Deceptive growth

Eugene points out that the Cons' cabinet shuffle seems aimed in part at direct confrontation against both public-sector and private-sector workers. But it's worth noting that the Cons' stay in power so far already looks to be softening the economic foundation underlying Canada's working class - despite what the job headlines suggest:

(A)nalysts warned there's more sizzle than steak in the gravity-defying performance of the labour market that created 62,000 jobs, four times what analysts had expected, and reduced the jobless rate two notches to 6.1 per cent in December, matching the lows of last spring...

(T)he job growth in 2006 was driven by gains in paid, full-time, and private-sector employment, all reflections of underlying economic strength.

In December, however, the gains were divided between full- and part-time employment, and nearly 50,000 of the new jobs were in self employment, with only 4,700 being in paid employment, the smallest gain in four months.

"The bottomline is that the Canadian economy is creating jobs, but at nowhere near the pace suggested by this morning's headline number," National Bank of Canada analysts cautioned, adding they still expect the Bank of Canada will further downgrade its economic growth projections in its monetary policy report later this month.

Further, unlike the drop in unemployment, which is a lagging economic indicator, they noted the total number of hours worked during the month, a leading indicator of the future direction of the economy, suffered its steepest drop in more than two years...

"Nor does the report square with the economic backdrop as a whole," observed TD Securities economist Marc Levesque, warning last month's pace of job growth is not sustainable.

"Canadian economic growth has clearly been downshifting in recent months," he said. "In fact, GDP growth is likely to struggle to even remain in positive territory, and the odds are high that it will come in below one per cent way short of the Bank of Canada's estimate of 2.8 per cent ... ."

Of course, it's always possible that future results will defy expectations, and/or that the current growth in low-hour jobs will somehow translate into longer-term employment.

But given that perception plays a significant role in shaping economic reality, it seems likely that the analysts' concerns will come to pass. And that may lead the Cons to want to go to the polls before a stalled economy gets placed on their shoulders - even if that means that their new hatchet men won't get to carry out their intended missions just yet.