September 1, 2010

Canadian economy weak, recovery in doubt

CANADA - Canada's economy has been growing more slowly than expected and appears to be stagnating. Concerns over Canada's economic recovery are casting doubt whether the Bank of Canada will raise interest rates or keep them low.

Canada's GDP grew at an annualized rate of 2.0% during the second quarter. Earlier estimates had been hopeful for a number near 5.8%, which is what the first quarter of 2010 did. (Source: Statistics Canada)

Even conservative analysts had been hoping for 2.5% growth for the 2nd quarter, but even that has proven false with the 2.0% results. Meanwhile the US recovery is even weaker, a mere 1.6% for the same time period.

Compared to pre-Great Recession / 2007 levels consumer and government investment are higher now, but business investment and exports are lower. While the bolstering effect of investments does add some stability to the economy, the lower exports and trade deficits are not helping either the North American economy.

Furthermore Canada's GDP growth is mostly limited to the mining, oil and gas sector. If we ignore that Canada would still be in a recession.

Consumer spending in Canada is also slowing. In the first quarter of 2010 it was an annualized rate of 4.3%. During the 2nd quarter it went down to 2.6%.

With the housing market in Canada heading towards a real estate bubble burst this could be very dangerous times for the Canadian economy. A housing bubble burst, combined with a double dip recession would be disastrous.

It is our opinion that the Bank of Canada botched the economy by raising interest rates in July. They should have waited until Canada's economic recovery was complete. The early rise in interest rates hurt the mortgage and housing industry and will now make things much worse when the double dip recession hits.

No comments:

Post a Comment

Comments containing links will be marked as spam and not approved. We moderate every comment. If you want to advertise on this blog it is $30 per link.

Affordable Website Design & SEO

Looking for a quality professional website designer? Why not go where the smart money is?! Toronto Website Design and Toronto SEO. Get free SEO advice from people who really know the business.

Featured Posts

The Sarcasm Symbol
Ever had some confusion online or with your cellphone when someone fails to catch the sarcasm? Well now with the SarcMark you can ge...
Behold, the Scorpion Hydrogen Supercar
CARS - To the right is the future of supercars... it is a hydrogen supercar called the Scorpion. The Scorpion from Ronn Motors in Texas is t...
Documents show Stephen Harper misusing public funds
CANADA - According to 950+ pages of documents obtained by the Canadian Press under the Access to Information Act the Privy Coun...
Pink's Rosie the Riveter
ENTERTAINMENT - What I like about this video is how it meshes different social movements like feminism, veganism, anti-capitalism...
California's Dustbowl
ENVIRONMENT - The photo on the right is a farm in California that has been put up for sale. Its just one of thousands of farms that are n...
Is Steampunk the New Goth???
GOTHIC - Watch out what you see on the subway late at night because while in 2001 you might have seen some pretty freakish goths, by 20...
Do you have enough Ice Water in your diet?
HEALTH - A Calorie (large C) is a measurement of the amount of energy needed to raise the temperature of a litre of water (1 kg's worth) ...
North Korean timeline towards Inevitable War
POLITICS - The following is timeline of events that have occurred on the Korean Peninsula. 1945 - Japan surrenders to the United States a...
Judgment Day is Tomorrow, so sayeth Cult
RELIGION - According to a cult based in California, Judgement Day is tomorrow (May 21st 2011) and Jesus Christ will return to the Earth a...
Sex in Space Forbidden
SEX/TECHNOLOGY - Sex in outer space is a big no-no according to NASA. Not for professional astronauts at least, but the growing numb...

Popular Posts / Last 30 Days