OTTAWA — Hold off on the talk about “green shoots” and an economic recovery being just around the corner.
New data Wednesday indicated that although there is reason to believe the economy is no longer in free-fall, it is still sliding toward a bottom not yet visible.
Retail sales in the United States fell a surprising 0.4 per cent in April, far worse than the flat reading economists had anticipated, confirming that the American shopper is still dormant.
In Canada, credit rating agency DBRS said conditions for domestic airlines have been typical of past recessions, with first-quarter passenger traffic down three to six per cent.
This follows Tuesday’s mixed report on bankruptcies — consumer defaults alarmingly up; business insolvencies unexpectedly down.
One harbinger of global economic activity is demand for energy, and despite all the talk of a rebound in China and better conditions in the United States, that appears to be muted, according to the Organization of Petroleum Exporting Countries. OPEC has lowered its estimate for world oil consumption for the ninth consecutive month, saying demand will fall by almost two per cent this year.
Analysts believe conjecture about green shoots — delicate signs of revival sprinkled among the economic desolation — has overshadowed the weaknesses that remain in the economy and the risk that conditions could deteriorate further.
“I think it was the combination of the stock markets doing so well in March and April, and then we had that good employment report on Friday; people were getting ahead of themselves,” said Dale Orr, a Toronto economist and consultant.
“I still say it’s going to be the fourth quarter until we see any growth at all.”
Even this forecast, which coincides with the Bank of Canada’s projection, comes with caveats, including that there won’t be another major financial-sector failure, or that the broken-down jalopy that is the North American auto sector won’t finally expire.
Hard data over the past months, even numbers that are cited as encouraging, are consistent with a severe recession, not growth, said CIBC economist Meny Grauman.
Often-cited retail sales figures earlier in the year appeared solid only in contrast to the “horrid” results of the previous months, he said.
And while housing markets are showing signs of nearing bottom, there is scant evidence of a rebound in either prices or construction.