But most business groups, usually the shrillest of critics, are behind the Liberal government’s plans. This backing includes support from the Canadian Chamber of Commerce, Canadian Manufacturers and Exporters, economists at the big banks and several think tanks. And this, even though the budget may see a $ 30 billion deficit when unveiled in Ottawa Tuesday.
Who would have once thought that our central bank would be trying to stoke inflation, rather than crush it? Or that instead of worrying about rising interest rates killing the economy, we’d be worried that falling rates killing the economy? Or that it would okay for central banks to create trillions of dollars out of thin air?
So it’s time to pull lever number two, fiscal policy. You spend money you don’t have (but promise to pay back). You hope to stimulate demand so that businesses will follow along and economic activity will increase.
The frantic effort to get something going is as much about the future as the present. The concern is that when the next recession arrives — which inevitably it will — there will be nothing central banks can do. There’ll be no ammunition left in the rate-cut gun.
There’s nothing to suggest any downturn is imminent, though early in the new year many wondered. Things are looking a lot better than they did then. A low dollar has perked up manufacturing. Retail sales surprised in the latest reading. American unemployment is low.
In an interview with Bloomberg News last week, Prime Minister Justin Trudeau gave an encouraging message. He said his plans are not so much “to jolt the economy into life as trying to lay the groundwork, the foundation, for better growth, better productivity, over the long term.” Trudeau has called on other Western leaders to do the same.
The one sure thing is that ever-lower interest rates have not done the job. Now that those pulling the lever admit that, it’s time to try something else.
More columns by Adam Mayers