Bye, Don 👋
There’s a New(ish) Guy in Town
…Because America said, “Bye Don”
On Saturday, Joe Biden was declared President-Elect of the United States of America, and (perhaps even more excitingly), Kamala Harris became the first woman AND the first non-white person to become the Vice President-Elect.
The election was a nail biter, but Democratic candidates supporting Joe and Kamala voted in disproportionately large numbers through mail-in ballots (largely because they are more likely to believe COVID-19 is real, so less likely to subject themselves to busy polling stations).
President Trump was projected to lead, but as more and more mail-in ballots were counted, Joe and Kamala were officially declared the next White House Dream Team and will be sworn in on January 20th.
The United States actually had three elections folded into one. A quick aside: In Canada, at the federal level, we just vote for our local MP who represents us in the House of Commons, but the US votes for their President, House Representative, and Senator — but both countries have three levels of power.
The Democrats won the highest number of seats in the House of Representatives, so they retain control. The Senate is still undetermined (though will likely go Republican), with 51 seats needed for a majority, and both the Democrats and Republicans 48 seats at the time of writing. The Senate, the House, and the President all have to agree for big changes to move forward – so, if all three are Democrat, we will see lots of Democrat promises be fulfilled, but if the Senate stays Republican, there will be more checks and balances in place.
We’ll keep you posted on how the financial landscape in the U.S. plays out – but for now, here’s what you need to know:
(1) Joe and Kamala ran on a platform of a $2 trillion economic stimulus, focused on climate change mitigation, renewable energy, etc. (If you’re curious what other economic policies he ran on, check this out).
(2) The stock markets have actually been positive and fairly steady this week, as it’s expected that Joe will provide stability to the economy, and the aforementioned stimulus package will boost economic recovery — and that a possible Republican Senate will keep spending and taxation measures in check.
(3) Biden is expected to have fairly protectionist (i.e. America first) policies, which is typical for Democrats. How this will impact Canada is TBD, and we’re still unsure if he will be more protectionist than Trump.
Anyone else get excited for the StatsCan job numbers at the beginning of the month?
Or is that just us?
Claire Porter Robbins
Jokes aside, while we’ve discussed how unemployment rates don’t offer a totally accurate picture of the state of unemployment, the monthly StatsCan numbers are the best measure we have to understand the impact of the pandemic on our economy.
So how did we fare in October?
Short answer: Pretty good, but not as good as economists were anticipating.
Canada added 83,000 jobs in October, causing the unemployment rate to dip a bit lower to 8.9%. For context, September’s numbers hovered around 9.0%.
It’s worth noting that this has been the smallest jobs gain we’ve seen since the economic recovery began in May.
As we await a COVID-19 vaccine (remember when Donald said we would have one by the end of October?), many businesses are on edge for intermittent lockdowns and stock market fluctuations. That helps explain why the economy has been so slow to recover.
WFH? Time to Move to the ‘Burbs…
Amidst a global pandemic and a recession, the Canadian housing market is hot as ever and it isn’t showing signs of cooling down. The market is defying earlier forecasts by the Canada Mortgage Housing Corporation, which said that housing prices would decline by 9% to 18% below its pre-COVID-19 level. In October, sales surged nationally between 23% to 37% from the year before. Montreal and Ottawa took the lead in October, with sales up by 37% and 34% respectively; putting them ahead of Toronto (up 25%) and Vancouver (up 29%). This boom has also started lifting markets, which have seen challenges in recent years, like Calgary (up 23%) and Edmonton (up 26%).
Single-detached homes are the stars of this market. As COVID-19 restrictions continue and with more people working from home, experts suggest that people are reconsidering how much space they want and the supply is much lower than the demand for single-family homes. On the other hand, condo supply is high in most urban cities, and condo prices are showing signs of decline in downtowns.
Interest rates remain low and last week the Bank of Canada announced that it plans to keep the policy interest rate at 0.25% for two more years. If you recall from Btchcoin’s September Newsletter, when banks keep interest rates low it encourages people to borrow. Homebuyers looking for more space during the pandemic can take advantage of these lower interest rates (low interest rates means it costs less to borrow money).
Considering that many Canadians are working from home and the average condo size in Toronto is 752 sq. ft. (half that of a single-family detached home), we can see why more people are ditching the downtown condo in pursuit of more space!
US Streaming Giants Told to Pay Up by the CRTC…
Time for Netflix to chip in their fair share
It’s been a busy week for the otherwise inconspicuous Canadian Radio-Television and Telecommunications Committee (CRTC). A proposed change to the Broadcasting Act through Bill C-10 was brought forward to tackle the new wave of foreign content streaming platforms.
The Broadcasting Act, which was put into law in 1991, was created to protect “Canada’s cultural fabric” through three main sections. By defining the policies for the CBC, the regulatory powers of the CRTC, and an overall broadcasting policy for Canada, the CRTC aims to maintain a Canadian controlled broadcasting system. We can see the legacy of the Act today with radio stations being mandated to play Canadian content for 35% of their total programming or the CBC creating the glorious Schitt’s Creek.
The proposed changes aim to update the legislation to be relevant in the digital age and enforce compliance of the regulations with fines. Heritage Minister Steven Guilbeault said at an Ottawa press conference, “The government believes that everyone who benefits from the system should contribute to it fairly”.
With online streaming platforms like Spotify and Netflix raking in billions of dollars a year and traditional broadcasters facing a steady decline in viewership and ad revenue, the new legislation could include the ability to force the companies to make financial contributions to support Canadian music, stories, creators and producers. A document provided by the government estimates those contributions could reach up to $830 million by 2023.
For many in the media industry, this is a long overdue modernization and attempt to level the playing field between old and new media. However, critics argue this could scare off future companies from entering the Canadian market as the regulatory environment becomes increasingly complicated.
Canadians should keep an eye out for the amendment reaching Parliament as this will likely set the stage for the types of regulation social media giants like Facebook and Twitter could face in the future.