Thursday, December 27, 2007

Did The Recession Start Today?

The Canadian economy has been quite resilient lately, and the foundations of it are pretty sound, this thing notwithstanding. However, the death of Benazir Bhutto (and the effect of the resultant turmoil in Pakistan on oil prices), slow U.S. holiday sales, disappointing U.S. durable goods numbers, jobless claims up over 300,000 per week...that's a lot of hits to take on a single Thursday morning.

And when the U.S. economy goes into the tank, the Canadian economy gets wet.

Luckily, most Canadian housing markets have not climbed into bubble territory (in Toronto, for example, the average annual price increase has been about 6 to 8 per cent since 1996, rather than the double digit advances leading up to the crash of 1990), and the whole concept of "Ninja mortgages" (No Income, No Job or Assets) never did get off the ground. But when your Federal finance minister tells you things are going to suck in 2008, they probably are.


Anonymous said...

I'm praying for a deep, painful recession.

Remember the early 90s, man? All anyone ever talked about was jobs and the economy. We debated how best to get out of the recession. People referenced Phillips curves. In other words, the political narrative was mature, substantive, and connected to the everyday reality of all Canadians.

Fast forward to 2003. Suddenly, Gay Marriage is the single most pressing issue in Canada. Then came Gomery, then child care, then Kyoto hysteria, and barring a recession, no doubt 2008 will deliver a Brand New Most Important Issue Ever, perhaps the Schreiber gong show. All of which crowds out debate and advocacy of more substantive matters, and yes, they are more substantive matters.

One example: for various reasons Canada has failed to cash in on the hi tech economy of the past dozen years. We did OK, but could have done better. Those chickens will come home to roost in a recession.

BTW, your brief analysis of the housing market is on the money; I'll add that a country with the world's highest immigration rate and the highest population growth rate in the G8 isn't going to see a collapse in the housing market anytime soon, which of course begs the question if our immigration scheme isn't a pyramid scheme to begin with.

Abdul-Rahim said...

Benazir Bhutto is another victim of a suicide attack, which happens every day. She is a convicted embezzler who was exiled from the country in a popular opposition. If one plains themselves for her, they should do so just as much for all the other victims. Her role as a party leader in Pakistan should give her a saintly status. In regards to the economy, they've been saying it's about to tank for months, but it keeps slogging along. We're out of the boom-slump cycle of early capitalism, we just had a recession 2001-2003, so to think that the economy is really in such a state as to not be able to handle the current international finantial semi-crisis, is too soon.

Lord of Wealth said...

The definition of a recession is 2 quarters of negative growth, since the Governement lies about inflation, gdp, growth it's damn hard to really know for sure when 2 quarters have hit. I would say we have not entered a recession but the U.S. who's lying stats are worse then ours is very likely a couple of quarters into neg growth.
Check out Shadow Government stats .org, john williams is using the clinton ear accounting and shows neg growth 10% inflation and 8%+ unemployment in the U.S.

It will creep into our economy any time now.

The Grumpy Voter said...

I am not surprised by Bhutto's assassination and surely she knew she'd be a target before returned from exile. Clearly she was made of stronger stuff than any Canadian politician could hope to be. Meantime, a recession is likely going to occur for the simple reason that the good times cannot last forever. I remember the really bad bad bad recession of the early 1980's when people were crashing their cars into the living room when the banks foreclosed on their 21% interest rate mortgages. People were out of work big time in Calgary and all across the country, voters looked to government to bail them out.
Will this coming recession be similar to that one? Beats me. One thing's for certain, if a recession hits, I somehow suspect that concerns over global warming and meeting our Kyoto targets will be a distant memory as most people struggle to keep from going under.

I am a Believer said...

"(and the effect of the resultant turmoil in Pakistan on oil prices)

yup .. being a big oil exporter it should really impact the world oil market.

And the US has a 3% projected growth rate next year.

Housing prices are down - that's fantastic for anyone smart enough to invest in real estate . . its a buyers market at last.