My perspective - Is anyone spending money?
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- Published on Friday, November 22, 2019
By Kate Jackman-Atkinson
Neepawa Banner & Press
Iheard a couple of concerning stories over the last week. It started with a large Westman supply place, the kind of place that sells to commercial customers and farmers and all the sorts of people that drive economic activity in the region. The staff there were talking about how quiet it had been lately. No one was spending money.
The next story was from an employee at a large commercial contractor. Most of their crew had been laid off and those that weren’t, were expecting to be, as soon as their current project was over. There were no new jobs lined up, the work they usually kept busy with over the winter wouldn’t be happening this winter. Not that they weren’t doing it, no one was. No one was spending money.
That’s before we even get to farmers, who across the board saw a pretty rough year. On the cattle side, another dry year has meant that since mid summer, cattle producers have been trying to find alternate feed sources. Many are selling off animals because they lack the necessary feed.
The story isn’t much better on the crop side. According to Manitoba Agriculture’s end of season report, on Nov. 12, harvest was 91 per cent complete. Two weeks before, it was only 85 per cent complete, compared to 97 per cent complete at the end of October 2018. The crops still behind on harvest include some important ones, such as potatoes, which were 67 per cent completed by Nov. 12, and grain corn, which was just 47 per cent complete.
It’s not been an optimistic year— right from the start, this year’s harvest progress has been below the three year average. Many are finally getting wrapped up, thanks to some decent weather, but it’s expected that some crops will spend the winter out in the fields. Not only has getting the crops in been a challenge, the Thanksgiving snow storm and overall wet fall have resulted in lower yields, lower quality and storage issues.
Farmers can generally be relied upon to spend money when they have it, but with many facing a second or third year of poor growing conditions, rural communities will feel the impact. No one is spending money. On the ground, we might be facing a perfect storm, showing the interconnectedness of our economy. The question that remains is how extensive this downturn will be. We know it’s not entirely isolated— just before the weekend, CN Rail announced they would be cutting 1,600 jobs due to falling freight volumes and a slowing economy.
The impact is starting to show up in national statistics too. Statistics Canada registered a small increase in unemployment numbers for Manitoba in October. Compared to September, the province lost over 7,000 full time jobs. Nationally, employment among men of core working age, 25 to 54 years old, fell in October, wiping out any gains made in September.
Since July, more than 35 central banks in advanced and emerging economies have dropped key rates in the face of slowing economic growth and low inflation. However, at the end of October, the Bank of Canada announced that they wouldn’t drop their prime rate, one of the few central banks in a developed country to not do so. I’m no economist, but the evidence is mounting that we could be seeing some tougher times, just how tough is yet to be seen.
