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The difference between Canada and the US is that the US saw a rapid increase in construction employment before the equally rapid decline. Canada didn't and this led to an excess of work. That excess work has dried up and only now are we seeing the beginning of the same rapid decline that the US has seen.

How do you know that?

Stephen: you are right to insist on this. I am going to attempt an answer.

Canada is not the US, but it might be a lagged, milder version of the US, at least as regards the housing market and construction sector. I see our construction employment continuing to fall quite quickly, following theirs. If we allow for the lag in implementing infrastructure investment, we *may* get the timing roughly right.

Also, some of the inputs (like lumber) are traded, so there may be unemployed Canadian lumber mills (and cheap construction materials) right now. Construction machinery can also cross the border, and a lot of it is cheaply available in the US right now.

If worse comes to worst, and the unemployed construction workers aren't ready for the new infrastructure investment, we can always slow things down. Not so good for a quick effective stimulus, admittedly, but if we do need the new infrastructure anyway, it's not a bad worst case.

And infrastructure investment is investment, and I feel a lot happier borrowing for investment than borrowing for consumption. And infrastructure is one of the things that government does, and is supposed to do. The only question is when. Last year would have been a very bad time. Later this year, and next year, might be a good time, or might not, but it is unlikely to be a worse time than average.

I don't know if I have convinced you. I don't know if I've convinced myself! But we could both think of worse things, I'm sure!

Judging from the change in housing prices over the last few months, there should be plenty of construction workers looking for work.

Nick? You must have posted just as I was posting the link.

I agree with you. I like borrowing for investment but not for consumption. What disturbed me about this budget is how much it lacked. Aren't the boomers retiring in 5 years? If government revenue is down, how in the world are we going to ever repay the sum?

Economics is not my background. I always found interpretation of unlimited boundaries too limited, if you catch my meaning.;)

How do you know that?

I was in the business and all over the country I'm seeing the signs that work is rapidly drying up. The last set of employment numbers in the construction industry began to show it and the next set of numbers will be the same or worse.

I can't speak for the rest of the country, but anecdotal reports out of Northern Alberta indicate that there will be a lot of unemployed construction workers in the oil patch. While I am not entirely sure that these individuals could be readily employed in infrastructure programs, I would hope that many of their skills could be utilized.

The thing is, this looks too much like a "Hail Mary": throwing the ball 40 yards down to the end zone and hoping that by the time it comes down, one of your receivers will be there to grab it. It's a desperation play - and we're not desperate. To continue with the football analogy, we've got plenty of time on the clock and all of our time-outs. Why not go for the short pass?

Quebec's situation may be atypical, but forecasts for 2009 reflect a stability in the construction sector at 132 million hours, according to this news release, quoting Commission de la construction du Québec figures. The residential sector will be affected, but the slack should be picked up by a major provincial infrastructure program announced 2 years ago ($30 billion between 2007 and 2012) and the Eastmain-Sarcelle hydro development in the James Bay area.

We have the Olympics, too. That's got to be some ongoing infrastructure stimulus already.

The thing is, this looks too much like a "Hail Mary"

It's worse than that. It's an absolute farce. The Conservatives don't believe stimulus spending works so I can't fathom why they thought they could craft a budget filled with it. It's like watching an atheist try to give the Sunday sermon.

About a year ago there was a severe shortage of both large cranes and crane operators because of the large number of wind farm projects. The waiting list for large cranes was several years.

I also think that for the past few months a lot of municipal projects may have been put on hold because cities are waiting for federal and provincial infrastructure money.

Well, housing starts are cratering in Vancouver with many many already started projects being abandoned, plus 2009 should see completion of the Canada Line, the Golden Ears Bridge, the Pitt River Bridge, the Convention Centre and the Sea to Sky Highway upgrade, not to mention an all time record for housing completions, so if you folks in the rest of the country don't want any stimulus, we'll be glad to take it, materials are cheap, we've got a whole lot of workers being freed up this year (I suspect those types of workers employed in the early stages of projects are already well underemployed) and no shortage of projects to work on.

The only mention of Vancouver infrastructure in the budget was the Evergreen Line. Seems hard for me to imagine we can't round up enough people to start working on a transit line considering we're finishing up work on a bigger one as I type.

Or, in other words, I agree with Nick.

I find the argument that the next few years will be better than average for infrastructure spending to be compelling, and the reason I supported infrastructure stimulus. At worst, we get infrastructure we need when the economy isn't operating above capacity. At best, we prevent tens of thousands of construction workers using 50 weeks of EI (at substantial expense), and get the spin-off benefits of new infrastructure.

Is it just me, but when you consider % change from 2000, Canada seems to have farther to fall than the US? Our construction employment is up 50%, which seems pretty substantial. US employment peaked around 12% higher than the 2002 trough.

"But I question the assertion that a Canadian infrastructure program is what we need now."
Iz you or iz you ain't just the most provocative lil thing?

Lots of anecdotal comments above that suggest the Canadian Construction Labor graph might be lagging.
I simply take the US graph with a grain of salt: "12M illegal aliens" --undocumented workers mostly in construction, mostly uncounted, 12M a guess, not a calculation (WSJ provided clues as to how the IRS derived this number)...George Bush legacy #1: corruption of the data gathering system so crucial for intelligent policy development.

So Canada's economy might be less housing centric than the US's, but I believe the MEW made similar inroads, that the crowding out by Housing of other economic production was/is a global feature. So I expect Canada to follow US's tumble even though the savings rate in Canada may not have descended to zero like the American experience.

Who buys the bulk of Canadian exports? of any country's exports? The USA, until recently...and some think the consumer that drives the global economy is not going to rise to the occasion for at least a year. So I'd take the other side and start planning now for that spike in unemployment.

It is interesting comparing the US and Canada on Stephen's graph. Watch the axes though. Three things stand out:
1. The "rule of 10" does not work for some reason. Actually, I've just realised that's wrong. The rule of 10 is for nominal magnitudes, where we ignore C$ vs US$. In population, the US is not 10 times as big as Canada, more like 9 times as big (305 mill vs 33 mill). US construction emplyment seems on average about 7X Canada's. Maybe undocumented illegals, as calmo says, or maybe different definitions.
2. Canadian construction employment increase 50% trough to peak, while US increased about 15%. Could that difference all be illegals?
3. Canadian growth is almost dead smooth (so far). No 2003 dip for example. I can't explain that.

Nick's revised hypothesis: everything West of the Ottawa river will have unemployed construction workers; everything East won't. Fits where the house price bubbles were, and fits comments here.

Rule of 10 (or 9) will re-establish itself. A new 'order' is inevitable. At least your jobs in Academia are safe. I think.

How can a new order of anything be possible without altering Professors? Nazis had plans for B.Russell. They were all assassinated post-2003 Iraq.

A Canada budget is $200B/yr in mostly fixed expenses and maybe $20-50B/yr in custom spending and cuts. I can't support any budget that misses out on $15B/yr+ in carbon auction revenues. But at least this time around it looks like Flaherty has put some thought into this thing. The 2008 sweater platform had tax cuts and a zero removed from all the creative programmes. Budgets are supposed to be about finding the best cuts and the best new programmes and at least this time around there aren't any obvious new rich-people tax breaks to attack.

I give it a D+ for deficit.

All construction (commercial, industrial and residential) employment...the Canada graph is impossibly straight...gotta be seasonally adjusted...or Menzie Chinn has put it thru his log fn ... 8)
So all those roofing guys keeping banging the shingles on in the snow storms? Or...take to shovelling in the off-season?
Can we have a look at the previous 10 years to verify just how steady Canadian construction employment really is?
Before I give up on both lines, is it possible to look at housing inventory in both countries to support 1 or both employment graphs?

Calmo - roofers shift to snow removal in winter..... Please remember that lots of the oil and gas construction up north takes place mainly in winter and then slows in the summer. Big commercial projects start in the spring and then are on their own time line.

The problem with the budget is we are betting on small projects. It would be nice for the government to think big - like build the McKenzie Valley Pipeline, or a bitumen upgrader in Sarnia, or some major transportation projects that will make a difference - fixed link to Vancouver Isle, replace the Lions Gate or something like that. Regional consideratins aside, this particular government thinks small.

Hey, since the US apparently has more workers than available projects, maybe we can help you build some of your roads? ;-p

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