Just before it closed up for the holidays this past Friday, Finance Canada released a set of long term fiscal projections. Thanks to the stronger GDP growth seen in the past year or so, the baseline forecast now sees the Federal deficit falling to zero by....(drum roll please) 2045, almost a decade earlier than was projected last year.
It's hard to know whether to laugh or cry. There will be at least six more elections before 2045, so any assumption of policy continuity is a complete non-starter. And of course, we could be looking at the collapse of NAFTA, the demise of fossil fuels, wars and rumours of wars and any number of events that simply cannot be foreseen.
It's a good idea to have a baseline forecast in place to benchmark yourself against but really, what possible value is there in looking this far into the future? And yet the media have been lapping this up, even complaining that it's naughty of Finance Canada to release it so close to Christmas each year. My suggestion for next year: don't bother updating the report at all -- it's junk economics.
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