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Recession is Over!


Mr.Canada

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Look folks, the reason that they are declaring the recession over is because corporate profits are up. ...

Although I agree with the rest of your post, this first sentence isn't the defining factor of a recession. Recession is defined as two consecutive quarters of economic decline. That's measured in GDP or GNP - profit is not a factor, it's sales. And yes, it's possible to have increased sales but still turn up a loss.

So in order for the recession to be officially over, June to November must report (on average) GNP growth. The employment rate is not in the equation either.

Edited by daniel
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Although I agree with the rest of your post, this first sentence isn't the defining factor of a recession. Recession is defined as two consecutive quarters of economic decline. That's measured in GDP or GNP - profit is not a factor, it's sales. And yes, it's possible to have increased sales but still turn up a loss.

So in order for the recession to be officially over, June to November must report (on average) GNP growth. The employment rate is not in the equation either.

The "they" I am referring to is the spin doctors, not the stats guys. I did not try to define a recession, there is enough said about that anyway, and I do agree with your definition. Even so, I am not convinced that the fat lady has sung her song yet. There is another real estate bubble in the states to burst really soon. That is the commercial one, look at the malls that are closing due to the retail slump. Look at the apartments and condos for rent sitting there vacant with expensive mortgage costs to cover. There is at least as much lost value there as there was with homes. Wait for it, because nobody even sees round two coming, and it will be worse than most folks think.

On the production side of the equation, domestic capacity is still being lost to foreign locations with reduced labour expenses, and those lost jobs do little to improve consumer spending which is the largest component of US GDP. The other side of the equation is resource harvesting and you don't need to go very far to see foreign nationals buying up endangered Canadian and US companies left right and centre. Things are not looking real good folks, despite what the spin doctors are saying.

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The green shoots of recovery are govt infrasturcture/bailouts/grants working their way through the economy. Once spent, nothing prevents the economy from slowing again. Example: cash for clunkers stateside. Funds ran out with one week left in August and, after an otherwise stellar month, Ford, for one, reports it's sales, post-clunker program, are a disaster. Artificial subsidies that rob future sales and must be paid for by future taxpayers is hardly evidence of recovery. Major US banks report profits generated from bailouts and the now-legal ability to keep toxic loans off their balance sheets.

America remains an economic basket case, a lurching giant that unfortunately consumes 85% of our exports and until they get their act together no meaninful recovery will happen here.

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The green shoots of recovery are govt infrasturcture/bailouts/grants working their way through the economy. Once spent, nothing prevents the economy from slowing again. Example: cash for clunkers stateside. Funds ran out with one week left in August and, after an otherwise stellar month, Ford, for one, reports it's sales, post-clunker program, are a disaster. Artificial subsidies that rob future sales and must be paid for by future taxpayers is hardly evidence of recovery. Major US banks report profits generated from bailouts and the now-legal ability to keep toxic loans off their balance sheets.

America remains an economic basket case, a lurching giant that unfortunately consumes 85% of our exports and until they get their act together no meaninful recovery will happen here.

That's exactly it. Just a few weeks ago, economists began predicting a W shaped recession curve in that we've had a collapse, infrastructure spending and other forms of stimulus essentially stopped us from a complete collapse but when these funds out people are starting to predict more often that despite this last bit of growth there's going to be another crash. Predicted for september/octoberish. Considering how the markets opened up september it isn't a good sign. Though, the fall months have historically been bad.

In the end I don't think anyone blames Stephen Harper for the recession, people are just upset that, for an economist, he couldn't see this coming or didn't want to see it coming when EVERYONE else did. Sure our banking system is fine but when 85% of our exports in an export based economy mind you go to a country which is imploding, it doesn't take a fool to realize that we'll feel it too. This doesn't mean its the end of the world but still, the economy is hurting. Ironically it was Trudeau (I believe) who said that when the elephant sneezes the mouse catches a cold. Surely enough, this turned out to be the case.

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...

In the end I don't think anyone blames Stephen Harper for the recession, people are just upset that, for an economist, he couldn't see this coming or didn't want to see it coming when EVERYONE else did..... Ironically it was Trudeau (I believe) who said that when the elephant sneezes the mouse catches a cold. Surely enough, this turned out to be the case.

The difference between then and now is that wiser people aren't blaming Harper but they were blaming Trudeau.

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In the end I don't think anyone blames Stephen Harper for the recession, people are just upset that, for an economist, he couldn't see this coming or didn't want to see it coming when EVERYONE else did. Sure our banking system is fine but when 85% of our exports in an export based economy mind you go to a country which is imploding, it doesn't take a fool to realize that we'll feel it too.

The real issue for Canada is why aren't the Feds trying to do more to prevent an erosion of quality in bank lending?

Sure, our banks look fine now (they don't look nearly as good as most people think) but they are still lending on terms that are closer to the US "sub prime" system than many Canadians realize.

And, since the banks are regulated at the cabinet level, this all could be stopped at that level.

But no, let's carry on business as usual and hope China isn't gaming its economy and, therefore, commodities, that our own housing bubble won't be as bad as the US' (hey, at least we have recourse lending!), and that somehow real incomes will rise so that people can start paying less than 50, 60 and even 70% of their incomes on housing costs (less than 40% is affordable).

The thing is, with what has happened in the US, one would think that Canada would learn from those mistakes.

We haven't and we are just repeating the same mistakes albeit with less exuberance than the Americans.

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In the end I don't think anyone blames Stephen Harper for the recession, people are just upset that, for an economist, he couldn't see this coming or didn't want to see it coming when EVERYONE else did.

Harper was lying to us intentionally, thinking that we are stupid. His contempt for Canadians was never more obvious.

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Harper was lying to us intentionally, thinking that we are stupid. His contempt for Canadians was never more obvious.

I tend to agree. However, people like to buy into what conservatives have to say. They play to the baser instinct and it seems that no one likes to listen to reason. Who needs to think about a certain policy when you can feel a certain way about someones character. Personally, I think the MOST contemptuous act, though I didnt even really support it was when he labelled the coalition as an illegal coup. What made me more upset is people bought into it.

As for the banks, yeah they aren't in great shape but Harper seeing the effect that these mortgages had in the states (essentially creating a bubble) was the one who pushed for greater de-regulation in the financial sector. The Star ran an article about Paul Martin essentially saving our banks from calamity through his regulations and the nullification of major mergers. Another one that people don't like to think about because it doesn't fit their picture of what a Liberal is. They raise taxes with one hand and spend it with the other didn't you know? I think the most upsetting part about these kinds of statements is that people just like to buy into stereotypes rather than actually do a little bit of research to figure out the ugly truth not just about Conservatives but even Liberals as well. There are some not so fine characters in the Liberal party as well. Oh well.

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Nonsense. He didn't "keep going on." Canada may have not been technically in a recession, but he stated several times that the economy was slowing, but that we weren't in as bad of shape as the American economy.

More nonsense. He didn't say that everything was fine.

But I must say, you did a fine job knocking down everyone of your strawman arguments. Good job!

During the leadership debate he said Canada would post a surplus, no recession and no deficit, you must have been asleep. Ya Harper the financial genius who's never actually had a job in finance probably was the last person on the planet who knew we were in a recession...

any summer gain is normal for summer that's prime construction season but our recession doesn't end until it ends in the USA and that's a long ways off as yet.

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