Province touts positive fiscal numbers for N.B., but economist urges caution

While a report on the New Brunswick economy is showing largely positive numbers, one economist warns the financial winds may have already shifted.

The provincial government released its "2024 Economy in Review" on Wednesday.

The report indicates the provincial economy grew by 1.8 per cent last year, slightly up from 1.7 per cent growth in 2023.

In a statement on the province's website, Finance Minister René Legacy said that while there was uncertainty, "these results are encouraging."

But Herb Emery, an economist at the University of New Brunswick, said any results may already be out of date.

"It fits with sort of an attempt that's going on in the region to put forward a positive spin," Emery.said. 

"We already know that those statistics are out of date, and we're forecast to have the slowest growth in New Brunswick of all the provinces in the upcoming year."

The 'real economy'

Emery said none of the positive economic movement is related to the "real economy," including manufacturing.

He points to a population that increased 2.7 per cent as a complicated driving factor in the positive economic numbers.

While the province said the increase was largely attributable to immigration from outside Canada, it also includes migration from within Canada, and the demographics wouldn't point to an economic boon for the province.

"A lot of that immigration wasn't working age population," Emergy said. "It's just people who want to reside here and have sources of income like pensions from somewhere else."

Emery also said much of the positive job numbers, employment rose by 2.9 per cent, aren't economically sustainable.

"It's really been government spending and government employment that's been driving a lot of that growth,"  he said.

Trump and Carney

Emery said the future of the province's economy will largely be affected by two men, Prime Minister Mark Carney and U.S. President Donald Trump.

With Trump, the issue is his capricious treatment of Canada since he started a trade war, and the usually strong trading relationship between Canada and the United States.

"This is Trump's thing … you have to get Donald's approval to get into anything," Emery said. 

"By creating that kind of world where it's your relationships with people and not rules, it's going to create a lot of transaction costs."

As for Carney, the prime minister will have several competing visions about what projects to support and where to cut expenditures, Emery said. 

It's not certain the province will come out in a better position.

"We're so heavily dependent on the federal government to do anything in this province … that if those federal transfers get squeezed, if not cut, in the next five years … then we're going to have our own fiscal crisis in the province that's going to limit what we can do in terms of economic development.

Among other findings in the report on 2024:  

• Employment rose 2.9 per cent, the fourth consecutive year of growth.
• The labour force grew 3.5 per cent, making for a higher unemployment rate, which, at seven per cent, was still lower than it was during most of the last 50 years.
• Labour shortages eased, turning to levels close to those before the COVID pandemic.
• Average weekly earnings were about $1,145, up 3.7 per cent, which is not as high as the national increase.
• Retail and manufacturing sales were up 3.3 per cent and 1.6 per cent respectively.