Prime Minister Justin Trudeau will have a bad night Tuesday, when U.S. President Donald Trump delivers his State of the Union speech before Congress. Trump has done just about everything right on the economy, Trudeau just about everything wrong, and the contrast will be cringe-worthy.
Trump will doubtless brag about America’s red-hot economy, which took off the day after he was elected president in November 2016. Business confidence instantly soared upon the realization that companies would soon be able to shed the immense drag of Obama’s politically correct interventions. The stock market soared along with it, investment surged and employment boomed. The U.S. now boasts an unemployment rate below four per cent that includes rates not seen in decades, or ever, for blacks, Hispanics and women. So many people are entering the workforce to seize the well-paying jobs on offer that the workforce-participation rate is up while the numbers of those on disability and food stamps are down. Employers are so desperate for help in America’s tight labour market that they are adapting their workplaces to accommodate those with physical and mental disabilities and are even giving a second chance to those with criminal records.
In Canada, despite the booming U.S. economy next door, our unemployment rate remains mired at 5.6 per cent, almost 50-per-cent higher than America’s. With our industries burdened by Trudeau’s Obama-style interventions — those tied to gender-equality and climate among them — and failing to generate the good jobs seen south of the border, our labour force is shrinking as wages struggle to keep pace with inflation. Investors in Canadian firms are suffering, too — since Trump’s election, the Dow Jones Industrial Average soared more than six times that of the S&P/TSX Composite Index.
What was once America’s single biggest economic and geopolitical weakness — its energy dependence on often-unsavoury foreign suppliers — has vanished, with America’s energy ascent an American triumph. By unshackling energy development, Trump has made America the world’s largest oil and gas producer, not only self-sufficient and secure domestically but able to undercut enemies such as Russia and Iran by eroding their markets, diminishing their incomes and undermining their relevance.
What was once Canada’s single biggest economic and geopolitical strength — our energy industry — has also vanished, to become our single-biggest shame. By shackling pipelines and otherwise demonizing fossil fuels, Trudeau has neutered Canada’s largest export earners and most strategic industries, diminishing Canada’s economic clout and political relevance to the U.S. and thus inevitably to the international community.
Before Trump came to power, the conventional wisdom among the world’s elites had two-per-cent GDP growth as the new normal for developed economies, with Obama averaging just 1.65 per cent. The Trump economy has blown that conventional wisdom away. In 2018, U.S. GDP growth is estimated to come in at three per cent, 50-per-cent above Canada’s two per cent, which will more resemble the old Obama normal.
Another pre-Trump conventional wisdom had manufacturing jobs gone for good. The Trump economy blew that away, too, with 284,000 manufacturing jobs created in 2018, mainly on the strength of cuts to taxes and red tape. In Canada, where taxes rise and red tape binds, manufacturing jobs are stagnant.
Trudeau’s bad night Tuesday will have one wry consolation, however: Trump makes Trudeau look bad, but he also makes Trudeau look better than he deserves. Without the Trump gangbuster economy, which has buoyed the Canadian economy to make ours look passable, the Canadian economy would be in clear decline. With Trudeau’s Canada having become one of the OECD’s highest corporate income tax jurisdictions, with our high marginal personal income tax rates certain to discourage the best and brightest from immigrating here and with investment leaving Canada, our economy’s plight will soon enough become widely evident to Canadians. How soon is the big worry for Trudeau. He needs the Trump train to keep barreling and to keep propping up Canada’s economy at least until the fall, when he faces voters in a general election.