One of the low-lights in Canada’s recent disappointing export performance (as I pointed out in a recent ROB Insight commentary) has been the apparent deterioration in crude oil shipments. I say “apparent” because CIBC World Markets chief economist Avery Shenfeld has questioned whether the official oil numbers in Statistics Canada’s trade reports are accurate.
In a research report this week, Mr. Shenfeld noted that Statscan’s oil export numbers – which it derives from provincial energy department data – have been considerably lower than the numbers coming from other agencies in both the United States and Canada that track cross-border shipments. While Statscan has been reporting declines in crude exports, other agencies – including Canada’s National Energy Board – indicate that shipments have actually risen significantly in recent months.
If the Statscan numbers are wrong and the figures coming from other agencies are more accurate, it would have a profound effect on Canada’s trade balance. Mr. Shenfeld said that if NEB and customs data were used for oil exports, Canada’s trade deficit in the fourth quarter would have been more than $1-billion a month lower than what Statscan reported.
“Those disappointing balance of payments figures, which weighed on the Canadian dollar, might not have been that disappointing after all,” Mr. Shenfeld said.
Corporate innovation drought
Some things were clearly lost in the financial crisis and Great Recession that we have yet to get back. One of them, it would appear, is Canadian companies’ appetite for innovation.
Statistics Canada on Friday released its Survey of Innovation and Business Strategy, 2012, its first survey since 2009 on innovation trends among Canadian enterprises. It found that during 2010-12, the percentage of companies “that introduced at least one type of innovation” slipped to 63.5 per cent from 66.8 per cent in the 2007-2009 period covered by the previous survey.
The biggest declines, the report said, came in “process innovation” – changes to improve production or distribution methods. The only segment with significant gains, meanwhile, was organizational innovation – streamlining business practices, management and administration.
The findings would seem to be consistent with the trends we have seen in the post-recession era, which have been marked by a reluctance toward business capital investment and a drive toward improved cost efficiencies. But the overall decline in innovation may be a significant factor in Canada’s continued lacklustre productivity performance and the sluggishness of the economic recovery.
Love does not conquer economics
The Cinderella story (and variations thereof) is among the most enduring themes in literature – probably because it essentially describes one of the most pervasive myths about North American culture. The idea that the class structure has been relegated to the history books, that we are in one big melting pot where people mingle and marry up and down the socioeconomic ladder, is clearly a compelling one. It’s also fiction, say researchers at the U.S. National Bureau of Economic Research.
Just before Valentine’s Day, the U.S. think tank Brookings Institution highlighted a recent NBER paper that examined marriage patterns in the United States. It found a close correlation between the educational background of the husband and that of the wife. In other words, Americans are much more likely to marry someone with a similar level of education as themselves. And since education level is both a reflation of and a determinant of economic stature, it would appear that in the economics of romance, opposites rarely attract. While this is not surprising, this lack of social mobility via marriage could be a contributing factor to income inequality, Brookings suggests.