By Tom Bradley

When I was a stock analyst at Richardson Greenshields in the 1980’s, I was forced to spend more time analyzing the Federal Budget than I ever wanted to. Everyone in the research team had to determine how the Finance Minister’s words would affect the industries they covered. In my sectors (conglomerates and transportation), there was never any material impact, but I dutifully reviewed the budget items just in case there was a need to change my earnings estimates or recommendations.

Since that time, I’ve steered clear of reporting on budgets. They’re important to a lot of people, but rarely do they have an impact on the stock market. But as I read the articles leading up to this week’s statement, I can’t help but provide a little perspective.

Canada is running a significant deficit at a time when two of its most important industries are experiencing boom times. For natural resources and housing, two highly cyclical drivers of economic activity (and tax revenues), it’s about as good as it gets, and yet, the country is struggling to get its budget under control.

At a time when we should be taking advantage of our good fortune to prepare for the inevitable demographic challenge ahead (increased demand for healthcare) and less favourable economic trends, we’re being provided with a recession-like budget. So when we hear the politicians and media debating about the trees (program spending, election goodies), let’s not lose sight of the forest.