If Prime Minister Stephen Harper is serious about a stimulus package for Canada's economy, he'd best act quickly and decisively, with a generous plan that will bolster confidence and encourage spending on Canadian goods, economists say.
“The sooner the better,” said Avery Shenfeld, economist at CIBC World Markets.
Finance Minister Jim Flaherty has suggested that this Thursday's economic update won't contain major fiscal stimulus measures, and that those announcements will come in the full budget early next year.
That's too long to wait, Mr. Shenfeld said. The U.S. economy is deteriorating so rapidly that it's certain to hurt Canada deeply, he said. Since government stimulus packages usually take a while to have any effect on the economy, a delay in government action would cause needless suffering in Canada.
“If you wait till the spring, you're potentially throwing in stimulus far too late,” added Derek Holt, vice-president of economics at Scotia Capital Inc. “We've got to move really quickly.”
The classic way for a government to stimulate a flagging economy is to pump money into infrastructure. Road-building and government-funded construction can create jobs through one-time projects that increase spending on local materials and provide the country with something it actually needs - without creating a long-term spending problem for the government. More...