Are we there yet? The annoying chant of the backseat set has become a COVID-19 mantra. And it’s getting louder the longer things drag on. Trouble is, neither driver nor navigator knows the answer. All of the oases have been mirages so far, the gas tank is getting emptier and there’s a real fear that the gas stations on this route are getting fewer and further between. What do we make of the Canadian economy’s pandemic progress, and are better times ahead?

In fact, Canada has recovered 81% of what was lost in the initial economic plunge, which takes us to 97% of pre-COVID-19 production levels. Most of the rebound occurred in May and June last year; since then, growth has slowed to half that pace. If it continues, next month we should see the economy finally get back to its pre-pandemic marker. That’s no small victory, but it’ll have taken 14 months, and it leaves us well below where we would have been had regular growth continued to move the economy forward.

While we can lament the sluggishness, let’s remember the context: in the stop-start governance of the pandemic, it’s a marvel that we didn’t see a corresponding two-steps-forward, one-step-back economy. That may yet happen when the January gross domestic product (GDP) numbers get released. But with widespread vaccination in sight, there is well-founded hope that the second half of this year will see the resumption of shuttered activity in travel and related industries, and a spirited return to where the economy should really be performing.

When it comes to resilience, consumers have been a standout. By the end of 2020, aggregate spending on goods was back to 95% of pre-pandemic levels. Services didn’t do as well, but not because of demand; restaurant meals, concerts, sporting events, out-of-country vacations and the like simply weren’t available for purchase. And we spent far less on gasoline and transit fares as most of us didn’t have to commute to work. But retail and wholesaling are two industries that are currently well above pre-COVID-19 levels, and growing. They’re not likely to stop anytime soon; the consumer money that wasn’t spent on “unavailables” in the last few months was put into the bank. There’s a cash-stash worth 11% of GDP just waiting for better times.

Wholesaling and retailing aren’t alone; a number of other industries are also above the pre-pandemic mark, and doing well: wood products, plastics, chemicals, food, beverages and basic agriculture products have all recovered handily and are thriving. But it’s not just goods that score well; finance and insurance services have soared, as has the real estate sector, and public administration was barely dented.

Sadly, these are in the minority. 29 of 39, or 74% of industry categories, representing 55% of GDP, are still on the journey. The arts and entertainment sector is still half of its previous self, a devastating outcome. Accommodation and food services has doubled output from the chasm, but is still at 60% of pre-COVID-19 output. Together, eight industries are still at least 10% below pre-pandemic levels of output, a far worse outcome than in a standard recession.

Where to from here? Well, the good news is that if the recent plunge in new COVID-19 infections persists, and on top of that, broad distribution of vaccines proves effective, add a dash of herd immunity and those industries that are down will be the most exciting stock plays around. They will come back, and as they do, more will see that getting on a plane, a bus, even a cruise ship is no longer any riskier than it used to be. Better yet, there’s a lot of pent-up personal financial reserve to fund it. Funny, every time it seems we’re getting there, there’s a rally in beleaguered-industry stocks. Hmm.

The bottom line?

Back-seat drivers, fasten your belts. The trip has been long and arduous, but if you’re in for it, the most exciting part of the ride is just ahead. That next gas station might well be the first in a while that’s privately run, and I believe they’re giving away free shots of nitrous oxide. That’ll help the industries who, through no fault of their own, are the economy’s laggards, to catch up with the early-rebounders. If it sounds too good to be true, remember that the same cynicism was proven wrong in the aftermath of SARS—and we still don’t have a vaccine for that one!


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