Chapter 5 - Economic Indicators

"U.S. Jobless Claims Up", Globe and Mail - March 2, 2006

The U.S. Labour Department observed that there was an increase in the number of Americans filing new claims for unemployment benefits in the past week. The number of filings have increased by 15,000 since the previous week, coming to a total of 294,000 Americans currently filing for jobless benefits. Even though the number of filings have increased, a healthy labour market is still being indicated. Government analysts say that this increase is due to problems adjusting the data for seasonal variations in February of weather and holidays. Despite this recent increase, the number of new benefit applications has been under 300,000 for the past seven weeks. In the past January, the unemployment rate dropped to a 4 1/2 year low of 4.7%, as businesses added 193,000 new jobs. This is considered fairly good, as it shows (along with other economic statistics) the U.S. economy rebounding strongly from its disasters caused by hurricanes and also, their high energy prices.

Relation to Chapter 5 - unemployment

The recent unemployment rate in the United States of 4.7%, compared to Canada's unemployment rate of 6.6%, indicates that the U.S. economy is doing well. There are many types of unemployment – one of them being the natural rate of unemployment. Businesses had helped to decrease U.S.'s natural rate of unemployment, as they created many new job openings. The higher levels of unemployment insurance filings can be blamed on the U.S. economy currently still rebounding from their recent catastrophes, specifically Hurricane Katrina. However, even amongst this time of regrowth, Americans could possible be taking advantage of the unemployment insurances and therefore, producing a higher unemployment rate falling under the category of insurance-induced unemployment.

Chapter 4 - Government in Canada

"Liberal Tax Cuts Mustered Cool Reception", Globe and Mail - February 27, 2006

In last November's mini-budget, personal income tax cuts were put forth by the former Liberals, finance minister Ralph Goodale. These reductions would have added up to almost $30 billion within the next five years. However, instead of creating a positive reaction, a negative reaction was received by the Liberals from focus groups in three major Canadian cities: Toronto, Montreal, and Vancouver. A survey was conducted by Decima Research Inc. to study the people's reactions in these three cities to the November 14th mini-budget. From these focus groups, it was concluded from the people that they thought the Liberals' economic update was not enough to create a significant impact on their tax gains. Even if it was significant, their tax gains would be taken back by the municipal and provincial governments through other means. The Conservatives were against the Liberals' personal income tax cuts. Instead, they planned to reduce the goods and services tax. This survey also informed the government to put more emphasis on the education and skills training spending of the budget.

Relation to Chapter 4 - tax, Wagner's law

Personal income tax is the major source of tax revenue for both the federal and provincial governments. But apparently, many people think that if there were to be a personal tax cut, they would not gain much from it. It's ironic how personal income tax is such a great source of revenue for the government, but Canadians think it to be insignificant for them. Wagner's law of increasing state activity states that people in urban areas require more services than people in rural areas. With Canada being an urban country, we would need many services to be provided by the government – such as education and skills training. However, if there were to be cuts in taxes–whether it be personal income or goods and services–then how are we to expect the same level of services to be continued being provided by the government?