They’ve been telling us… “No No… Canada’s not facing a recession. Our economy is strong. Don’t worry!”
Blame NAFTA if you will… but with the increasing job loss in Canada because of a suffering US automotive manufacturing industry and rising gas prices – it wouldn’t be long before Canada was hit. Hit hard. Especially the provinces of Ontario and Québec.
The country lost 39,200 full-time jobs and manufacturing-dependent Ontario alone accounts for a loss of 45,500 full time positions. Mind you… we had a pick up of 34,200 part-time employment opportunities, bringing us to the highest unemployment rate of 6.2% since January 2007.
Today, a long time company in my town announced further cut backs by laying off 600 employees at a local truck assembly plant, an additional 40 layoffs at another local automotive parts maker plant. Regionally, manufacturing personnel, both white and blue collar workers are being hit hard with this economic slump, much as a result of financial hardships of the Big 3 Automotive plants, GM, Ford and Daimler-Chrysler in the US and Canada. Add in high gas prices and the industry has been sent spiraling downwards and fast.
So the claims of not being or heading towards a recession are absurd. In fact, economists are finally admitting to this grim but very real fact. Canada is within a hair’s breadth of slipping into a technical recession. (Read Here)
Following a first quarter contraction that saw gross domestic product fall 0.3 per cent and continuing signs of stress, economists and policy makers have been routinely revising their growth projections for the year, all trending downward.
In the last week, Canadians have been hit by a series of bad news announcements. Employment fell in June for the first time this year and full-time employment tumbled for the second straight month. Average home sale prices edged down during the month, the first year-over year price decline in nearly a decade. And General Motors Corp. (NYSE: GM) announced plans to lay off 20 per cent of its white collar staff in North America, a further cut of thousands of jobs.
(Dale Orr, Global Insight economist) But Orr also points out that the Canadian economy still has some legs, particularly in the resource and oil and sector, consumer spending, and employment and housing that while slowing, are coming off record-setting years.
The strongest pillar remains high-priced commodities, particularly Alberta oil, which is bringing tremendous wealth into the country and helping grease the general economy through corporate profits, job creation, and higher government revenues that get passed along in lower taxes and higher spending.
“The hurt in Canada is narrowly focused in the trade sector,” Orr says. “If you are in Windsor, Ont., where unemployment is near 10 per cent and the value of your home is falling, or in the auto sector, or if you are in a forestry one-industry town in northern Ontario or Quebec or B.C., then you are really hurting.”
But for most Canadians the slump has yet to register and likely won’t if forecasts of a second-half improvement prove accurate. And for those who live off the resource sector, this is boom times, says Orr.
So… times are a little leaner than usual. I know – I feel it. The dollar doesn’t go further anymore and cost of living adjustments aren’t being made. But the fact of the matter is … when there is war… there is a recession. And that isn’t going away anytime soon… not while we are still in Iraq. Not while Israel is planning to invade Iran, with backing from the US and whomever else (I’m sure Canada’s in there somewhere). There will be no ‘Messiah’ that will save the economy in a short period of time. I believe people are beginning to see this. We are not in recovery mode and faith alone isn’t going to make the current situation go away. Many are in survival mode. But we are nowhere near in a position to say safely – we are out of the economic slump. We aren’t.
Canada does have some saving grace… Alberta oil. And we might not be producing the volume we once did – the wealth effect from commodity exports is very much there and helping. And it is still a world-wide industry that is in need of qualified workforce.
The same industry many are trying to stop from increasing by blocking new development… is what just might be our saving grace at the end of the day. So why are we jumping up and down when we could improve our situation?
Time to do things differently… don’t you think??? And as long as the Bank of Canada keeps inflation from rising (not reduce it) – we just be able to get thru these challenging times with mere bruising and perhaps a few cuts. Minor considering it could be worst…