Recession? What Recession?

[bush_cheney2004]

....In fact there is no real money - so if we are going to continue to play this game we must follow the contract - the the poor must stop being afraid - and the rich must have faith and courage in the system they created...or poverty will decend on the rich and poor alike - Have faith guys - You can't take the god damned stuff with you!

Agreed....the poor will just have to go back to their traditional role, and return all those wide screen HDTVs.

[eyeball]

A recession is two downturns in a row, techincally Canada is looming into a recession, just not on the same level as the US.

Also where are these "lower prices" food costs are 5 to 10% higher. and the dollar is under 0.80 to the USD. With oil prices down, canada's dollar is down, and with that canada buying power meaning all products bought outside of canada are more expensive, which means companies that get products from foreign companies will increase their prices.

What does technically mean exactly? Amongst other things shoddy accounting practices are not the least of the reasons the bubble we call the economy appears ready to pop. Technically, the experts don't have a clue what's going on. The entire school of thought, the science known as economics is no more prepared for understanding never mind controlling what's happening than the Sorcerer's Apprentice did when he got his hands on the Sorcerer's magic wand and unleashed chaos.

Speaking of conjuring up analogies the spectacle of international meetings with politicians and financial experts and such scurrying to and fro brings to mind the story of Humpty Dumpty. There's the Emperor's Clothes or Pandora's Box - there are all sorts of old tales whose morals could better describe what's happening than economists could or would.

I can only shudder at what a totally transparent full cost audit would reveal - especially one that accounted for the drawdown of natural capital that's ultimately responsible for most of the wealth that has been created in the world.

[August1991]

And because, for all the depressing depression talk these days, the economy may surprise us. The OECD has just forecast Canadian growth of 0.5% this year, minus 0.5% next and 2.1% in 2010.

No slowdown would be better, of course, but in historical perspective that would be a relatively mild downturn.

Link

A dose of perspective is deserved here and the column is good in general.

[msj]

And because, for all the depressing depression talk these days, the economy may surprise us. The OECD has just forecast Canadian growth of 0.5% this year, minus 0.5% next and 2.1% in 2010.

No slowdown would be better, of course, but in historical perspective that would be a relatively mild downturn.

A dose of perspective is deserved here and the column is good in general.

Hmmm, I think someone needs to read his own words regarding a certain other forecast by the Bank of Canada in another thread.

One person's perspective seems to be another person's lack of credibility.... After all, no one knows what will happen in 2009, never mind 2010.

But then, maybe you have come around to realize that it is not the forecast that is important, but the substance supporting that forecast and the thought that it provokes.

[Topaz]

There alot of confusing info out there. In the auto sector, first reports said that GM may be near bankruptcy, then yesterday I heard that Chrysler may be gone when GM takes it over! Windsor On, does not need that kind of info. and the workers there are keeping their fingers crossed that its the Big 3 and not the Big 2. The government is paying out over 700Mil in IE a lot going to Oshawa's citizens and I'm sure many more to come and that is why IE premiums are going up in the New Year unless the Finance minister changes his mind. They only had 2 Bil in there instead of the 45 Bil Canadians had paid into it. So our recession will depend what happens to the auto sector and of course the oil sand out west and how high unemployment will go.

[Oleg Bach]

The homespun Magna Corporation seems to be bailing out and cutting and running. Due to potential losses. They did send out a prepared press release saying that Magna will find jobs or the 1000 empoyees to be laid off. The communique also stated the the workers will be re-employed by Magna at other Magna facilities....That statement defys logic - why would you dump your human liablity and hire it back again...do you get that? I don't - call me stupid!

[August1991]

A dose of perspective is deserved here and the column is good in general.

Hmmm, I think someone needs to read his own words regarding a certain other forecast by the Bank of Canada in another thread.

One person's perspective seems to be another person's lack of credibility.... After all, no one knows what will happen in 2009, never mind 2010.

But then, maybe you have come around to realize that it is not the forecast that is important, but the substance supporting that forecast and the thought that it provokes.

msj, true, we don't know what will happen in 2009 or 2010.

As to your reference to the Bank of Canada, you've lost me. I gather that the Bank of Canada forecasted a "recession". That may be so.

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I started this thread (and I linked to the quote above) because of the hyperbole in this new millenium. Your guru Noubini (the guy who has predicted nine of the last four recessions) is a typical example of this.

In 1932, US unemployment reached 32%. That is, about one-third of the labour force had no job. At present, even doom-and-gloom analysts are predicting that US unemployment will rise at most to 7.5%.

----

In the Cold War, the Soviet Union lost and the US won. Too many people just can't seem to accept this.

[msj]

I started this thread (and I linked to the quote above) because of the hyperbole in this new millenium. Your guru Noubini (the guy who has predicted nine of the last four recessions) is a typical example of this.

In 1932, US unemployment reached 32%. That is, about one-third of the labour force had no job. At present, even doom-and-gloom analysts are predicting that US unemployment will rise at most to 7.5%.

----

In the Cold War, the Soviet Union lost and the US won. Too many people just can't seem to accept this.

His name is Roubini. You look increasingly foolish by purposefully (or are you really that dumb?) misspelling it.

As for predicting the recession - well he has been surprisingly accurate about this financial mess.

Better to get it right eventually than not at all like the recession deniers and their ilk. But hey, you can't even get a name right so what do you know.

As for predictions about the unemployment rate - are we comparing apples to apples? U3 to U6?

Who knows where you get your stats from. Can't even provide a link and I know from past experience that you're not good for one.

As for unemployment - well, in 1982 it hit ~10.8% and people seem to have thought that that was pretty bad.

Roubini thinks this mess will be the worst recession since the depression which I take to mean that it will compete with the 74-75 and 80-82 numbers rather than the dirty 30's numbers.

But, hey, who am I to keep you from spewing out another straw man argument about the depression.

What I do know is that unemployment usually continues to rise even after the trough has been hit.

The trough isn't likely to hit until sometime in 2009 which means that unemployment will likely rise into 2010 to X% (I would tell you my guess but it really is a waste of my time).

As for the Cold War - don't see how that is even possibly relevant to the discussion.

Probably just you trying to set up another straw man again...

-----------------------------

Edit - Not to inadvertently put words into Roubini's mouth - I did not mean to imply that Roubini thought that the unemployment rate would go to 10%+ from this recession.

He has stated that this recession will be a bad one and will compete with some nasty ones in the past 50 years (Video).

It should be remembered, however, that statistical methods have changed in the past 50 years so this has to be discounted to some degree (which has been discussed in the other recession thread and I will leave it in there).

Roubini has gone on record that he expects unemployment in the US to hit 8.5-9% in 2009/2010.

I can't remember much from the video linked above since I viewed it last week and the computer I'm on right now isn't attached to speakers.

Linked so that other people seeing this can get their own ideas of what Roubini is saying.

Edited November 29, 2008 by msj

[August1991]

As for predicting the recession - well he has been surprisingly accurate about this financial mess.

Roubini has been predicting doom-and-gloom for as long as I can remember. And I'm sorry about the name change but I just couldn't resist it.

As for predictions about the unemployment rate - are we comparing apples to apples? U3 to U6?

Who knows where you get your stats from. Can't even provide a link and I know from past experience that you're not good for one.

As for unemployment - well, in 1982 it hit ~10.8% and people seem to have thought that that was pretty bad.

Roubini thinks this mess will be the worst recession since the depression which I take to mean that it will compete with the 74-75 and 80-82 numbers rather than the dirty 30's numbers.

...

Edit - Not to inadvertently put words into Roubini's mouth - I did not mean to imply that Roubini thought that the unemployment rate would go to 10%+ from this recession.

After wanting to adjust CPI calculations to suit your argument, you now want to do teh same with unemployment stats. Whatever.

msj, at least you had the honesty to note that even Roubini is not predicting that unemployment will rise to 10%.

Here's how the Toronto Star has chosen to present a CP report about Canada's growing GDP in the III quarter:

Canada's economy expanded marginally in September and only slightly more in the third quarter, in what's widely seen as a final spasm of growth before what could be a painful period of decline in the next year or so.

"Last call, the last hurrah, the last gasp, the final scene, the credits are rolling... call it what you will," BMO Capital Markets economist Douglas Porter said Monday after Statistics Canada tallied third-quarter growth of 0.3 per cent growth in gross domestic product – the country's total production of goods and services.

The September growth came in at 0.1 per cent.

"Fourth-quarter GDP will quite likely be negative, as the deepening U.S. downturn digs more heavily into exports and domestic demand is hit by sagging consumer and business confidence," Porter predicted.

The Canadian economy has slowed to a crawl for most of this year as falling commodity prices, a corporate credit squeeze and troubles in the manufacturing sector have hit all the parts of the country hard. The current 6.2 per cent jobless rate is expected to climb to seven per cent or higher next year before a recovery expected in 2010.

While that's far below the 13 per cent unemployment in the early 1980s recession and 10 per cent in 1991-93, the weakening economy is expected to shed tens of thousands of jobs over the next few months.

The Statistics Canada report Monday showed almost all of the growth in the July-September quarter came in a 0.7 per cent spurt in July, following a flat performance in the first half of the year. Inflation-adjusted GDP sank 0.3 per cent in August, before September's bare 0.1 per cent gain.

Toronto Star

So, unemployment is predicted to climb to 7% or higher before a recovery in 2010. 1.3% annualized growth in the III quarter.

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With the US equity and housing markets down, and many boomers about to retire, it is hard not to imagine that wealth effects will have an effect on US consumption - assuming of course that you view the problem through an aggregbate demand perspective.

Presumably, this will have an effect on Canada's GDP, mitigated to some degree by our devalued dollar. Commodity prices after all are down.

I agree that all the numbers point to a recession of sorts. But this is a very strange recession. A collapse in equity market prices does not a recession make, and the hyperbole of "an end of civilization as we know it" is just that: hyperbole.

Politicians of various stripes, from Jean Charest to Barack Obama and Stephen Harper and now even Jack Layton, are all using this talk (and amplifying it) for their own ends.

[M.Dancer]

Speaking of Doom And Gloom.....

OTTAWA — The Canadian economy managed to expand at a 1.3 per cent annual pace in the third quarter, despite continuing declines in the export sector and rapidly fading personal spending by consumers.

It was the strongest pace of growth in a year, and made Canada one of the few advanced countries in the world to show any expansion between July and September. But it is not expected to last, economists said.

http://business.theglobeandmail.com/servle...y/Business/home

I wonder if the economists are factoring in the potential of having NDPers in a cabinet in their expectations?...?

[msj]

I should have made it clear that I am primarily focussed on the US recession. This is because the US has a lot more information available (not to mention intelligent people commenting on that info) as compared to Canada.

Roubini, of course, is entirely focussed on the US recession although he does mention Canada on occasion (which is to say that Canada is headed for a recession).

Of course, we now know that the US has been in a recession since December, 2007.

We always seem to "find" these things out after the fact thanks to constant revisions to the statistics and just because one has to wait for reality to show itself.

Canada, of course, doesn't have any official recession dating committee unlike the US. As such, the media and other headline dimwits will only focus on quarterly real GDP growth while ignoring any other economic indicators as they begin to turn south.

Tis to be expected... just like the other thread - once a recession denier, always a recession denier.

[bush_cheney2004]

..Canada, of course, doesn't have any official recession dating committee unlike the US. As such, the media and other headline dimwits will only focus on quarterly real GDP growth while ignoring any other economic indicators as they begin to turn south.

Perhaps Canada doesn't believe in "recessions" either.

[August1991]

Of course, we now know that the US has been in a recession since December, 2007.

We always seem to "find" these things out after the fact thanks to constant revisions to the statistics and just because one has to wait for reality to show itself.

It has nothing to do with revisions. The NBER just invented a whole new way to define "recession".

A US recession began in December 2007, a panel of economists charged with the official designation of business cycles said Monday.

....

According to official government data, the US economy contracted at a 0.2 percent pace in the fourth quarter of 2007 but grew 0.8 percent in the first quarter and 2.8 percent in the second quarter of 2008. It then contracted 0.5 percent in the third quarter, based on a provisional estimate.

But the gross domestic product (GDP) data may have been skewed by tax rebates that stimulated consumer spending, according to analysts.

Link

I have no problem with calling this a trough in the business cycle. Heck, I have no problem even calling it a recession if we are going to play word games. For the moment though, we are very far from a "major crisis of western capitalism". No one is predicting unemployment rates equal to downturns in the early 1980s or certainly the 1930s.

And it's a strange recession where the GDP grows two quarters out of four and the declines are measured in decimal places.

[msj]

It has nothing to do with revisions. The NBER just invented a whole new way to define "recession".

Link

I have no problem with calling this a trough in the business cycle. Heck, I have no problem even calling it a recession if we are going to play word games. For the moment though, we are very far from a "major crisis of western capitalism". No one is predicting unemployment rates equal to downturns in the early 1980s or certainly the 1930s.

And it's a strange recession where the GDP grows two quarters out of four and the declines are measured in decimal places.

Where in the NBER release did they say this is a "major crisis of western capitalism?"

Why do you keep making things up?

I think it is time that I stop playing with people who can't read below headlines....

Like I have told the other recession denier on here - stop being a sore loser.

Edited December 2, 2008 by msj

[msj]

Well, looks like things may not be as rosy in Canada as some would like us to believe:

Canada loses most jobs in 26 years

Let's just hope that this is not the beginning of a trend.

The US is showing 533,000 jobs lost in November with another 199,000 increase in lost jobs as revisions for October and September (i.e. October total job losses have been revised to 320,000 and September's to 403,000).

That's a brutal trend which started back in January, 2008 and has to end sometime.

If the average recession lasts ~23 months, and the US has been in recession for 12 months already then one would surmise that the downtrend for job losses would generally continue into 2010, at least.

If Canada is 10 - 12 months behind the US then Canada would see a general downtrend in jobs starting about now.

As usual, we will have to wait and see what the stats show us.

What we do know, however, is that U6 unemployment in the US is comparable to the first half of 1982 by looking at the chart on page 8 (Adobe number) or page 10 (as marked) on this PDF .

Currently, the BLS shows U6 to be 12.5%.

The "official" rate is holding up well - U5 in the first part of 1982 hit what looks like to be ~9-9.5%. U3 in 2008 is still at 6.7%.

I'm not sure exactly what the methodological difference is between U5 in 1982 and U3 in 2008 and, based on past experience, see little point in figuring it out for anyone else's benefit.

[August1991]

Well, looks like things may not be as rosy in Canada as some would like us to believe:

Canada loses most jobs in 26 years

Let's just hope that this is not the beginning of a trend.

The seasonally adjusted Canadian unemployment rate has increased from 6.2% to 6.3% - hardly a brusque change. Current predictions are that it might peak at about 7.5%. The US downturn is bound to affect us as well as the fall in commodity prices.

Like I have told the other recession denier on here - stop being a sore loser.

msj, I am not a "recession denier". I just object to the sensationalizing. (We just went through a political crisis due in part to this sensationalism.)

In Canada, we have had sustained growth for the past 15 years or so. This is not the end of the world. The recession of the early 1980s was far more severe than what anyone is now predicting.

Edited December 6, 2008 by August1991

[msj]

msj, I am not a "recession denier". I just object to the sensationalizing. (We just went through a political crisis due in part to this sensationalism.)

In Canada, we have had sustained growth for the past 15 years or so. This is not the end of the world. The recession of the early 1980s was far more severe than what anyone is now predicting.

I'm not referring to your views on Canada.

I am very much in agreement that Canada is not in the same place as the US. It is not bad, certainly not a crisis, and the nonsense about politicians, any politicians, in Ottawa having to turn on the taps is complete nonsense.

I will also note, however, that the recession in 1982 come on the heels of a recession in 1980-81 ish and lets not forget the 1970's weren't exactly great, either.

Always better to enter a recession from a healthy economy than from a sick one - unless the healthy economy has led to complacency.

My reference is with respect to the extent that you deflect away the very serious recession that the US finds itself in and for which many have substantially detailed over the past year.

Sure, BC2004 is not willing to read any detail that is below a headline but you appear only willing to skim the surface.

Such narrowness does not suit anyone well.

I have problems with people who pick and choose the forecast that they like simply based on the projected outcome.

If the forecast shows modest growth, like the one in this thread's OP, then you defend it based on flimsy opinion rather than substantive arguments (for example - you point out US job losses as not being that bad while continuously ignoring the fact that their job loss methodology is terrible (in the short term) to the point that revisions after the fact substantially change one's view of just how bad things are down there. But that is my point about reading headlines - you don't notice that US September job losses started out at 159,000 and have finally been revised to 403,000 - such details are important and should not be missed).

Canada can find itself in a recession pretty quick and, unfortunately, Canada tends to not have the same amount of critical thinkers who are willing to blog about the short comings of statistical methodologies and who will take the time to provide the substantive arguments for where our economy may be headed (although, at least Canada tends to have less of the extreme cheer leading that the US suffers from - it is to the point of absolute reality denial).