Canadian economy even worse than recent figures suggest

[Smallc]

He says a better indicator is gross domestic income, which measures Canadians' purchasing power. That shows a plunge of 15.3 per cent in the fourth quarter over the previous three months. The sharp drop was primarily driven by the decline in corporate profits as a result of the crash in world commodity prices.

The report notes that the drop is far worse than the 1.5 per cent contraction in the U.S. during the same period.

CBC

Edited March 11, 2009 by Smallc

[Alta4ever]

CBC

I wonder what reports this guy is looking at my dollar goes a little further now then it did last summer.

[Smallc]

I wonder what reports this guy is looking at my dollar goes a little further now then it did last summer.

So does mine actually, but perhaps we aren't typical?

[bjre]

The report notes that the drop is far worse than the 1.5 per cent contraction in the U.S. during the same period.

CBC

I guess it is true, just take a look of the exchange rate history between CDN and USD, you will find it.

[Alta4ever]

CBC

I guess it is true, just take a look of the exchange rate history between CDN and USD, you will find it.

Funny I don't buy my consumables in the US. I buy them in Canada, and a lot of them are imported from China.

[bjre]

Funny I don't buy my consumables in the US. I buy them in Canada, and a lot of them are imported from China.

Than take a look at the exchange rate between CDN and CNY

http://ca.finance.yahoo.com/currency/conve...NY&from=CAD

[gordiecanuk]

Funny I don't buy my consumables in the US. I buy them in Canada, and a lot of them are imported from China.

Ni How Mah? China eh? I guess that explains it.

[jdobbin]

I wonder what reports this guy is looking at my dollar goes a little further now then it did last summer.

The Harper appointed Budget Officer is looking at these figures.

http://www.theglobeandmail.com/servlet/sto...l_gam_mostemail

The federal Finance Department has also acknowledged GDI can be a more relevant measure to track than GDP. “This provides the best measure of income growth in the overall economy – and is a more relevant indicator of change in well-being of Canadians than real GDP, which is a measure of the volume of production,” Finance said in an August 2008 paper.

[gordiecanuk]

The Harper appointed Budget Officer is looking at these figures.

http://www.theglobeandmail.com/servlet/sto...l_gam_mostemail

Harper and Flaherty know the score, they merely appear incompetent. That's why Stevie broke his own fixed election date law, he knew what was coming. The economic update joke was fudged in November because the Tories figured there was a good chance we'd be heading to the polls again, and they didn't want the real story out in advance of the vote.

[August1991]

The parliamentary budget officer says the Canadian economy is doing even worse than published figures would suggest.

Kevin Page says in a new assessment of the economy that last quarter's 3.4 per cent contraction in gross domestic product doesn't begin to reflect how far Canada's performance has fallen.

He says a better indicator is gross domestic income, which measures Canadians' purchasing power. That shows a plunge of 15.3 per cent in the fourth quarter over the previous three months. The sharp drop was primarily driven by the decline in corporate profits as a result of the crash in world commodity prices.

The report notes that the drop is far worse than the 1.5 per cent contraction in the U.S. during the same period.

CBC

This why I hate the CBC, and the federal bureaucracy:

Mr. Page, 50, has an extensive career in the federal public service, starting as an economist at Finance Canada in 1981 and spanning through the Privy Council Office, the Treasury Board, and the Department of Finance.

...

"His background very much fits the profile of skills you would look to selecting a person for the position, in addition to that, because he knows how the system works, he knows how to get access to get access to information that he will require to do the job and then his track record and performance in the government suggests he will work well, in fact his reputation is he works well with everybody and that means he will be able to work well with Parliamentarians, to ascertain what it is they are looking for and to involve their points of view in how he organizes and produces the work," said Mr. Darling.

...

"A second challenge, of course, is this is an interesting economic and fiscal environment," said Mr. Page. "There is more uncertainty now, a lot of people concerned about sort of downside risks in our economy, what that can mean fiscally. This will all have an impact on how we do budget planning as people look ahead to the budget for 2009, or even an economic and fiscal update for this year and later 2008 so it's an interesting planning environment but overall it's a big opportunity I'm really looking for and I'm very, very proud to be the first Parliamentary Budget Officer, very privileged."

Hill Times

----

It is painfully obvious to everyone that we are facing a severe recession. (msj, linking to Roubini and others, has argued that this was known at least two years ago.)

So what is Page, or the CBC, telling us that's new? Nothing. And what to make of this distinction between "gross domestic income" and "gross domestic product"? Nothing. It's called cherry picking, or merely "statistics". Politicians (or blinded bureacracts) will pick the statistic most likely to support their case.

I have no doubt that Page (and the CBC journalists) genuinely believe that they are doing their job competently, and with integrity. Unfortunately, they see trees, but not the forest.

----

Underneath all, Canadian banking institutions largely avoided buying toxic assets. (The exceptions are Quebec's Caisse and National Bank. BMO and CIBC were counterparties to AIG.) Nevertheless, Canadian banks are remarkably sound, given the various craziness that has occurred around the world. (Imagine if you were an American with several hundred thousand deposited in Citibank. Canadians with money in Canadian banks don't worry the same way.) Moreover, Canadians never got involved in such a crazy housing bubble as the Spaniards or Californians did. Finally, our federal government has more fiscal room than any other in the G7.

When Stephen Harper sits down in Sardinia for the G7 summit this summer, he can look around the table with English Canadian pride.

First of all, Harper knows that what our troops are doing in Afghanistan is beyond what any other G7 country is doing. Canadian troops have taken on the tough tasks, and this mission is critical for the West.

Second, Harper knows that he represents a country whose people, by nature, run things better than all the other countries around the table.

Can Harper take credit for this? No - no more than Paul Martin or Brian Mulroney. Harper is only our representative.

Edited March 12, 2009 by August1991

[Smallc]

So what is Page, or the CBC, telling us that's new? Nothing.

Except the news....the factual news...not the opinionated view that you always take. There are positive markers, and negative ones, and the CBC reported both today.

[msj]

The Harper appointed Budget Officer is looking at these figures.

http://www.theglobeandmail.com/servlet/sto...l_gam_mostemail

Nice link.

I have seen this argument about using GDI rather than GDP before. I came across it last year when it was obvious that the US was in a recession and most people were looking at the GDP and saying it wasn't.

Anyway, I would like to see a public debate on the merits of such things by some seriously intelligent economists (as opposed to a pointless "discussion" on the merits within this forum which would turn out to be a waste of time thanks to the same old, same old....).

[msj]

It is painfully obvious to everyone that we are facing a severe recession. (msj, linking to Roubini and others, has argued that this was known at least two years ago.)

Really? Good of you to finally come around to this point of view, however slow it has been for you to admit it.

As for Roubini, yes, he called for the recession to start sometime in early 2007 (he called this in August 2006) but, as usual, you forget to mention that while he was calling for a sharp slowdown it was relative to growth levels in GDP.

You also conveniently forget that Roubini admitted that his view was not even close to the consensus. The consensus being that everything was alright, Jack (just a little wee slow down, maybe).

How funny and convenient for you to throw Roubini's name around for your little purposes....

As for me, I have only thought the recession would be severe since about last July or August. Before that I thought the recession would be modest like the 90/91 recession while you were still asking about "what recession?" like a Phil Gramm drone (mental recession and all that).

[bush_cheney2004]

....As for Roubini, yes, he called for the recession to start sometime in early 2007 (he called this in August 2006) but, as usual, you forget to mention that while he was calling for a sharp slowdown it was relative to growth levels in GDP.....

Roubini "called for" a recession in Canada back in 2007? Amazing!

[August1991]

As for Roubini, yes, he called for the recession to start sometime in early 2007 (he called this in August 2006) but, as usual, you forget to mention that while he was calling for a sharp slowdown it was relative to growth levels in GDP.

I think Roubini first predicted a recession in 2001 or so.

Roubini says he was able to predict the catastrophe so accurately because of his "holistic" approach to the crisis and his ability to work outside traditional economic disciplines.

Link

Roubini earns $100,000 a speech. More power to him, but that's not the Scientific Method.

Edited March 12, 2009 by August1991

[msj]

I think Roubini first predicted a recession in 2001 or so.

Link

Roubini earns $100,000 a speech. More power to him, but that's not the Scientific Method.

1) I think we had a recession in 2001/2002. Oh right, the NBER is even on record stating as much....

2) What does it matter what he makes?

Does big money impress you?

Are you a gold digger participating in a Dr. Phil experiment or something?

How is that even relevant?

3) No one is going to perfectly predict the timing of everything - however, some are better at spotting trends and pointing them out.

Roubini has done that while you have fiddled with the cheerleaders/deniers long past their expiry date.

[bush_cheney2004]

1) I think we had a recession in 2001/2002. Oh right, the NBER is even on record stating as much....

There was no equivalent "recession" in Canada for 2000 - 2002....Canada and Australia weathered things quite well.

The NBER's pronouncements do not apply to Canada.

Edited March 12, 2009 by bush_cheney2004

[msj]

There was no equivalent "recession" in Canada for 2000 - 2002....Canada and Australia weathered things quite well.

The NBER's pronouncements do not apply to Canada.

Clearly August was referring to Roubini "calling" a recession for the US in 2001. Hence my reference to the recession and to the NBER.

My apologies to anyone who couldn't follow along this meandering path.

[bush_cheney2004]

Clearly August was referring to Roubini "calling" a recession for the US in 2001. Hence my reference to the recession and to the NBER.

My apologies to anyone who couldn't follow along this meandering path.

If you say so.....just another instance of "we" not being the case at all.

[msj]

If you say so.....just another instance of "we" not being the case at all.

It's kinda like the "royal we" or the "editorial we."

Such semantic posturing - I know, how 'bout we get into a spelling flame war!

[August1991]

Clearly August was referring to Roubini "calling" a recession for the US in 2001. Hence my reference to the recession and to the NBER.

No, it's my error.

I was looking for Roubini's first prediction of a recession, downturn, housing collapse in the US. I saw a link with a reference to 2001. I think Roubini first started on this recession idea in 2002 - after the US was coming out of the tech bubble. (Roubini has been called Dr. Doom fro several years now.)

Anyway, this is not the issue. The Scientific Method requires a theory and a repeatable test. Roubini has no theory, and his arguments are ad hoc. Unlike Galileo or Copernicus (or Coase or Lucas), Roubini offers no new way to view things and nothing to test his ideas.

[bush_cheney2004]

It's kinda like the "royal we" or the "editorial we."

Such semantic posturing - I know, how 'bout we get into a spelling flame war!

Not required at all....I marvel at the ability to swim between each national consciousness to suit your purpose.

Hope Santa brings you your own "NBER" next X-mas.

[msj]

Not required at all....I marvel at the ability to swim between each national consciousness to suit your purpose.

Hope Santa brings you your own "NBER" next X-mas.

Now c'mon. It's not nice to rub it in!

Canada needs a NBER to ward of the ... oh, forget it.

[Visionseeker]

To GDI, or GDP?

That is the question.

Both of these are important indicators in forming an economic outlook. Their relative importance largely depends on where the economy is in terms of cycle, but Page is right to emphasize the GDI right now. In our aging society, declining investment incomes and the depreciated value of portfolios carry more significant consequences than they would in previous cycles. What Page is addressing is behavioural economics: namely, that the vast majority of retiree investors or soon to be retired investors will act in a manner that disfavours consumption as well as further suppress the ability to consume in other demographic groups.

Under normal circumstances, investment income is spent, re-invested, or redeemed through sale in given proportions. But the economic shock we are currently facing is disproportionately favouring re-investment and redemption (at the expense of spending) among the retired and soon to retire demographic. Their buy-sell behaviours will serve to stagnate or worse, further devalue equities and confidence in the market. But more disconcerting is that fewer and fewer investment income dollars will find their way into the consumptive economic multiplier, effectively stagnating or worse, deflating prices and earnings in other demographics.

The next few years ain't going to be pretty. I'll guarantee you that.

[msj]

Anyway, this is not the issue. The Scientific Method requires a theory and a repeatable test. Roubini has no theory, and his arguments are ad hoc. Unlike Galileo or Copernicus (or Coase or Lucas), Roubini offers no new way to view things and nothing to test his ideas.

Um, there's a reason it's called the "dismal science."