Canada's Troubled Economy

Report Outline
Rise of Inflation and Unemployment
Early Economic Development of Canada
Prospects for Renewal of Prosperity
Special Focus

Rise of Inflation and Unemployment

New Budget Emphasis on Providing More Jobs

The Canadian Economy is often regarded as a mirror image of the American—only smaller and more vulnerable to the shocks and jolts from abroad. Hence it should come as no surprise in the United States that Canada, too, is suffering from the twin economic ills of inflation and unemployment. The government of Prime Minister Pierre Elliott Trudeau in Ottawa, like the Nixon government in Washington, has had trouble this year deciding which was the worse evil. To combat one, the reins often must be loosened on the other.

In Canada, the emphasis seems to be shifting toward unemployment. The new national budget presented to the House of Commons on Dec. 3 included plans for $500 million spending on public works and other programs to stimulate the economy and provide jobs. Finance Minister Edgar J.

Benson said the new spending will cause a budget deficit of $320 million this year, whereas a $250 million surplus was forecast last March at the beginning of the fiscal period. No new taxes were requested but a 3 per cent tax on personal and corporate income would be extended one year. Despite the prospect of a deficit this year and a bigger one next year—he estimated it at $600 million—Benson portrayed the pump-priming course chosen by the Trudeau government as the least likely to add to inflationary pressures.