Dollar hits 94 cents US

The latest economic data on growth coupled with low inflation in Canada   plus the good economic news from the US higher than expected job growth and lower than expected inflation have produced an interesting outcome on the currency exchanges. The Canadian dollar has risen against the US to over 94 cents. The Canadian dollar rise is also stimulated by the search for Canadian equities by foreign takeover artists who are seeking to buy up Canadian companies.  
How high can the dollar go?

Well the last time the dollar rose in this fashion was during the 1970s and it peaked at close to 1.07 to the US dollar. This would be a disaster for Canadian manufacturing and if the Bank of Canada foolishly ignored this trend in its interest setting regime a major recession in manufacturing at the very least would be the order of the day.

So far, however, the good news is that the Bank despite making noises about barely noticeable inflation has not raised rates. Contrary to the analysts who argue that they are going to, I would surmise that so long as the dollar trends up above 93 cents they will be reluctant to do so provided inflation stays below 3 %. If the Bank hangs on the unemployment rate outside of manufacturing will continue to trend down because of the resource boom, the strong housing construction market and the general prosperity that the resource boom has delivered.

The trick will be to find a way to spread the prosperity throughout the country and particularly to our larger metropolises.

In data released today by Statistics Canada showing median income for our leading metropolises, Toronto, Montreal and Vancouver all fall close to the bottom of the list.

Of the fifteen leading largest metropolises Toronto ranks 11th,($ 26,100) Montréal 12th(24,900) and Vancouver 13th(24,000). Our three largest metropolises contain many poor people unlike protected government centres like Ottawa first with a median income of 32,700 , Edmonton 3rd,(29,500) Regina 4th,(28,900) Victoria 6th(28,700) and Québec city 7th (27,600).    

Toronto ($26,100)is a government centre with a large number of government employees yet it still ranks 10 th in the country on median income suggesting a major poverty problem there.

It is also not surprising that Québec contains many of the poorest metropolises in the country with Montréal at 10th, Saguenay at 13th and Three Rivers at 14th.

Not surprisingly Edmonton and Calgary have the second and third highest median incomes$ 29,500 and 30,800 respectively. Montéal has a median income of 24,900 and Toronto 26,100. Trois Rivières is 22,300 and Saguenay 23,500.

The uneven nature of economic growth and income distribution in the country and the way that it reinforces political strains is clear in this data. It is long overdue that our governments address this problem.The rural small town bias of governments throughout the country is a major problem that needs to be addressed.