Another Word About the Canadian Dollar

Today I was reading a report on the Canadian economy. But more specific, a report on job growth in Canada. The recent rise of the Canadian dollar has made many changes to the Canadian economy, one of these changes affects business. With the Canadian dollar trading at par with the U.S. dollar or greenback, U.S. companies are now finding it more costly to manufacture goods in Canada. When the Canadian dollar was trading roughly at 75 % of the U.S. dollar, the exchange rate made manufacturing goods in Canada much more appealling because the actual cost was about 75 % of the numbers due to the exchange rate. Now that the Canadian dollar is close to or at par with the U.S. dollar, costs simply are rising.

With a growing economy, job growth is definitely a key ingredient for sustaining long term economic growth. The fact that manufacturing jobs have been cut in most provinces should not discourage Canadians from investing in Canadian business'. It is imparitive for sustained growth that Canadians continue to purchase Canadian made goods and services. The recent out cry for lower prices got national attention and the Retail Council of Canada took notice. Some prices have come down along with a 1% cut in the G.S.T. (Goods and Services Tax, for those who are not familiar with this tax) has made goods and services a little easier to afford. But what does this all mean for our economy?

Simply put, a larger amout of disposable income will inevitably increase the amount of larger purchases. The tax on a new home will now be 1% cheaper than last year, every Canadian will now save a whole 1 cent on every dollar spent. This really doesn't sound like a lot, but when you put 1000 pennies together you do get $10. Granted this small decrease doesn't look like much, but don't worry it all adds up, eventually. But back to the report on job growth.

With American business finding it cheaper to do business in the U.S. it is important that Canadian manufacturers realize that there is more room for diversity in those sectors. Not only do Canadians need to adopt a policy of 'Buy Canandian' but we need to realize that the departure of U.S. corporations from our manufacturing sector creates room for Canadian business. It is possible that the Canadian economy can benefit from sustained economic growth, we just need people with ideas as well as investment capital to create more growth. The Canadian government will give out grants for those willing to start a new business. If you have an idea, it would be worth the time it takes to look into attaining a grant from the government to get started. What do you think?

Image source: my camera phone

News Story: Loonie slumps on feeble jobs report

A Soaring Canadian Dollar Part 1!

Well folks, the Canadian dollar has been floating around par with the almighty U.S. Dollar. What does that mean for you? What does it mean for our economy? I'm not a financial genius, but it is my opinion that the only way for Canada to continue to keep our dollar at par or very close to par is to increase our GDP.

For those that don't know what GDP is, it is Gross Domestic Product. It is affected by imports and exports. Imports generally reduce the GDP while exports increase the GDP. This is just a brief synopsis of what GDP is. For more information on what GDP is go to Wikipedia to learn more. The most important thing to remember in my opinion is to consume Canadian made products, this will increase our GDP and overall help our economy to grow.

Now, what does the Canadian dollar trading at par mean for you? Well simply put, since products in U.S. markets are generally cheaper, it could mean more trips over the border. With all the border issues between Canada and the U.S. it would be a good idea to have a passport handy when travelling over the border. Even though the U.S. and Canada have generally good relations, having a passport to enter another country should be widely practised. You wouldn't go to another country with out one, so why should you go to the the States with out one?

The problem with a high Canadian dollar is that it tends to drive business south of the border. Labour costs are cheaper in the States and with a decreasing profit margin, more and more companies will be considering moving back across the border. As Canadians, we are going to have to invest more into our Canadian business' to support a stronger dollar. But with our dollar so high, some prices on commodities should be on a downward slope making your dollar go further. But will companies voluntarily reduce the price of their product? If we want to continue to trade with the U.S. they should, because they are not going to want to purchase Canadian goods at Canadian prices.

To be continued....