Election Economics

A fall election is just what the economy needs.

Despite claims to the contrary, a fall election would boost, not hurt the economic recovery.

Based on the impact of last year’s October election on the economy, which was then sliding into recession, an election this fall would create some 40,000 full-time jobs across the country.

"With the federal election in mid-October, there were large employment gains in public administration, spread across most provinces,” Statistics Canada noted in an analysis of the employment changes during that month last year. “Most of the increase was among occupations related to the election process.”

“At the same time, employment declined in accommodation and food services,” it also noted in its analysis released in the month following the election. “There was little change for all other industries.”

And that doesn’t include any other positive impact on economic output and employment in both the public and private sectors leading up to and during an election such as that generated by the boost in political advertising at the riding and national levels and travel by candidates and their media contingents.

Further, economists have already dismissed the threat of any economic damage resulting from political uncertainty generated by an election.

Moreover, even another minority government wouldn’t add to the uncertainty as both the two main parties are basically committed to maintaining the current levels of economic stimulus and don’t diverge much on other economic issues.

True, the boost in employment and election related spending would be temporary, but so are government stimulus packages.

And, like other forms of government stimulus, the election related economic boost would help extend the recovery in the domestic side of the economy until the global economic recovery strengthens to the point that it begins to provide some stimulus to the export side of the economy.

Searching for a bottom

Arguably, the best line this past this past week about whether the economy/markets have hit bottom yet, comes from Tobias Levkovich, chief United States equity strategist at Citigroup who in an analysis in the New York Times, Sunday, was quoted as saying it's: "When we stop behaving like children in the backseat of the car asking their parents, 'Are We There Yet?'"

The second best: I wouldn't know a bottom if it whacked me in the head” comes from John Clark, a hedge fund manager, who in a column by the Globe and Mail's Derek DeCloet, adds: “No one ever does.”

Regardless, a bottom is what those who have lost, or fear losing, their jobs, or who are waiting for a recovery in some of their deeply eroded investment savings are hoping for.

So far, however, evidence that the worst of stock market meltdown has passed, and even more so the downturn in the economy has hit bottom, is thin, and based mostly on recent reports that were not not so much good as not as bad as feared.
They, however, were enough to trigger a week-long market rally.

Dampening hope, and in turn briefly sinking markets at mid-week was, among other things, news that the IMF was again slashing its economic forecasts for the world and most, if not all, developed and developing economies.

Adding to the renewed doom and gloom was former Bank of Canada governor David Dodge's comments that forecasts of the start of an economic recovery this year, such as by current central bank governor Mark Carney and Prime Minister Stephen Harper, were "unrealistic."

But just as workers and investors shouldn't put too much hope in the thin gruel of reports suggesting the start of a recovery is near, the forecast by the IMF, and the comments by Dodge, shouldn't drive them to despair either.

A review of the forecasts bythe IMF and bythe Bank of Canada when Dodge was running the show reveals neither saw this recession coming much in advance.

As such, don't count on either to see a recovery much before it arrives either.