Thought you understood economy?
StatsCan to send Canadians back to school
Beltrame, The Canadian Press
Statistics Canada is about to retell the country's economic history for
the past 30 years in a new move that will also provide more insight into
murky economic concepts.
Monday morning, the federal data agency will issue a comprehensive
revision to economic data of the past 30 years, introducing new measures
and changing the definition of others.
— two years in the making and designed to comply with revised
international standards of economic measurements set out in 2008 — will
put Canada in the forefront of nations, along with Australia, in adopting
the new way of measuring economic performance.
pledged to follow; the United States in 2013 and Europe in 2014.
It's a big
deal, say economists, but it won't change the way Canadians feel about
their economic place in the space at present, or in the past.
domestic product numbers will likely move marginally up, in part because
research and development will be capitalized and some services will be
added to the export tally.
But in broad
terms, Statistics Canada is not rewriting the past — the new data will
still dutifully record the slumps of the early 80s and 90s, the growth
spurts that followed, and the great recession of 2008-09 and tepid
no real change in the economic history of Canada," says Jim Tebrake,
Statistics Canada's director of the income and expenditure accounts
are changes from quarter to quarter, but nothing of significance. The
business cycle is still the business cycle."
The value of
the exercise, says Paul Jacobson, a Toronto-based consulting economist who
has followed the process closely, is to give economic policy-makers and
analysts a more precise picture of the ebb and flow of economic movements.
But it will
take some getting used to. CIBC chief economist Avery Shenfeld has
compared it to the transition from Fahrenheit to Celsius.
comparison is somewhat apt because one of the benefits will be that
countries, once they've followed suit, will more easily be able to stack
their economies and component parts against each other.
economists will need some time to adjust, Jacobson says, adding that he
has arranged for a four-hour seminar on the subject later in the month.
been warning people for months this is going to be a biggie, but not
everybody's been paying attention." he says. "Every single
identifier people are using is changing, all the matrices change."
the exercise will be worth it. "It's going to make things clearer
about what the devil is going on."
standards will be a bonanza for "data wonks," Tebrake agrees.
That's because they will have so many more data points to follow.
instance, total exports is currently broken down into seven groupings, now
it will be 35. For personal expenditures, StatsCan will issue 100
sub-groupings for analysts to ponder, instead of the previous 38.
sector will be split between financial and non-financial corporations, and
household income will become more precise after jettisoning tribal
government activity, non-profit institutions, and other sectors that
really had little relevance to households. Now they will have their own
much purer and clear measure," Teblake explains.
think at the end of the day it's a more relevant product. Anyone who does
forecasts has much better data at their disposal."
include re-definitions of categories and new terminology. For instance,
terms such as corporate profits, labour income and personal expenditures
will be no more.
say analysts, is that forecasters may need re-adjust their models to
incorporate the new definitions, categories and adjusted GDP results.
Monday's release by the agency is unlikely to impact the market or the
Bank of Canada's thinking about monetary policy, Shenfeld says there is a
potential to alter some perceptions, if in the margins.
real GDP growth has been faster than we thought, Canada's productivity
performance hasn't been as worrisome as feared," he explains in a
note issued to clients Friday.
At the same
time, he said, changes in the definition of the household sector could
result in Canadians realizing they are even more in debt on average than
they thought, or maybe not.
In the end,
he said, it will likely mean having "to get used to thinking in