LILLEY: Falling loonie and weak economy hurting average Canadians

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Things are bad for the loonie and are likely to get worse, at least in the short term.

The Canadian dollar hit a low of 70 cents to the U.S. dollar this week, a drop we haven’t seen in more than four years.

In February of 2020, just before the pandemic hit Canada, the loonie fell to 70 cents.

The weak dollar means many of the things we buy, especially things like imported fresh fruits and vegetables during the winter months, are going to go up in price. Just as we were recovering from three years of rampant inflation driving up prices, now we get the joy of a weaker Canadian dollar driving up prices.

The drop in the price of oil still impacts the Canadian economy despite the Trudeau government’s attempts to suffocate the industry. The price of a barrel of West Texas Intermediate has fallen from $86 earlier this year to $67 now and of course, Canadian oil, like Western Select, trades even lower at $57 a barrel.

The drop in oil prices can be good for us at the pump but can also make everything more expensive. Right now, consumers are getting the fuzzy end of the lollypop no matter what happens.

The Bank of Canada’s interest rate cuts were welcome news by many. But in cutting more aggressively than the American Federal Reserve, the Bank of Canada may have chased investment south, leading to a lower dollar.

Add to all that the fact that the Canadian economy isn’t performing as well as the American economy. The scary part is the American economy is about to get a boost in the New Year from President-elect Donald Trump, which could leave us further in the dust.

In a paper for The Hub recently, economist Trevor Tombe pegged real GDP per capita in Canada at $44,400 compared to $66,300 based on 2015 dollars. The gap between the GDP per capita in the two countries has been widening for years and has become more pronounced as the American economy outpaces our own.

The translates into lower wages for Canadian workers and lower purchasing power, which has shrunk in this country over the last decade.

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Two weeks ago, Statistics Canada released their latest report showing that GDP per capita in Canada has shrunk, meaning we are getting poorer, in eight of the last nine quarters. Much of the county now lags behind states that we would not consider wealthy, such as Alabama or Mississippi.

In the midst of all this, Justin Trudeau and his Liberals are belting out Sweet Caroline and telling Canadians “Good times never seemed so good.”

The Liberal government also continues to raise taxes with payroll taxes going up on Jan. 1, followed by the carbon tax increase on April 1 along with the annual tax hike on beer and wine that same day. All of these seemingly small changes have a much bigger cumulative effect on our economy, on our collective and individual wealth.

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As the Canadian economy struggles, the Trudeau Liberals decided that now would be a good time to bring in an emissions cap, which really means a production cap, on the oil and gas sector. No other oil and gas producer in the world, not even green and progressive Norway, is doing this – just Canada.

We are also doing this just as the incoming Trump administration has vowed to increase oil and gas production and expand the exports of liquified natural gas, which Trudeau said there was no market for. All reasons the Canadian economy will fall further behind the American economy, the dollar will drop lower still, and we will all be poorer for it.

Our country is being run by economic illiterates – the sooner they are replaced with a government that will help not hurt the Canadian economy, the better.

blilley@postmedia.com