Affluence In Canada

Press, Volume CIII, Issue 30543, 11 September 1964, Page 11

Affluence In Canada

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MELVIN SURFIN,

Speciol Correspondent N.Z.P.A ./

TORONTO, Sept. 8 Buoyed by the biggest spending spree in a decade, Canada is enjoying its longest period of sustained prosperity since the days that following the Second World War. Economists, even the sceptical ones, confess they cannot see any sign of an end to the good times.

A variety of factors have contributed to the affluence that began early in 1961. Not the least is the continued economic strength in the United States and other countries with which Canada trades.

Much of the prosperity can be traced to the devaluation of the Canadian dollar at the height of a currency crisis in 1961.

Valued at 92} cents in terms of the United States dollar, it has had the effect of making Canadian products more competitive in world markets and of forcing the cost of some imports up to the level where domestic goods can compete with them at home. Canadians are buying more of everything, both at home and abroad, and business and industry are spending record amounts on expansion, and there is a possibility the devalued dollar will in time lose its competitive edge. What makes the economists optimistic is that within a year and a half the post-war babies will be well into marrying age and likely to begin setting up new homes with all the buying that entails. Unemployment remains around five per cent, less than half what it was four years ago, but still too high. However, 16-per-cent increase in spending on manufacturing and other facilities this year is expected to continue to boost the number of new jobs. Labour Growth A record number of 6J million Canadians are at work and it is evident the economy is more than keeping up with the growth of the labour force. A major reason for confidence in the boom is that it has not been accompanied by excessive inventories and sharply rising prices which brought the 1954-56 expansion to an abrupt halt. Prices have gone up 4.6 per cent since the economy began rising in 1961 and they are up two per cent in the last year,' but experts regard this as relatively stable under the conditions. Huge sales of grain to China and the Soviet Union, as well as strength in the

market among Canada’s regular customers, have helped put money into the pockets of western farmers. The demand for Canadian exports increased by 44 per cent in May, compared with the same month of 1963. Increased Exports The value of exports in the first five months was more than three billion dollars, an increase of 400 million dollars. This included 11,025.369 dollars in sales to New Zealand, compared with 10,624,284 in the January-May period of 1963. Imports are also higher, especially from the United States, and the 18 per cent increase in purchases of American products is largely the result of tremendous Canadian demand for consumer goods. Consumers and businessmen alike are finding it easy to borrow money. As long as inflation does not get out of hand the easy money will continue, offering the prospect of continuing growth of industrial plant. Retail sales are up 8 per cent so far this year, with a 17 per cent increase in purchases of new motor-cars leading the way. Account Deficit One of the few worries for the nation is that the capital flowing into Canada in the first quarter fell 42 million dollars short of financing the current account deficit, including the interest Canadian firms must pay foreign investors. But as long as the over, all economic buoyancy continues, it will not constitute a serious problem. The boom may be just long enough to enable the Government and business to reorganise the economy generally, to make it more competitive in the international sphere. This is a monumental task, but success would reduce the danger of Canada facing the sort of monetary crisis that caught up with it five years ago.