Episode Transcript
[00:00:00] Speaker A: Foreign.
Under the pillar economy. I'm joined by Mike Wixon to go over what happened in October. We saw a 0.3% decrease in our GDP, which is probably one of the biggest GDP decreases we've seen since 2022. Hi, Mike, how's it going? Good, good.
[00:00:23] Speaker B: I appreciate you. You know what, I like being the guy in this seat. Yep. Because you make clarity of what tends to come out in charts I don't understand out there often.
So I appreciate this.
[00:00:34] Speaker A: Yeah, no, thanks for joining me. You know what it was, it was a funny month because we remember back to October, things slowed down a little. We were kind of at the point where we had seen the bubble from tariffs. People had gone and stockpiled all their goods and then all of a sudden the economy started to slow. So we particularly saw manufact dip. We saw the, the wood industry go. You know, we heard a lot about, remember we heard a lot about subsidizing the wood industry.
[00:01:04] Speaker B: That's right, yeah.
[00:01:05] Speaker A: Yeah.
[00:01:05] Speaker B: We got soft lumber.
[00:01:06] Speaker A: Lumber, all that stuff. So we saw that manufacturing, we talked a lot about auto product manufacturing, how all that had started to slow down. So we saw the decline in that.
And you know what? We saw the construction industry just, just disappear.
[00:01:24] Speaker B: Yeah.
[00:01:25] Speaker A: In October, you know, we started to hear, we started to hear about condos. The unwinding of the condo industry and then boom. Right.
[00:01:33] Speaker B: The overall drop we understood to be 0.3%.
That's an enormous drop across all these.
[00:01:41] Speaker A: Categories for a monthly change. Yes, it is. And again, we hadn't seen anything like that since the early, you know, 2000s.
And you know, that kind of alarmed everyone. Now this hasn't been something that we haven't been tracking, we haven't been talking about because Deloitte, for example, I get a circular from them every month. They're predicting a mild recession. I don't know.
[00:02:04] Speaker B: Oh yeah, Yeah.
[00:02:05] Speaker A: I don't know how you classify a mild recession, but they've been saying for.
[00:02:10] Speaker B: A while we're mildly pregnant.
[00:02:12] Speaker A: Yeah, we're mildly pregnant. But they are saying they're expecting the bubble to burst and to get a few. Back to back recession defined as several months of back to back decline in.
[00:02:24] Speaker B: Gdp over half the sectors that were, I guess, polled or researched on this reported decline.
[00:02:32] Speaker A: 11. 11 out of 20.
[00:02:33] Speaker B: Wow.
[00:02:34] Speaker A: So, so, and that's interesting because if you look back since last October. So if you look back a year, 20, 24, October, and you go forward, out of those 12 months, six of those 12 months were a significant decline in GDP.
So it's not something we hadn't seen coming. And people, again, we're here, we talk so much about the tariff impacts and what's happening with the tariffs.
We've been in this malaise for a while. Right. This isn't something new that was Donald Trump related. This is something that our economy was starting to see some bumps. So when we got to the fall of 2024, I knew it, I started to see it and I. He was, you know, we were talking about it.
So it's not, it's not something that wasn't funny that it's such a slow an indicator.
[00:03:21] Speaker B: It's. It's funny that such a slow grind. Paul.
[00:03:24] Speaker A: Yeah.
[00:03:24] Speaker B: Like if in 2024 you were starting to see pretty serious indicators of this happening month over month.
[00:03:30] Speaker A: Yeah.
[00:03:30] Speaker B: And you can start to see this on the horizon. This is a couple of years of getting to that point. It feels like maybe we've made some bad choices between here and there, to be honest with you.
[00:03:40] Speaker A: Oh, yeah.
[00:03:40] Speaker B: We could have staved this off in many ways.
[00:03:42] Speaker A: Well, and we did some things to actually kind of mask it. So if you look at, there were some months where we'd increase military spending, which would just get us back positive by like a tiny bit. We'd increase housing subsidies, which would just get us back. So we'd have one really negative month and then all of a sudden there'd be government spending or there'd be some program that would kick in. So we saw a year of kind of up and down based on the way we managing gdp.
[00:04:11] Speaker B: Well, this chart that you point out to me just a little bit earlier, and we'll put it up right now for you to have a look at. This is an interesting one because it shows so many months that we've dipped below the line in the last year.
[00:04:23] Speaker A: Yes.
[00:04:23] Speaker B: Talk to me about that.
[00:04:25] Speaker A: Yeah, so Those are the six, you know, six out of 12 months that we did go below the line that we were trying to manage through now, gdp. So let's make sure, because a lot of people out there always ask me the question, you know, what's the difference between real and nominal gdp?
So we're talking real gdp, so which has been inflation adjusted. So inflation isn't impacting the numbers. So, you know, so we're not seeing months where we have more inflation and less inflation. That's nominal gdp where inflation's already in, that adjusted out.
And, you know, gdp, for those of you kind of new to the term or, you know, just remembering it again, gdp, we Hear it a lot. We hear it a lot. But GDP is a number of sectors, right? So whether it's services, manufacturing, natural resources, construction. So what they do is they basically, it's like a surveying.
They go through the key industries, they take the economic volume so the revenues, they compile them stats can, does a really good job at doing this. They do it on a monthly basis. And they, they basically say, okay, I'm going to take the top 90% of an industry, so let's take agricultural.
And they take 90% of the agricultural companies, they record their revenue for the month and then they're able to determine whether the industry is going up or down. Right. So they do know a dollar value on gdp, which, which is great. And they can then go from month to month and they can compare the two.
And, and so it's a.
[00:06:00] Speaker B: When you remove the inflation from that overall number though, what does that leave us with?
[00:06:07] Speaker A: It leaves us with a baseline gdp. So basically it leaves us with the GDP that's adjusted out for inflation. So for example, say if in the agricultural industry inflation hits harder than in the construction industry or otherwise, it takes that number out. So it's kind of apples to apples versus apples to inflated apples.
[00:06:27] Speaker B: Gotcha.
[00:06:28] Speaker A: So it takes it out. And that's why I like the real GDP now, you know, as you go through, and I think they've talked about quite a bit over the, the years, our GDP continues per capita to slip significantly.
[00:06:42] Speaker B: Explain that to me.
[00:06:44] Speaker A: Well, so we are kind of a, we're part of a group. It's called the Organization of Economic and Cooperation and Development.
So you know, the acronym is oecd. So okay, to make it easy, it's developed countries.
So you know, we talk about non developed countries and third world countries and developed countries.
[00:07:04] Speaker B: How many people are, how many countries are in this?
[00:07:07] Speaker A: 38.
[00:07:07] Speaker B: 38 countries.
[00:07:08] Speaker A: Right. So 38 countries in this.
And we are unfortunately slipped to last of 38 countries in the forecasted. So the OECD is predicted between 20 and 30 will be in last place among the developed countries for GDP growth.
Wow. Right. So it's a scary figure. You know, it's been something.
[00:07:32] Speaker B: It's almost like we're not on that list. Almost.
[00:07:35] Speaker A: Well, you know, the. And I bring it up in previous shows and I think through the, what they call the lost decade.
Even the finance minister, you know, Christine Christia Friedland, who's now, you know, working for the Ukrainians.
[00:07:50] Speaker B: Yeah, that's right. She's a special envoy to Ukraine.
[00:07:53] Speaker A: No, no, she left that job Sorry.
[00:07:55] Speaker B: Oh, my apologies.
[00:07:57] Speaker A: That was yesterday.
[00:07:57] Speaker B: She's now actually employ the people she gave the money to.
[00:08:00] Speaker A: Yeah, so.
Well, that's another show.
[00:08:03] Speaker B: Okay.
[00:08:03] Speaker A: All right. But. So, you know, the interesting part is that the growth. Our growth in GDP has slipped to last place in the developed countries. And the real interesting part of that is that we've not really been worried about it, which is to me, and I've said on numerous shows the last decade, even the Liberal government, you know, she is the finance minister, was saying, hey, you know, time out. We gotta. We gotta turn. You know, we gotta turn. And they were trying to figure it out, but they weren't getting any programs in place to get it figured out.
So now we've slipped to that bottom. Bottom tier.
[00:08:43] Speaker B: So compare U.S. to the U.S. for a minute.
[00:08:46] Speaker A: Well, so, okay, so the U.S. that's interesting. Per capita. So what they do is they take GDP per capita and they compare us to the US and the US has been on this sharp increase, and we've flattened off and went down, so we've, you know, we went the opposite direction. So GDP per capita, you know, is wide. And I've talked about on other shows almost to the point where It's, I think, $8,000 per person per capita difference. Difference between the two countries. So if you look at it in 1970, we started off on the same plane, so we were in the same position. And then over, you know, decades, we've just constantly. We've divided, divided, divided. The US Climbing, we sort of stabilizing or, you know, leveling and then going down, unfortunately. So not a good predictor. And quite frankly, it doesn't help us going into this economic climate, which, you know, is a. As Deloitte says, will be some type of recession.
[00:09:45] Speaker B: Not only that, but it does seem to add a little bit of fuel to the flames for Trump in any sort of negotiation. He does. I mean, I can almost hear him saying, your GDP is dead. You've got no gdp.
[00:09:56] Speaker A: Well, yeah, that's the.
[00:09:58] Speaker B: That's the bargaining chip.
[00:09:59] Speaker A: Well, that's interesting because, you know, there's a couple. A couple indicators of. That cause GDP decline. So there's a number of indicators that cause GDP decline, but one of the key ones is capital investment in your own country.
[00:10:15] Speaker B: Mm.
[00:10:16] Speaker A: And we've unfortunately managed to go the opposite direction. So we spend more money investing in other countries than we do in our own country.
And that's. That's very bizarre. Yeah. Notice. So even our CPP, which we've talked about on other shows, 50% of that is invested in the US and not Canada.
[00:10:36] Speaker B: So I looked into that. There's not another country on earth that invests more outside of their own country than they do in. Yeah.
[00:10:44] Speaker A: Which is bizarre. So, so that's been kind of the challenge. Our, our, our basic, our capital investment. So our capital investment into the country has managed to go down. So as your product productivity decreases and your productivity is a function of labor and resources.
So. And technology, of course, in the innovative technology. So those are the kind of. The three components that make up your productivity in your country are labor resources. You know, our labor productivity has gotten scarily low.
[00:11:15] Speaker B: We don't do any manufacturing.
[00:11:16] Speaker A: We don't do many manufacturing. So the level of manufacturing do is sunk.
[00:11:20] Speaker B: Sorry to manufacturers in this nation. But you are among a really rare group. You're in rare air if that's what you do.
[00:11:26] Speaker A: But if you're not, you're not manual. If you're not manufacturing anything, you're not spending capital.
So they kind of go hand in hand. Right. So now I'm not billing anything or I'm not manufacturing anything. Am I going to buy machines, buy equipment? Am I going to worry about innovation? Am I going to try to make that widget better? Do I need to make it better?
[00:11:45] Speaker B: Construct a new building? Do I need more warehouse space? Do I need more drivers? Like. Yeah, all of that is impacted.
[00:11:51] Speaker A: Well, we have done. Which is interesting. So that's an interesting one. On the real estate side, we do do a lot of storage. And so we do build a lot of things to store things. We don't build a lot of places to manufacture things. So our, you know, we've seen over the years it's come to an end. But our residential construction was a booming industry.
[00:12:13] Speaker B: Oh yeah.
[00:12:13] Speaker A: Our commercial was a booming industry. Only from a perspective of storage, not a perspective of manufacturing. So that, that was interesting.
[00:12:22] Speaker B: You say that in many parts of this country, as you leave the outskirts of the core of the city and you get to the main transport areas, we have huge warehouses.
[00:12:32] Speaker A: Yeah.
[00:12:33] Speaker B: A lot of the Amazon warehouses. There's warehouses in this country that color cover square kilometers.
[00:12:39] Speaker A: Yes.
[00:12:40] Speaker B: It's remarkable.
[00:12:41] Speaker A: Yeah, yeah. Well, you know, even Mississauga by me, it's amazing. Even over the last few years coming out of COVID the amount of storage that we, we've built and you see them, you know, you wonder articulate that with me. What's in them?
[00:12:56] Speaker B: Why are we doing that?
Are we a hub for the world for distribution? I don't think so. Are we storing product that we're going to buy in the future.
[00:13:05] Speaker A: I think we thought, well, coming out of COVID I think we thought we had supply management challenges.
[00:13:09] Speaker B: So.
[00:13:10] Speaker A: So I think a lot of that was just, you know, did.
That was the perception I think we built to meet a demand or a supply issue that probably wasn't there in the end.
So now I think a lot of those are sitting empty. You don't see many people around those buildings anymore. You see them kind of vacant with 10 cars at most.
[00:13:29] Speaker B: Yeah, it seems like they're just storage space on occasion.
[00:13:33] Speaker A: Yeah, that's.
[00:13:34] Speaker B: And there's so much of it anyway. It's, it's interesting. I think we should take a look at that down the road. What's. What are we warehousing in Canada that we have so much space?
[00:13:43] Speaker A: Exactly. The other one I wanted to bring up, and this is on the GDP front per capita, is that when you look across the country, you know, we seem to think for years we had. Ontario was a boom for manufacturing, Alberta for oil and gas.
So since 2019, we basically have not had a province grow above the 2% mark.
So all 10 provinces. Right. That we have have not exceeded that.
[00:14:20] Speaker B: There's no superstar.
[00:14:22] Speaker A: There's no superstar. No.
In fact, Alberta since 2019 has been in a negative growth.
Oil and gas business has just not been happening.
[00:14:35] Speaker B: And that was, that was maybe the star, actually.
[00:14:38] Speaker A: It was. And Ontario is slightly down. It's like 0.1% down, but it's negative.
So. And you know, the east coast, except for New Brunswick, you know, P.E.I. is slightly up, but you know, that's not been positive either. So.
[00:14:53] Speaker B: So basically across the nation, even on a localized basis, there's no real relief at any one place in this country?
[00:15:02] Speaker A: No. Well, you know, that's a little frightening. It is frightening. But, you know, we've tried to do a few things. We've tried to lower interest rates. We've, you know, given credits for manufacturing. You know, right now we're, as we talked about before the show, when we did the budget show, we gave a lot of tax breaks. So we came out for, you know, buy equipment, invest innovation.
We, we are trying to do things. The challenge right now is how fast will those kick in and then where are we going to end up the next few months as we go through into the winter, when we do hit this recession in 2026, when technically we are in it, and then how deep do we go?
So that becomes the question now. Is it a mild recession? It is a deep recession. And then what does the government do. And if these programs, the tax credits and all these things that we put in the budget don't kick in and don't kick in fast enough, which I think that was the, that was the budget sort of complaint from everyone is that it was too mild, not hard hitting enough and we were going to hit it.
[00:16:08] Speaker B: And it was lengthy in delivering exactly like it was long in the tooth by the time that they get there from the original concept. And frankly it's an election period.
[00:16:18] Speaker A: Right. But we're into it now, so we're basically into it. And how do you get productivity up? Because without people investing in machinery, innovation, we have an aging population growth, we have a high immigration. That's not product hasn't been productive, quite frankly to the country. So that's been a challenge. We haven't had a huge productivity from our immigration groups.
How do you get that stimulated again? And what programs do you follow?
So we started looking into it. We said, okay, what happens now? This is an interesting thing. What do countries do?
Right when they hit our circumstances? Yeah, you can, what do they do?
[00:16:57] Speaker B: That's my next question is like, okay, so we're here. Can we get out of this? Is there, are there, is there a model out there?
[00:17:04] Speaker A: Sure. We've, you know, five, six, five that I can count since 1961.
Recession. We've been in recessions before. This is a recession that's a little different because we're kind of missing a large portion of the baby boomers.
[00:17:18] Speaker B: That's true too.
[00:17:18] Speaker A: This is a little different. So I think we're underestimating my opinion. So Paul's opinion on this is we're underestimating how deep we're going to go on this. I think this is going to go.
[00:17:28] Speaker B: Since the last recession.
Correct me if I'm wrong on any of this because I'm just an average Canadian guy looking at the numbers.
But since the last recession, there's policies that make it difficult to mine, there's policies that are put in place to make it difficult to manufacture because you could be creating pollution of some sort. And all of this is necessary to have a protected world. And I understand.
[00:17:51] Speaker A: Right.
[00:17:51] Speaker B: But a lot of industry restriction has come into place in almost every sector that does manufacturing, that does resource mining or pulls anything out of the ground.
Do you think changing some of that and our policy in this country just with the existing industries we have could be a tipping point for this?
[00:18:14] Speaker A: Oh, 100%. 100%.
Here's the challenge we're going to hit. So we're going to dip.
Leaders are going to have to make decisions. So whether it's cutting red tape, whether it's internal trade barriers, we've gone too slow. So we didn't hit it, we missed it. So we're in October. We've seen the diplomatic.
[00:18:34] Speaker B: We.
[00:18:34] Speaker A: If we hit November, December, where the results are going to come out shortly, we'll know. So then they'll pop, you know, they'll announce it. It'll be the, you know, the big news story of the day, which is imminent. Yeah, it'll come out and we'll be like. And a lot of people will be like, wow, you know, why are we in a recession? Well, we just kind of explained.
Here's how you got here.
[00:18:53] Speaker B: You know, you might want to share this with your friends when they say, I don't know how we got here. Here's While I've got something.
So now you mentioned we've seen some examples and how they got out of there. Share some of those with me, if you don't mind. Sure. Well, you know, some hope.
[00:19:06] Speaker A: Some hope. Well, you know, I don't know if it's hope, but it's, it's changing your economy. So a lot of times what countries do when they hit bad recessions is number one, they have to renegotiate their loans and debt and everything else. So like, you know, I was looking just for some examples before the show and, you know, one popped which I had forgotten about was in the 1997 Asian financial crisis when South Korea took a bunch of loans from the IMF and they were defaulting on them. So they actually went to their citizens and requested that people donate gold.
So gold, jewelry, gold.
[00:19:43] Speaker B: Wow.
[00:19:44] Speaker A: So, you know, everyone has to pony up.
[00:19:46] Speaker B: The citizens all ponied up actual gold.
[00:19:48] Speaker A: They ponied up, valued, sold it and they actually raised $2 billion to stay afloat, which was, you know, that was a wake up call for a nation, like a huge wake up call for the nation to say, you know, what trouble? Yeah, we're really in trouble. Like, this isn't funny. So they had to get together and they had to redevise business sectors. So one of the business sectors, which everyone will know is Korean cars.
[00:20:12] Speaker B: They've done really well. So they came out of no place with that. This must have been where.
[00:20:17] Speaker A: But you know, here's the nice part about what they did or the good part about what they did. Number one, they, they started building their own cars. Number two, they took the time to actually make sure the technology in those cars, the Innovation, all the things that increase their productivity went into those cars. And from there they created a nation that became more productive. So that was kind of the. That spurred them on to actually be more diligent and create an industry that then brought them through the recession.
[00:20:44] Speaker B: They created formulas for creating great product.
[00:20:47] Speaker A: Yeah.
[00:20:47] Speaker B: That they can put into other places.
[00:20:49] Speaker A: Yep.
[00:20:50] Speaker B: Yeah.
[00:20:50] Speaker A: So.
[00:20:51] Speaker B: And the banks know how to lend against that formula.
[00:20:54] Speaker A: Exactly.
[00:20:54] Speaker B: Investors can have reliance on that. Yeah.
The building process becomes formula. The employment process becomes formula. A reset like that is pretty good. Okay, guys, give me your gold.
[00:21:06] Speaker A: Well, and. Well, here's the other thing. It actually is stimulated. The government stimulates it, and then the private. Private enterprise takes it and runs with it. So that's the nice part of that, because they've done very well. We're going to talk about this a minute. A lot of countries don't do that, and that's also a challenge.
Iceland. So 2000 to 2000. I don't know. Remember, 2008 was terrible. The meltdown across the world. Subprime mortgages, all that crazy stuff. But Iceland actually let their financial institutions collapse, their banks collapse. So they let them fail. They basically.
Restarted. They hit the restart button. Right. And they devalued their currency. And they devalued their currency to make themselves more attractive as a trading partner. I don't know if you remember, you know, remember the spa days in Iceland?
[00:21:56] Speaker B: Oh, yeah. You could. I was going to say they really.
They took advantage of this in so many ways because tourism opened up, airlines opened up.
[00:22:03] Speaker A: Yeah.
[00:22:04] Speaker B: They built a new airport, international Runway so that people could. It became a tourist attraction around the world.
[00:22:10] Speaker A: Yeah. 200 bucks. You were in Iceland, you know, $80 a night.
[00:22:14] Speaker B: You know, one of the most incredible scenery locations on earth.
[00:22:18] Speaker A: Great coal plunges.
[00:22:19] Speaker B: Yeah, yeah.
[00:22:20] Speaker A: So Iceland really took advantage of it. So, you know, that's one way. Australia. So let's talk about that. So then when Australia. This was in the 2008, 2. Australia probably did it a different way, which didn't end up for them, didn't end going well at all. So they just gave cash subsidies.
So one of the things. One of the main things they did is they gave everyone 900 bucks.
And I think we learned from Justin Trudeau that quite frankly, giving cash to citizens as a pure stimulus never works. Right. It doesn't cost.
[00:22:52] Speaker B: It's probably the goofiest idea I've ever heard in my life. Okay. We've taken your money.
[00:22:58] Speaker A: Yes.
[00:22:58] Speaker B: At a high rate that you don't want to pay in the first Place in taxes. Don't worry, we're going to give some back. Well, can't you work this out better than that?
[00:23:07] Speaker A: Yeah, well, and, and they took, the interesting thing is the other flip side of that is they took significant loans from China and then they actually paid them off with resources or they're still paying them off with resources. So they kind of took their resource, the country's resources which were vast, and sold them basically to the Chinese in return for the loans to bail them out of the, the meltdown.
[00:23:33] Speaker B: So they used their resources to save the nation.
Anybody?
Anybody?
[00:23:43] Speaker A: Well, it is an interesting approach. I don't know. You know, this is interesting because, you know that was in a climate where we were totally different and there were, there was no anxiety about Western hemisphere protection.
You know, and if this was happening at another time, that would be something I throw on the table right away. But right now, you know, on the show a few, a month ago we actually went through the national defense paper of the United States.
[00:24:10] Speaker B: They want nothing to do.
[00:24:12] Speaker A: They went to, they were basically saying they won't allow that now.
[00:24:15] Speaker B: Yeah.
[00:24:15] Speaker A: So they won't allow an economic bailout of a country in the Western Hemisphere.
[00:24:21] Speaker B: Yeah.
[00:24:22] Speaker A: So they're time out. We're not doing that anymore.
You will, in that paper that they published, basically you will buy your goods and resources from the United States. You will take loans from the United States. You will partner with the United States. That's the way they see the world.
[00:24:36] Speaker B: It's very interesting because Australia seems to be doing very well with the resources right now. So whatever investment went in from whatever countries and they are mining well, productivity.
[00:24:47] Speaker A: Right. So you know, if you look at the productivity factors by industry, mining is one of the highest. So it takes people, it takes innovation, it takes resources, it takes machinery. It's a, it's a great stimulator for productivity that actually stimulates gdp. So they kick started it after a bad, you know, after a bad downturn and it actually stimulated growth. They also, you know, leadership wise right now they have a, they have a great prime minister, quite frankly. He's doing a really good job. Very humble, very, you know, focused on the work. Focused on the work. Not, not needing the money, quite frankly. So doing it because he wants to better the country. So which is great.
Germany. I remember this in 2008. Right. And I'm not picking, this was a weird one, not picking on Germany. But Germany always is an interesting test case in everything when you read it. I always, when I, when I read the German economic stats all the time. It's so interesting to me the way they look at things. So in 2008, what they did is they basically were reduced work times.
[00:25:55] Speaker B: Oh.
[00:25:56] Speaker A: So to kind of increase. They thought that they would increase their productivity and they didn't have enough work in the country because the slowdown that they would actually have people work like 30 hours a week.
[00:26:10] Speaker B: Right.
[00:26:12] Speaker A: It was a horrifically bad idea that it turned out to have another many social consequences.
[00:26:19] Speaker B: Well, yeah, I can imagine it did. People left Germany for other jobs. I mean they lost a brain trust and, and a talent base through it. Yeah, it. It changed the work ethic for a period of time in Germany, as I recall.
[00:26:31] Speaker A: Yeah.
[00:26:31] Speaker B: I thought, I felt this one was a strange one. And you pointed it out. We actually did it here. We did Ray days. Yeah.
[00:26:38] Speaker A: We were. Remember we were on that in Ontario at one point. We were on a path to do it. And also the citizens of Ontario, like.
[00:26:45] Speaker B: Who get out of here.
[00:26:46] Speaker A: The businesses went bananas. I'm not paying people for. Remember the, the idea was that the businesses would pay people for the time off and not to work.
[00:26:56] Speaker B: Yeah.
[00:26:56] Speaker A: So you would still make the same income. You just wouldn't work as much. And so. And the business was like, well, how's that going to increase my product productivity, my profitability?
[00:27:04] Speaker B: I still have to hire another shift.
[00:27:06] Speaker A: How am I gonna. Yeah, how am I gonna buy capital, reinvest. It didn't make any sense. Right. It, it, it has no. Phil. Philosophical economic.
[00:27:16] Speaker B: Yet Germany did support.
[00:27:17] Speaker A: But they did it and, and now they're doing, you know, now they've kind of went into government sustained programs.
So which I think are helping the country, you know, to come back. But it's been a tough comeback for them since 2008 and they have a lot of government supported projects.
[00:27:38] Speaker B: If you have debt in a country, it always seems to me that you're just building more debt.
I think unless you're manufacturing, unless you're doing something, unless you're producing something, you don't really. Your startup, your restart. First of all, you might not end up closer to a recession.
But even if you have to bump out of a recession, it's your resources, your manufacturing, your price per product and all of that that's going to really save your country.
[00:28:03] Speaker A: Yeah. Well, it's interesting. So you know, it's how deep your recession goes. So this is, you know, if you look at the lessons Learned from the 1930s to 2008, you know, depression to recession, you know, as you get deeper into your recession and closer to A depression, quite frankly, you have to stimulate those projects. So, you know, the U.S. you know, we saw it, you know, 1930s, they, you know, had to actually start to build major projects. You know, the. Whether it be the Hoover Dam or roads, highways, all those good things, you know, they had to create big, massive projects to put people back to work and get companies moving again to jolt the economy. So that was a huge jolt. They had to get going to get people back.
[00:28:48] Speaker B: They also had a boost of immigration. They needed to get to work at that time as well. I mean, they. They really were in that situation where.
[00:28:54] Speaker A: Well, but you look at Canada. So let's stop for a minute because, you know, it's interesting.
We have, you know, baby boomers we've talked about on other shows make up roughly 20% of the population.
So kids, you know, make up another 15%.
So that's 35.
And then unemployed. So we're projecting EI to go up to 10%.
And then people who are just not on the EI role just have left their welfare or just left the economy.
So right now, 50% of Canadians are supporting 100% of the pie.
So we're kind of getting a scary. That's the scary math. It's an estimate, but it's a scary projection because you're having, as it surpasses the 50% mark, you're having a very small part of the population smarting the whole pie. So the, you know, the reason, again, our productivity low is so low is that our unemployment's high, our aging population. These are all the things that we're kind of dealing with in this country right now that are causing GDP per capita to drop. And it's. It hasn't been right now. It's been over time.
[00:30:11] Speaker B: Yeah. It's interesting because you talk about the United States coming out of the Great Depression and building these big projects. The projects that they did for infrastructure were the. The Hoover Dam. And they. They, you know, shored up all of their national parks, and they built highways and rail systems and commuter rail systems, and they really got to work building out a country that wasn't already in the outskirts. They built train stations where there would be towns. They built monuments that would drive Americans to want to drive across their new highways, to see this wonderful thing for productivity.
[00:30:49] Speaker A: So, you see, that's the leadership piece. If you build a highway, you reduce.
You increase productivity because you don't have people sitting on the highway.
[00:30:57] Speaker B: Right.
[00:30:57] Speaker A: You don't have people not wanting to drive the highway to go to work. So now all of a sudden you have more people working, more people getting there faster. So you create methods to actually get people to their work, get people to invest in their work.
Logistics, getting materials to factories, expanding the.
[00:31:14] Speaker B: Industrial area in which your country works.
[00:31:17] Speaker A: Exactly. So that's the key, right? That's the. If you look at a lot of great rebounds from recessions, it is people who thought about actually increasing their productivity first. And that's, that's, you know, coming through this and talking about this today, the one thing that keeps coming to mind, we need to set us. We need to start setting some indicators, benchmarks that we look at every month and we say, okay, we got to hit these. Because if you don't drive towards those goals for the country, whether it be GDP per capita growth, whether it be ppe, you know, whatever we determine we want to look at, we need to actually set those and drive those benchmarks forward. And by doing that, we can do similar to what they did coming out of the Depression, they start to drive industry back.
[00:32:08] Speaker B: If you're building bridges, you've built steel companies, you've trained people for the next project that comes in. So if you say to a Germany, we can do the. The bridge here, we can build this. We can use our expertise, our steel and our. You're already ready to go. And that productivity of having those trained people and the plant built and the systems in place to transport it, that must increase your productivity and your economy.
[00:32:34] Speaker A: Exactly. And, but. And also as we do that, it's actually starting to report. And this is, you know, we talked about this on another Mike.
It's actually the PR around doing it. You remember, you remember when they were coming out of the Great Depression, the amount of pr, you know, we're building dams, we're building highways, we're building roads. We are America. Right. Remember that whole.
[00:32:56] Speaker B: The new Las Vegas is now open.
[00:32:58] Speaker A: Yeah, exactly.
[00:32:59] Speaker B: Come to Palm Springs. The highways now here. Yeah. The Route 66 is now ready to go.
[00:33:05] Speaker A: Exactly. You remember those, you know, the, the advertising, the PR around those.
And that is when you get a nation kind of coming back. And so I think as we, you know, as the next few months go by and we're going to do every month, when we get the GDP results, we're going to actually go through them. I think what we need to talk about and what we need to start focusing on is, okay, we're here.
You know, do we all want to be in last place in the o. In the OECD? No. In the developed country world, out of 38 countries. Did we want to have, have be projected to have the lowest GDP growth? No. None of us wanted to do that. But we are here.
How do we build it back and what are the plans that we have to do and what do we recommend to the government to do?
[00:33:49] Speaker B: That's the other thing. I, I think that even I'm hoping that this episode focuses somebody in, you know, one of the, one of the advisory research houses or, or think tanks here in this country to say, you know what? I think Canadians are ready to focus on getting up that ladder two or three rungs every couple of years just to get ourselves back into play. We don't need to be the top of the list, although we were near for many years, just to make our way closer to the, to the top of that list. We have to do some things. I hope that this inspires that. Thank you for doing this.
[00:34:28] Speaker A: I agree. Thank you, Mike. And for those of you, we're going to be doing a show every month when the GDP results come out from Stats Canada. So please stay tuned, watch, subscribe, and, and let's. If you have any ideas. So I always say at the end of every show, you know, write us, let's talk about it. Because the more creative we are, the more innovative we are, the faster we get out of this challenge.
[00:34:52] Speaker B: I'm glad to know that GDP does not stand for a great dill pickles like I thought.
[00:34:56] Speaker A: Thank you, Paul. Thanks, Mike.
