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Crazy
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Originally Posted by rofgilead
The US GDP only fell 1% (before it gets revised..) this last quarter. Hopefully we are seeing the end of the fall, and loss of jobs here too.
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I don't know, despite all the hoopla in the news I'm still finding myself incredulous at best that the brunt of this is over. We just experienced consecutive quarters where there were huge losses in GDP and unemployment shot up drastically. A few slightly positive results at the onset of this quarter are really of minor importance I'd say. The economy has shrunk like nuts this past year and a half, and I think its effects have only started to be fully felt. It's going to be a long road back up, especially with such piecemeal economic growth. Further, I also find it dubious that the BOC's citing exports as being a key component of Canada's rebound, especially given the downward pressure in the USD to ours. Over the course of the near future, unless the USA is able to rebound even better than us, I feel like we'll be seeing manufacturers exporting to the US taking an even greater beating.
Anyways, for the sake of ongoing discourse here's another good update on the North American situation:
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From economic trough, slow slog out begins
Barrie McKenna
Washington — Globe and Mail Update
Last updated on Sunday, Aug. 02, 2009 01:09PM EDT
The United States is finally nearing an end to the longest and deepest recession since the aftermath of the Second World War.
Its economy shrank at an annual rate of 1 per cent in the second quarter, marking the first time since 1947 that U.S. gross domestic product has declined for four consecutive quarters, the Commerce Department reported Friday.
But the decline was slightly smaller than most economists had expected – and much less severe than the revised 6.4-per-cent drop reported in the first quarter.
In Canada, however, the economy took a turn for the worse. May marked the 10th successive month of declining economic activity, shrinking 0.5 per cent under the weight of a dismal performance by the manufacturing sector.
That's the longest losing streak since Bob Dylan started making music and work began on the Berlin Wall (Statistics Canada didn't begin tracking monthly GDP until 1961).
Without the massive amounts of government cash, both the Canadian and U.S. economies would be in even worse shape. As grim as the numbers are, they do point to a looming recovery. That's a significant milestone for economists and investors, who look for inflection points in the economic cycle.
But the sheer depth of the recession means most people won't feel a recovery for quite some time. Particularly in the United States, the collapse in household wealth and the weak state of the labour market will weigh on growth – perhaps for years.
“The second quarter of 2009 may mark the end of the recession, [but] the road to recovery ... is a long one,” said Toronto-Dominion Bank economist James Marple.
U.S. household wealth has fallen by nearly $14-trillion, or 22 per cent, since mid-2007. Mr. Marple estimated this loss of wealth will subtract a full percentage from consumption for the next few years.
Speaking at the White House, President Barack Obama greeted the GDP figures as “an important sign that the economy is headed in the right direction.” He pointed out that the plunge in business investment appears to have stabilized – a precondition for companies to resume hiring.
“This means that eventually businesses will start growing and they'll start hiring again,” Mr. Obama said. “And that's when it will truly feel like a recovery to the American people.”
But he cautioned that the economy is still losing “far too many jobs.”
In June, the United States lost 467,000 jobs, pushing the unemployment rate to 9.5 per cent – five percentage points higher than when the recession began. Most economists expect the rate to shoot past 10 per cent later this year.
“America should start climbing out of it's the hole in the next quarter, but there's a lot more climbing to do,” CIBC economist Avery Shenfeld said in a report to clients.
The U.S. economy got a lift from government spending, which rose at an annual rate of 5.6 per cent in the quarter.
But just about every other component of GDP declined – including housing, business investment and, most tellingly, consumer activity. Consumption fell 1.2 per cent, even though personal incomes rose.
This suggests consumers continue to shore up their finances after a long, debt-fuelled purchasing binge.
Like the United States, the Canadian economy is largely on government life support. Of Statscan's 18 categories, six were higher in May than a year ago. Three of those were public administration, health service and education. The only private industry that expanded significantly from the previous year was finance and insurance, where output was 2.4 per cent higher than in May, 2008.
A new survey of factory owners reinforced Bank of Canada's outlook that while the recession is likely over, the climb back will be long.
The Canadian Manufacturers & Exporters said 53 per cent of its 583 association members surveyed said the value of current orders is lower than three months ago, compared with 51 per cent in June and 57 per cent in May.
Factory inventories still are high, and companies aren't planning to rehire any time soon.
Some 31 per cent of the respondents said their materials inventories were too high, compared with 6 per cent that said stockpiles were too low; 27 per cent said inventories of finished products were too high; 7 per cent that said they were too low.
With files from reporter Kevin Carmichael in Washington
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