Economic recovery

In a case of interesting timing, The Mark posted an op-ed I wrote on the lack of economic recovery for those hit hardest by the recession on the same day that the Globe and Mail headlined “Canada’s hot economy tops forecasts.” Rather than reiterate my arguments here as to why we should temper the recovery celebration, I’ll just send you to The Mark to check it out for yourself.

Over at the Progressive Economics blog, Erin Weir has a post pointing out that Canada’s stronger-than-expected first quarter GDP growth depended heavily on businesses restocking inventory and housing. We can’t count on either one to continue unabated, meaning that the need for government investment to stimulate the economy has not passed.

Another Progressive Economics blogger, Nick Falvo, presented a paper last week at the Canadian Economics Association Conference examining the recession’s impact on homelessness. Falvo argued that on the basis of previous recessions, we can expect the recession’s full impact on homelessness to hit in three to five years. In other words, we have not yet experienced the full effect of the recession on poverty and the poor in Canada.

In light of these trends, government investment in social infrastructure makes very good sense. Modeling by Informetrica has demonstrated that investment in social infrastructure has the biggest bang for the buck when compared to tax cuts and physical infrastructure. And the need for supportive programs and services has only been increased by the recession. An investment in people and in the economy – now there’s a recovery to get excited about.