OTTAWA — The economy received some needed encouragement Monday with a sharp jump in stock markets and a report showing Canadians are less despondent about their prospects.
The Toronto stock market surge of over 450 points followed the unveiling of the much-anticipated U.S. bank rescue plan worth up to US$1-trillion and a blockbuster deal in the Canadian oilpatch that will see the merger of Petro-Canada (TSX:PCA) and Suncor Energy (TSX:SU).
Meanwhile, the Conference Board said its March consumer confidence survey shows Canadians are starting to feel a little better about their financial situation and may be preparing to re-engage in the economy.
“We’re beginning to form a bottom of the recession. We’re starting to get people looking a little more creatively and optimistically ahead,” the think-tank’s chief economist Glen Hodgson said.
“They understand they can buy stuff at a much better price than they did six months ago, that they are able to re-finance their mortgage at really impressive rates and that they probably aren’t all going to lose their jobs.”
The monthly survey of 2,000 found consumer confidence rising 2.7 points to 71.5 — still recession gloomy territory — but better than January’s and with a suggestion Canadians are less fearful of losing their jobs and more inclined to spend.
CIBC’ economist Avery Shenfeld said he was not ready to sound the all-clear yet, but acknowledged the smattering of good news was welcome.
“The pieces of an economic recovery, in turns of policy developments, are starting to come together, but there’s still some large questions around (the Obama plan) and it will be months before we see an impact from the fiscal stimulus,” he said.
The big missing ingredient, Shenfeld said, is that labour markets continue to shrink both in Canada and the U.S. Canada lost 212,000 jobs in the past two months alone.
And there is no guarantee the Obama plan will indeed save the troubled U.S. banks.