BMO Economists Project “Sturdy Growth Ahead” at Great Lakes Economic Forum
Posted on: May 4, 2016
Great Lakes

Doug Porter, chief economist with BMO Economics, presented a report on Great Lakes economic outlook last week at the Great Lakes Economic Forum in Toronto, ON. Porter presented the report, authored by senior economist Robert Kavcic and dated April 2016, on April 25th.

The report cited some staggering figures to prop its claim that the Great Lakes region is one of the most powerful economic forces in North America, and the world. Great Lakes economic output was estimated at $5.8 billion USD in 2015, comprising 30% of economic activity in Canada and the U.S. combined. The Great Lakes-St. Lawrence region supports 51 million jobs among 107 million people, or 31% of Canadian and American total workforce. It accounts for half of all Canada/U.S. trade.

This regional output puts the Great Lakes on par with global economic leaders. The Great Lakes region’s output surpasses Japan, Germany, the U.K., France, and Brazil, to name a few. “It would rank as the third largest economy in the world if it were a country, behind only the U.S. and China […] Quite simply, the economic importance of the region can’t be overstated.”

Here are some highlights from the report:

  • U.S. economy is expected to expand at a rate of 2%; Canadian growth lags at 1.8%, held back by faltering energy prices outside of Great Lakes provinces. Ontario’s growth has been 2.3-2.8%, topping the national average.
  • Housing markets are recovering in the U.S. midwest states, and continue to boom in Southern Ontario.
  • Jobless rates are below previous levels; hiring continues across the Great Lakes region. “Employment growth was a solid 1.2% last year, pulling the average jobless rate down to 5.4%, down 2 ppts from two years prior.”
  • While the Great Lakes region is still the “manufacturing heartland” and holds more manufacturing jobs compared to the North American average, manufacturing employment is down 17% from a decade ago. This shortfall has been met and overcome with an increase in education & healthcare jobs and professional services.
  • Productivity has slowed over the last two decades, especially in Great Lakes states. “As the region’s economic base gradually transitions away from traditional manufacturing and more into the service sector, we could continue to see downward pullon productivity simply due to share effects (i.e., higher-productivity industries now carry less weight than in the past).”
  • Population growth has slowed and the region faces demographic challenges with an aging workforce and outflows to other economic regions
  • Great Lakes region is the critically important North American trading hub: “The region’s states were the origin of roughly a quarter of total U.S. merchandise exports in 2015, while Ontario and Quebec accounted for more than 60% of Canadian shipments.”
  • The Great Lakes-St. Lawrence states are Ontario and Quebec’s largest trading partner, accounting for $232 billion of total trade in 2015. (1/3 of total international trade for the two provinces.)

Kavcic concludes with what he refers to as the bottom line: “The Great Lakes-St. Lawrence region remains a key contributor to North American economic output, employment and trade, and the current outlook remains positive for the region. Measures by policymakers to facilitate trade flows, support productivity growth and contain business costs are key for the long-term health of the region and broader North American economy.”

To see the whole report, click here.

 

 

 

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