they pay the landlord some of the money, they pay their suppliers some of the money. And so that $3.50
00:04:08.020gets spread out among the various components of the economy in income form. But there's a third
00:04:13.880angle in which we could look at it, which is how much value is actually in the ice cap. So when you
00:04:20.520take those raw ingredients and you combine them together, Tim Hortons says, look, the ingredients
00:04:25.840only cost us a dollar, but we're selling it to you for $3.50. So Tim Hortons creates $2.50 of value
00:04:32.100added but the story doesn't end there because the one dollar worth of ingredients that they bought
00:04:36.740from their suppliers were themselves raw ingredients that maybe those suppliers bought
00:04:43.380for 25 cents from somebody else so up the supply chain somebody created 75 cents worth of value
00:04:49.460and the 25 cents were bought from somebody else were bought from somebody else and if you go all
00:04:53.540the way back to the beginning everything comes from take your pick god nature whatever it is that
00:04:58.020you believe but whoever was that provided it provided it for free because it came out of the
00:05:02.260ground so how much value added is in that three dollar and fifty cents ice cap three dollars and
00:05:07.620fifty cents so what we do then when we calculate gdp is we go look at every transaction that took
00:05:13.060place within the last three months last 12 months uh within canada's borders and we say how much was
00:05:19.060spent how much was earned how much value added was created and all three of those things should give
00:05:23.700give you the same number, 350. But the reason we would look at three different lenses is one
00:05:29.320showing who's spending within the economy, and that could be households, businesses, governments,
00:05:35.200or foreigners. Who's earning the money? That could be laborers or shareholders or government through
00:05:41.160the form of tax collection. Remember, there's a GST for all provinces in the country. And in
00:05:46.000terms of value added, which sectors are creating the value? And so that could be the consumer
00:05:51.440industry, or that could be the upstream wholesale industry, or that could be the raw materials
00:05:56.480industry. And so when we track it, the problem is when you start aggregating over all of these
00:06:01.660transactions, it's pretty hard to see everything that's going on. And some transactions are not
00:06:06.300included, or some might be only included on one side because we can see that one side,
00:06:11.600but we can't see the other side. And so it's an imperfect measure, but I'm of the opinion that
00:06:16.980there's not a better calculation that's out there. So as long as this imperfect calculation
00:06:22.640is imperfectly calculated in a consistent way, then we have a rough idea as to what's going on
00:06:29.780in the economy. And the thing is that a lot of the stuff that matters to Canadians, clean air,
00:06:34.420clean water, good quality of living, the ability to enjoy leisure time, those things are highly
00:06:41.160correlated with gp so even if it's not perfectly calculated if it's going up there's a good
00:06:47.800indication that our standard of living is probably going up as well so i i don't think that it's the
00:06:52.440be-all and end-all of how to figure out what's going on in the macro economy so that's also why
00:06:56.360i found it somewhat comical that we're debating about technical recessions and really you're
00:07:00.920missing the broader point if that's the debate that you're having then what does this mean then
00:07:05.480for canadians and the stuff that really matters to them yeah exactly well and it also you know
00:07:12.600is adjusted uh i think in this case for most measurements uh for inflation and price indexing
00:07:19.640there's a there's a whole bunch of formulas you know that you're probably way more familiar that
00:07:24.040with than i am that go in in theories that go in into the calculation of gdp so they can measure
00:07:29.800it through stats can every quarter and the technical recession is the two quarters of
00:07:34.840negative growth and i think what pierre polyev and the conservatives latched on to right away
00:07:41.000is that it is i i took a look this morning as i was getting ready i said okay which country in the
00:07:46.040g7 has a gdp that's closest to ours which you know my end my name ends with an i so i was interested
00:07:53.400it came up italy um and so i i took a look and i'm like okay italy has a 2.7 trillion dollar
00:08:00.360gdp um they saw a point three increase in gdp for the last quarter so we are like in you know for
00:08:08.840technically we are the only ones you know in the negative um but to your point people on a day-to-day
00:08:16.040basis uh they're not concerned about it they're concerned about what's going on in their life
00:08:20.760but i wanted to break down so then i dove in and this is why i wanted to pick your brain on
00:08:25.000it's interesting on a day-to-day basis i wanted to kind of dissect the gdp a little and i wanted
00:08:29.720to say okay let's take a look at what's happening inside the gdp for the last quarter so agricultural
00:08:36.760foresty fishing and hunting was significantly down which i was i was a little shocked
00:08:43.400um when it came out that way and it's down because agricultural yields are down
00:08:50.760So there it looks like right now the farmers are having a little problem getting products to market, I guess, you know, maybe it's costs, maybe it's, you know, and that's an interesting one.
00:09:03.100Well, we're mining and oil and gas are up, of course. So we're we're benefiting from, you know, what's going on, unfortunately, in the Middle East right now.
00:09:13.160yeah and you know i think one of the problems too with the the agricultural sector and uh forestry
00:09:20.780and stuff like that is climate change is happening uh and it's making it more and more unpredictable
00:09:26.380i live some of the year in halifax i live most of the year in calgary uh and i i teach in montreal
00:09:34.000so i get a chance to kind of see western canada atlantic canada and central canada
00:09:38.260you know, I can't tell you how many times I keep hearing on local forecasts that this is the once
00:09:44.800in a century storm, or this is the once in a century weather event. Yet I seem to be hearing
00:09:50.700it on an almost annual basis. It kind of reminds me of every time I hear like Leon's going out of
00:09:58.340business sale, you know, it's our 17th annual going out of business sale.