Canadian economy takes another dive this month

[mentalfloss]

Canadian economy sheds 2,800 jobs in February

Canadians continued to find work hard to come by in February as 2,800 jobs were lost across the country.

A consensus of economic forecasts had predicted overall growth of at least 15,000 new jobs in the month, with the jobless rate staying steady at 7.6 per cent.

Employment among people aged 15 to 24 fell for the fifth month in a row, putting their unemployment rate at 14.7 per cent. As well, the participation rate among young people has fallen to 63.3 per cent from 68.1 per cent in September 2008.

A report from TD Economics released Thursday highlighted the trouble for youths seeking jobs, calling the recovery since the recession for them "non-existent".

BMO deputy chief economist Doug Porter says while this latest jobs report isn't as bad as it looks, it does show underlying weakness in the economy.

"Just as the U.S. labour market finally appears to be turning the corner, Canada’s job market finds itself in a funk," he said in an email.

Later in the morning, the United States reported that the U.S. economy added 227,000 jobs, beating expectations, as the unemployment rate stayed flat at 8.3 per cent due to encouraged workers rejoining the work force.

http://www.cbc.ca/news/canada/story/2012/03/09/jobs-canada-030912.html

Edited March 9, 2012 by mentalfloss

[Boges]

I think the job figures in the US are an encouraging sign. And their improvement will ultimately trickle down to us.

I wouldn't expect robust job figures in the first few months of the year anyway. Anyone with a retail-related job would know this time of year is rather lean.

BTW unemployment did drop 2 percentage points to 7.4.

And for the year Canada is up around 100,000+ jobs compared to this time last year.

[mentalfloss]

I think the job figures in the US are an encouraging sign. And their improvement will ultimately trickle down to us.

I wouldn't expect robust job figures in the first few months of the year anyway. Anyone with a retail-related job would know this time of year is rather lean.

BTW unemployment did drop 2 percentage points to 7.4.

And for the year Canada is up around 100,000+ jobs compared to this time last year.

None of this is encouraging from the perspective of getting us out of deficit - which is the aim of the current government is it not? Also, unemployment dropped because the labour market shrinked.

Edited March 9, 2012 by mentalfloss

[madmax]

I'm no economist, but it seems to me there are a couple of pretty fundamental concerns with our economy. We are currently seeing record housing prices and unprecedented household debt, all at a time of global economic uncertainty. We have come to rely on the country's housing boom, using equity and low interest rates to keep the gears turning on the machine. The housing boom has really helped our construction industry, and given consumers confidence. This is fine when interest rates are low and activity in real estate is high. But with Home equity lines of credit increasing 170 % in the last decade, increasing twice as fast as new mortgages, there has to be some cause for concern, or at least caution.

Sound familiar? There's no doubt that our situation is different than the US was before their collapse, however the situation doesn't need to be the same to have the same basic result. Cautious optimism should be the order of the day.

Well Said!!!

[PIK]

Makes you wonder if some people here are praying the economy tanks, just for political points. But I imagine in a couppe of months it will go right down ,when the construction and roads start up again.

[Michael Hardner]

Makes you wonder if some people here are praying the economy tanks, just for political points.

That would be quite cynical - kind of like when Rush Limbaugh said that he hoped the president fails...

[dre]

None of this is encouraging from the perspective of getting us out of deficit - which is the aim of the current government is it not? Also, unemployment dropped because the labour market shrinked.

No, eliminating the defecit is absolutely NOT a government objective. Right now the GOC and BOC are doing the exact opposite. They are saying nice things about the economy to try to keep confidence up, but monetary policy exposes the fact that they are indeed deeply worried, and trying frantically to avoid a pretty serious recession.

This is a drop in the bucket... the real recession will start once Canadians start to get serious about rebuilding their savings, and how bad it is will depend on various other events around the world, such as the continued collapse of the eurozone, and quite likely a debt crisis at the european central bank. Not to mention acts of economic suicide like unprovoked, elective wars etc.

[Boges]

That would be quite cynical - kind of like when Rush Limbaugh said that he hoped the president fails...

That's exactly what's happening here. People who hate Harper are thrilled the economy is leveling out a bit.

[dre]

That would be quite cynical - kind of like when Rush Limbaugh said that he hoped the president fails...

Its not a matter of "hoping" it tanks, its matter of there being very strong empyrical evidence suggesting that is a likely outcome. We have a huge realestate bubble, historically low personal savings, and we have interest rates pegged at rock bottom for years.

Surely you can understand how these things point to some pretty serious problems. Do you think you can just keeep easing forever?

By keeping rates pegged at nothing the government is trying to dump borrowed money into the economy, so that theres a lot of debt driven consumption, and therefore increased economic growth. What you need to understand though is that isnt real economic growth its borrowed from the future, because consumption will slow way down once people decide they can no longer borrow more money even if the banks give them super low rates and practically beg them.

Also, never mind the extremely short sighted economic management... But what if something happens thats beyond our control? Our central bank has essentially run out of room. How are they going to keep people consuming, if rates are already near zero? Charge negative interest rates maybe?

[Boges]

The US is in a much deeper hole than we ever were and Canada has replaced all the jobs lost during the 2008/9 recession. Not so south of the border.

But while the rate of job creation in the U.S. is currently outpacing Canada’s, that wasn’t always the case, economists said.

Indeed, Canada has already regained all the jobs it lost during the 2008-09 recession while the U.S. is still catching up.

What’s we’re seeing now is a structural shift in the way the two economies are recovering, says Doug Porter, deputy chief economist with BMO Capital Markets.

“In a nutshell, we’re seeing a shift in the recovery (in Canada). The first couple of years saw a quick rebound in housing and consumer spending as well as fiscal stimulus. All those sectors are very good at generating lots of jobs. The public sector went on a bit of a hiring spree. The construction industry tends to be very labour intensive,” Porter said in a telephone interview.

“Now what we’re seeing is a transition away from those sectors and more towards exports to the U.S. supported by the manufacturing sector and the resources sector. Those sectors tend to be very productive. They don’t tend to generate a whole lot of jobs.”

http://www.thestar.com/business/article/1143496--unemployment-rate-dips-in-february-but-job-creation-stalls?bn=1

[dre]

That's exactly what's happening here. People who hate Harper are thrilled the economy is leveling out a bit.

No not really...

People who have a basic understanding of economics are worried about Canadas low personal savings rate, and all the debt driven consumption we know is going to dry up soon, and the fact that at this point its pretty damn clear that central banks around the world are acting like theres an emergency.

I dont want the economy to fail. Im going to get submarined when the realestate market corrects, and when interest rates inevitably have to rise again.

Edited March 9, 2012 by dre

[CPCFTW]

No not really...

People who have a basic understanding of economics are worried about Canadas low personal savings rate, and all the debt driven consumption we know is going to dry up soon, and the fact that at this point its pretty damn clear that central banks around the world are acting like theres an emergency.

Thank Harper for TFSAs to combat this.

I dont want the economy to fail. Im going to get submarined when the realestate market corrects, and when interest rates inevitably have to rise again.

You could always sell your real estate, rent, and then double down when the market corrects. Clearly your convictions don't match your rhetoric.

[j44]

Makes you wonder if some people here are praying the economy tanks, just for political points. .

What did anyone here say to make you think that?

That's exactly what's happening here. People who hate Harper are thrilled the economy is leveling out a bit.

If there was a Liberal or NDP PM would you want the economy to go down?

[dre]

Thank Harper for TFSAs to combat this.

You could always sell your real estate, rent, and then double down when the market corrects. Clearly your convictions don't match your rhetoric.

Actually they do. Im scrambling to put myself in a better position, and I am trying to sell some stuff. A while the current government really has the exact same macro economic policy as all other governments, and you cant blame this on them, they havent done anything to make it better. In fact... theyre whole plan is to bleed off peoples savings, to prop up the economy with debt driven consumption. Again... hard to blame them for that because that is the only trick in their playbook. But these credit bubbles drive the business cycle and all we are doing is guaranteeing a worse recession later.

[CPCFTW]

Actually they do. Im scrambling to put myself in a better position, and I am trying to sell some stuff. A while the current government really has the exact same macro economic policy as all other governments, and you cant blame this on them, they havent done anything to make it better. In fact... theyre whole plan is to bleed off peoples savings, to prop up the economy with debt driven consumption. Again... hard to blame them for that because that is the only trick in their playbook. But these credit bubbles drive the business cycle and all we are doing is guaranteeing a worse recession later.

I'm just saying that the BOC is quite transparent regarding interest hikes. You should be able to time your RE purchases/sales accordingly if you do believe that RE prices are highly overvalued. From what I have heard, economists are saying 5-10% overvalued, but obviously they have been wrong before. Personally, I would never buy a house in Toronto for 500k when I could buy 10 houses in Florida for that price. I do intend to buy some Toronto RE when and if prices plummet.

Edited March 10, 2012 by CPCFTW