Economy growth is slowing

OTTAWA — Investors run for cover, consumers quake and economists wonder if, two years after the deepest recession since the Great Depression, we are on the precipice of another pullback.

OTTAWA — Investors run for cover, consumers quake and economists wonder if, two years after the deepest recession since the Great Depression, we are on the precipice of another pullback.

The prognosticators of doom, including U.S. economist Nouriel Roubini, predict “we’re going into a recession,” adding that governments have run out of options or the will to prevent it.

But a lot of the data is telling a different story, one that shows the U.S., Canadian and global economies are stumbling, but not falling.

Thursday was a typical case of what on the surface appears to be a disconnect between fear and fact.

While the world waited to see if President Barack Obama’s speech Thursday night on job creation can soothe market wounds, the United States and Canada reported robust export numbers that by themselves should have done the trick. As well, Statistics Canada said building permits, indicative of builders’ confidence of future sales, rose to near record levels in July.

On the same day, however, Harris-Decima Research released the latest consumer confidence survey showing households on both sides of the border continued to experience palpitations. Confidence fell more than six points to 77.5 in Canada last month, and plunged to 55.7 in the U.S.

Just over one in 10 Canadians saw good times ahead for the economy in the next year. Twice as many foresaw bad times.

Other recent data points have tended to be along the same line. Consumer spending in Canada and the U.S. appears to be holding up; consumer confidence is plunging.

And that may be a big part of the problem, say some economists. While these are not the best of times, investors and consumers are assuming that we are entering the worst of times.

If we are not careful, says Douglas Porter, deputy chief economist with BMO Capital Markets, we could talk ourselves into a recession.

“When you carefully look at all the figures we have for July and a few figures we have for August, there’s plenty of evidence that the global economy has slowed, but nothing close the kind of trauma that’s been reflected in financial markets,” he says.

“It’s almost as if financial markets have all but thrown in the towel on the recovery and pricing in a recession.”

Part of the loss of confidence occurred because of what Porter termed the “artificial crisis” in August over whether the White House and Congress could come up with a way to stop the U.S. from technically defaulting on its debt. Few thought a default would occur, but is sowed the seeds of doubt whether the world’s biggest economy had its act together.

Even Porter admits the underlying difficulties in the global economy are real. The European debt crisis will strangle growth in that continent for years to come, and Washington’s fiscal difficulties, while not insurmountable, will also take a toll on growth.

But he adds, everyone has known for some time the recovery would be a long, slow slog.

In Canada, one of the most pessimistic of Bay Street economists is Derek Holt. Scotiabank’s vice-president of economics was one of the earliest to warn about a possible slump in Canada in the summer of 2008 and says his colleagues may be overly sanguine about the future now as well.

Not only is a recession possible, Canada could be in one right now, he says. A recession is technically defined as two negative quarters of growth. Canada’s economy slipped 0.4 per cent in the second quarter, and could also come in negative in the third, which concludes at the end of this month.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Energy Minister Sonya Savage speaks during an event to mark the start of right-of-way construction for the Trans Mountain Expansion Project, in Acheson, Alta., Tuesday, Dec. 3, 2019. A committee that is supposed to consult Albertans on coal development in the Rocky Mountains won't be able to ask questions about water or land use. THE CANADIAN PRESS/Jason Franson
Alberta coal consultation terms of reference rule out land use, water concerns

Alberta coal consultation terms of reference rule out land use, water concerns

Brittany Lausen, RDC Students’ Association president. (Advocate file photo).
RDC Students’ Association takes aim at ‘period poverty’ in Red Deer

Vulnerable clients of several non-profits can access free hygiene products

A voter is shown at a Whitehorse polling station during the Yukon election on Monday April 12, 2021. An official count has confirmed a tie in the Yukon election, pushing the process to the next step of a judicial recount. THE CANADIAN PRESS/Mark Kelly
Official count confirms tie in Yukon election, application filed for judicial recount

WHITEHORSE — An official count has confirmed a tie in the Yukon… Continue reading

Lieutenant Commander Nicole Robichaud welcomes members of the Liberian Coast Guard aboard the HMCS Moncton for training with Royal Canadian Navy off the coast of Monrovia, Liberia, Africa. (Contributed photo by Corp. Ryan Moulton)
Red Deer-raised woman finds her sea legs as commander in the Royal Canadian Navy

Cdr. Nicole Robichaud started out as a local sea cadet

Red Deer Public Schools will not pilot the new draft curriculum at its elementary schools. (File photo contributed by Red Deer Public Schools)
UPDATED: Red Deer Public Schools says no to piloting new curriculum

Alberta Teachers’ Association support school boards

Prime Minister Justin Trudeau adjusts his mask as Minister of Environment and Climate Change Jonathan Wilkinson answers a reporter's question during an announcement on the government's updated climate change plan in the Dominion Arboretum in Ottawa on Friday, Dec. 11, 2020. THE CANADIAN PRESS/Justin Tang
Wilkinson urges opposition leaders to stop stalling net-zero carbon emissions bill

OTTAWA — Environment Minister Jonathan Wilkinson is urging opposition leaders to end… Continue reading

Gwynne Dyer
Opinion: Biden’s words have no meaning

“If they go, we’ll all have to go. That’s the reality of… Continue reading

opinion
Shadow pandemic: Domestic violence has risen worldwide

The COVID-19 pandemic has left a devastating mark on communities across the… Continue reading

LtE bug
Letter: MLAs expected to toe the party line

I am writing this letter to express my disappointment with my MLA… Continue reading

Vancouver Canucks head coach Travis Green, top centre, prepares to begin practice during the NHL hockey team's training camp in Vancouver, on Friday, January 8, 2021. Media have been barred from the Vancouver Canucks first practice since a COVID-19 outbreak swept through the team. THE CANADIAN PRESS/Darryl Dyck
Vancouver Canucks’ next game postponed, delaying return from COVID-19 outbreak

Vancouver Canucks’ next game postponed, delaying return from COVID-19 outbreak

Winnipeg Jets' Nikolaj Ehlers (27) celebrates his goal against the Toronto Maple Leafs with teammate Mathieu Perreault (85) as Maple Leafs' Justin Holl (3) skates past during first-period NHL hockey action in Toronto on Thursday, April 15, 2021. THE CANADIAN PRESS/Frank Gunn
Ehlers scores two as Jets chase Campbell early, down Maple Leafs

Ehlers scores two as Jets chase Campbell early, down Maple Leafs

Canadian Grand Prix remains on F1 schedule for time being, despite report

Canadian Grand Prix remains on F1 schedule for time being, despite report

CFL teams select four Australian punters in the first round of league’s global draft

CFL teams select four Australian punters in the first round of league’s global draft

Most Read