The tentacles of global gloom are reaching out, but Canada has some secret weapons.
For those looking for some fresh economic bad news last week, it was not hard to find. On Friday, the country which is now by some measures the world’s largest economy, China, sank to its lowest ebb in almost 30 years.
The United States, the largest economy in dollar terms, has its own scary news as an unexpected decline in retail sales indicates that the country’s economic superstar, the consumer, will probably run offstage.
Even the economic gloom Canada gets some primary care as part of the paper business gives prominent placement to the somber predictions from David Rosenberg, the chief economist at wealth management company Gluskin Sheff.
“Time’s up for the Canadian economy, experts say,” is the title of the Toronto Star in front of the business section on the story from Bloomberg business news service quoted Rosenberg as “put the possibility of a recession in Canada at 80 percent.”
Knowing where the tigers are
For whatever reason, in the clickbait media world, it is well known that gloom attracts more attention than stories saying that everything is swelling. There are various theories about why going back to our evolutionary past when knowing details about a dangerous tiger contributed more to our ancestors’ survival than bland reassurances.
Clearly, if bad economic times are around the corner, we want to know. The problem, of course, is that it’s not that simple. As I have mentioned, whatever the fundamental causes of a weakening economy, a growing feeling of gloom can itself contribute to or even create economic weakness.
Despite all the forecasts are confident orally and in writing, no one really knows what will happen next. Known US economist Paul Samuelson once famously wrote that “Wall Street indexes predicted nine of the last five recessions,” and has been widely observed that economists have a worse record.
Not so gloomy after all
In fact, a detailed reading of the Bloomberg copy under the heading gloomy offers a surprise that the majority of people in the conference closed, unlike the often-dismal Rosenberg, did not see the recession Canada in the coming year.
After my own contribution to the gloomy mood last week, I thought it only fair to count some of the reasons why Canada might not have seen the worst of any global recession.
After a slow patch Canadian home sales again. And while they may have to be reconsidered for the time being, there are signs that the condo builders who have filled the skyscraper with cranes make too much money to stop. Some have pointed to the recent slump in New York condominium prices as a warning, but there is no reason why a different Canadian city.
One of the differences between Canada and many other places is that the state doormat means the population, the demand for housing and the economy continues to grow. Lots of people come up with money in their pockets, feel Canada is a safe place to store it. A report last week showed that one in five homes in Canada was purchased by someone who arrived in the last 10 years.
Despite some hints of a slowdown in parts of the economy, Canada continues to create jobs, and wages are rising. Difficulties in the energy sector may have bottomed out. Overall unemployment continues to hit record lows and wages continue to rise. While the slowdown could reverse the trend, low unemployment and a shortage of workers in various sectors can help to bridge the weak patch.
While in other countries the price is stagnant even as central banks cut rates, Canadian inflation remains well within the Bank of Canada’s target range. Core inflation, the rate banks use as an indicator Stephen Poloz best, an average of more than two percent. Research has shown one of the reasons inflation will remain healthy is that poor Canadians, who got the part fairer here than anywhere else, spend it all and stimulate the economy instead of tucking it away as savings.
Although attention is often paid to Canadian debt taken, there are other groups, many with a paid-off house, deep pockets and pensions will continue to share pension.
A large and growing group of well-heeled retirees who have helped to save the government pension program as RSPS and tax-free savings account will act as a safety net for the wider economy.
Partly because of the taxes paid by the working-class good middle-Canada, Canadian youth are the best educated in the world. That human capital is a stored wealth that can not be easily destroyed, even by the failure of the company.
7. The budget deficit is relatively low
While government spending has been a background issue in the campaign for the federal election today, as far as the country has a fiscal pad to help improve the global economy should slump worsens. Compared with our southern neighbor, Canada is the voice of the book, and for several revamps, Canada Pension Plan, while small, are adequately funded, most actuaries say.
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