Economists say Canada is headed towards an unprecedented economic struggle

[Krustee]

This article is from October of last year.

I will post a few more like these which chronicle the economic tide as we approach & then begin the new year.

Let's see if the stories get brighter or bleaker shall we?

Economists say Canada is headed towards an unprecedented economic struggle

By David Friend, THE CANADIAN PRESS

TORONTO - Economists say Canada is headed for one of the toughest economic periods in recent memory, as job losses climb and energy prices tumble, but it's hard to tell just how bad it might get over the next year and a half.

Making it hard to predict, says TD Bank (TSX:TD) chief economist Don Drummond, is that the current economic crisis hasn't followed historical trends so far.

"The starting point doesn't have any comparisons, that's the difficulty," he said Tuesday.

"You try to find a similar period in history and look at the conditions that will match that. But what do you do when you've never been here in history?"

Drummond says today's trouble is unlike the Great Depression, the Japanese banking problems of the 1990s or any other major periods of stock market turmoil.

Other economists pointed out that by definition we aren't necessarily in a recession, which is technically described as two or more consecutive quarters of economic contraction. Once a recession starts, it generally lasts 18 months to two years.

"A recession doesn't necessarily mean that old traditional definition," said Doug Porter, chief economist at the Bank of Montreal (TSX:BMO).

"Officially we don't have two back-to-back quarters of negative GDP in our forecasts, but that doesn't completely exempt Canada from being in a recession."

The most recent recession to rip through Canada happened in the early 1990s, an echo of the Wall Street stock market crash of 1987 and more directly caused by the pop of the real estate bubble.

Canada's jobless rate soared to 10 per cent in 1991 and 1992, the economy shrank and consumers tightened their spending at the same time as the retail sector adjusted to a new consumption tax - the GST.

In the recession of the early 1980s - the worst in the post Second World War era - the jobless rate peaked at 13 per cent. The Great Depression of the 1930s lasted about eight years and was accompanied by unemployment of more than 20 per cent.

The latest job numbers for September will be released Friday by Statistics Canada, and they're still expected to show growth in the economy.

Economists are estimating an average of about 12,500 new jobs in September, which is still considered modest job growth but is down slightly from the 15,200 jobs created in August.

Canada's jobless rate is currently 6.1 per cent, close to its lowest level in 30 years, though economists expect it to rise to 6.2 per cent for September.

The downturn in the United States could quickly obliterate Canada's gains as U.S. employers slash payrolls at an alarming rate.

Canadian Auto Workers economist Jim Stanford is betting on that darker times lie ahead, predicting that Canada will be in a full-blown recession by the end of this year.

He bases his pessimistic outlook on plummeting oil prices, which have descended from a record-high above US$150 a barrel to about US$90 on Tuesday.

"Our economy has been very reliant over the last five years on the commodities bubble," he said.

"If anything, the downturn in Canada could be worse because on top of the financial uncertainty, we had invested so many eggs in the resource basket. Now that the commodity bubble has popped, we're going to feel that pain on top of the general financial uncertainty that everyone is grappling with."

While energy prices are off from their recent highs, a barrel of crude oil is still about US$10 more than it was a year ago, a sign that the price declines haven't fully eroded growth.

Furthermore, the manufacturing sector in Central Canada is going to wallow in its existing problems for several years and will likely see more job cuts - up to another 100,000 - within the next year, Stanford predicted.

"Our manufacturing sector has been decimated and many of those jobs aren't coming back," he said.

BMO Capital Markets chief economist Sherry Cooper expects changes to consumer spending habits, starting in the United States where lending from banks will be much tighter.

"Households will be forced to save the old-fashioned way, by spending less than they earn," she wrote in a research note.

Cooper says the U.S. banking industry will end the credit crisis with fewer financial firms, tougher regulations and less money to lend.

Less spending means that Americans will think twice about how they use their paycheque, which could mean cancelling those gas guzzling road trips, less impulse purchases of Canadian goods, and fewer home renovations.

As a result, Canada's lumber, manufacturing and oil sands are all potential targets for further market erosion.

And the longer the turmoil goes on, the more serious the hit will be to consumer confidence, suggested Porter.

"If you begin to get further weakness in employment that's what's really going to weigh in on consumer spending," he said.

"To some extent, the Canadian consumer has led a charmed life over the last few years between low interest rates, strong job growth and the falling price for a lot of big ticket items."

"It's tough to build a bullish case at this point."

The shift in overall economic sentiment is a far cry from where economists were a year ago, when they expressed confidence that the U.S. subprime mortgage debacle's influence on credit markets was easing and wouldn't bleed into the Canadian economy.

Last October, the Conference Board of Canada predicted that the U.S. housing crisis would stretch at least into the autumn of 2008, but that neither the U.S. nor Canada would be slammed by a recession.

CIBC World Markets (TSX:CM) economists said the stock markets were showing signs that credit troubles were easing, while TD Bank expected the loonie to hold near parity well into this year.

Instead, markets are still being punished by the rippling effects of the credit crisis, and the loonie was sliding below parity with the U.S. dollar within weeks of the TD economist's prediction.

Drummond was part of the group that put their bets on a stronger dollar, and he said that with the rash gyrations in markets and commodities, it has been tough to find an estimate and hold to it.

"You go out with a weak baseline case, acknowledge to people very honestly that there's an extraordinary amount of uncertainty and you have to be prepared for the possibility of it being quite a bit worse," he said.

http://cnews.canoe.ca/CNEWS/Canada/2008/10/07/7007346-cp.html

Well now, that was then - October, 2008 -
Anybody think we are doing better than they predicted?


Let's look at the past resessions & depressions here in Canada:

The most recent recession to rip through Canada happened in the early 1990s, an echo of the Wall Street stock market crash of 1987 and more directly caused by the pop of the real estate bubble.

Canada's jobless rate soared to 10 per cent in 1991 and 1992, the economy shrank and consumers tightened their spending at the same time as the retail sector adjusted to a new consumption tax - the GST.

Anybody catch what he stated?
"...an echo of the Wall Street stock market crash..."

As Canada has always done we FOLLOWED the US in their economic downturn.

As the old saying goes;
"When America coughs & sneezes, the rest of the world gets a cold"

In the recession of the early 1980s - the worst in the post Second World War era - the jobless rate peaked at 13 per cent. The Great Depression of the 1930s lasted about eight years and was accompanied by unemployment of more than 20 per cent.

Any bets on how high our unemployment will get in this;
"... unprecedented economic struggle"

 

[Shakerod]

I think that the Canadian government is significantly downplaying what the affects of this economic downturn is going to mean to our country, when I hear our Finance Minister and the Bank of Canada Governor telling us that we are in a better position to weather the storm than other countries it makes me want to puke. We are so tied to the U.S. economy with our trade (something we have been bragging about for the last 20 years), and have very little economic sovereignty due to our fantastic NAFTA agreement, which has allowed multinational corporations to take over our manufacturing sector. We may be able to stave this off for a short time, especially here in Vancouver with the Olympics in a year, but I predict we are heading for some very tough economic times in the next 5 years.

 

[FunSugarDaddy]

That's what this site is missing

more threads on the current economic/housing market/financial situation.

 

[InTheBum]

more threads on the current economic/housing market/financial situation.

Much easier to just watch CNN, BNN, BCTV, NBC, CBS,...

 

[FunSugarDaddy]

Much easier to just watch CNN, BNN, BCTV, NBC, CBS,...

Yes, there's no lack of information or discussion on these topics that's for damn sure.

 

[FunSugarDaddy]

it makes me want to puke when I hear some of these forecasts. I heard an economist on the radio saying we should bottom out late 2009 and be back into growth in the first quarter of 2010. What fucking planet is he on?!!

George Bernard Shaw.

Note also:
the so-called Great Depression lasted 20 years from 1930 to 1950. The market didn't reach it's 1929s level until 1954. And the war years were an artificially high level of employment due to millions of young men being in uniform.

Present unemployment figures are artificially low as they do not count people no longer on EI or looking for work. Nor do they count people working part time and not making enough to make ends meet.

Well the simple truth is we've never experienced these set of factors before so no one knows how this is going to be resolved. And the markets, economic theory etc. have changed so much since the 1930's as to make much of what happened then meaningless. But personally, I kind of hope the guy is right.

 

[Krustee]

it makes me want to puke when I hear some of these forecasts. I heard an economist on the radio saying we should bottom out late 2009 and be back into growth in the first quarter of 2010. What fucking planet is he on?!!

Note also:
the so-called Great Depression lasted 20 years from 1930 to 1950. The market didn't reach it's 1929s level until 1954. And the war years were an artificially high level of employment due to millions of young men being in uniform.

Present unemployment figures are artificially low as they do not count people no longer on EI or looking for work. Nor do they count people working part time and not making enough to make ends meet.

I hear ya dog, I am thinkin this economy is the BEST we are gonna see it right NOW than it will be in the next 5-8 years.

As for the unemployment numbers - they are gonna be pretty bad indeed.

Take what we got now & then factor in the "Buy America" provisions in Prez Obama's stimulus package & you are gonna FREAK!

Just the steel works protectionist measures is gonna hit us to the tune of 2000 workers.

When Canada loses it's biggest customer where are we gonna find another country to replace it to sell our goods & services?

Batten down the hatches folks!

Get rid of your debt & cut your spending to the bare minimum ASAP!!!!!!!!

SAVE - SAVE - SAVE!!!!

Then pray!



Ladies - you need to be listening because this economy will affect you the same as everybody else!

 

[Krustee]

Much easier to just watch CNN, BNN, BCTV, NBC, CBS,...

I actually watch CNN quite a bit but I always go online to check on what they say cuz I don't trust the media that much.

Lou Dobbs does seem to be quite candid & kinda like a consumer advocate more than a liberal or conservative mouthpiece.

The Economist is also a good source for info with less bias.

 

[FunSugarDaddy]

I actually watch CNN quite a bit but I always go online to check on what they say cuz I don't trust the media that much.

Lou Dobbs does seem to be quite candid & kinda like a consumer advocate more than a liberal or conservative mouthpiece.

The Economist is also a good source for info with less bias.

Lou Dobbs is reasonably balanced except on the issue of free trade. He's a trade protectionist through and through and he certainly wanted the "Buy American" provision in this new bill to remain, despite the fact it's in clear volation to both NAFTA, and WTO treaties.

 

[Krustee]

Lou Dobbs is reasonably balanced except on the issue of free trade. He's a trade protectionist through and through and he certainly wanted the "Buy American" provision in this new bill to remain, despite the fact it's in clear volation to both NAFTA, and WTO treaties.

Thats why I say he is like a consumer advocate.

Dobbs seems to really care about the American people & I like how he speaks what he thinks.

 

[blazejowski]

Holy crap.... ENOUGH ALREADY with these stupid threads...

Did you know that 47% of people don't give a rat's ass?

 

[Krustee]

Japan's economy in quarterly dive

Like many other countries Japan is in an economic free fall.

Japan's economy contracted by 3.3% in the last quarter of last year - its worst showing since the oil crisis of the 1970s, official figures show.

It comes as the country faces its worst economic crisis since the end of World War II, said Economic and Fiscal Policy Minister Kaoru Yosano.

The slowdown in the world's second-biggest economy is steeper than in the US or Europe.

Japan has been hit particularly hard by falling global demand for its products.

Exports, particularly of electronics and cars, have slumped and production has been slashed.

Consumers have cut back too, alarmed by rising unemployment.

Now the government has confirmed that in October to December last year Japan's gross domestic product fell by 3.3%.

It is the equivalent of an annual decline of 12.7% - the worst figures since the 1970s.

Worst since war

"This is the worst economic crisis in the post-war era. There is no doubt about it," Mr Yosano said at a news conference.

"The Japanese economy, whose growth is heavily dependent on exports of automobiles, machinery, and IT equipment, was literally battered" by the global downturn, he said.

He said the government would consider new stimulus measures to aid the economy.

"Japan alone won't be able to recover. The economy has no border. It is our responsibility to rebuild the domestic economy for other countries," he added.

Prime Minister Taro Aso is hampered in his response by a divided parliament and a fractious ruling party.

There were reports over the weekend that he is considering another stimulus package of government spending worth 20 trillion yen ($218bn; £152bn).

But the latest opinion poll has showed fewer than 10% of people support the prime minister, who must call a general election by September.

http://news.bbc.co.uk/2/hi/business/7891849.stm

So, what do y'all think that means for us here?

comments?