HH Economists' Canada Problem

Canada’s economy remains the distinct enigma of the developed world, where the binary business cycle breakdown is perhaps most conspicuous. When oil prices first crashed to end 2014 and start 2015, even economists expected Canada’s economy to suffer, so exposed as it was and remains to the energy sector. But after two rough quarters to begin last year, that was supposed to be the full extent of it. Ever since the middle of 2015, economists have been predicting growth to resume. Instead, Canadian growth, as the rest of the world, continues to be at best uneven, unusually susceptible to contraction.

From the convention of recession/not recession, this was not how it was supposed to be. This article from September 2015 perfectly demonstrated the mainstream concept of growth/contraction:

Well, so much for Canada’s recession.

After pulling back for two straight quarters, the economy is showing new resilience — rebounding in subsequent months and providing hope of more growth for the rest of the year. 

“Growth looks like it’s going to be pretty solid in the third quarter,” said Benjamin Reitzes, senior economist at BMO Capital Markets. 

“Most definitely, this is among the shortest and most mild (recessions) in Canadian history.”

When quarterly GDP growth was once more abysmal in Q2 2016, it was similarly written off as a product of literal conflagration (Alberta wildfires) soon to be overcome and surpassed by looming “stimulus.” Canadian economists were again optimistic during the summer once the fires died down, but Q3’s better numbers haven’t been the start of recovery, either – nor should that have been the expectation. As I wrote in August:

Given the track record of “stimulus” all around the world, perhaps a little more skepticism is warranted for an economy “leaning heavily on Ottawa”? After all, Canada’s problems aren’t really Canada’s problems. At best, perhaps fiscal spending and payments might temporarily offset weakness (if even that), but it should be made clear that weakness is Canada’s continued future.

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Moon Kil Woong 1 year ago Contributor's comment

Sadly regulation, government bloat renamed stimulus, and monetary socialism directed at the banks and wealthy have not been the friend of anyone besides the privileged and politically entrenched it is meant to support. Sadly, the US seems to be constantly going this way and I'm not hopeful Trump will reverse this. Sadly, the camel that may break even the US' back is protectionism which shuts down the global economy bringing malaise to the globe just like it did in the great Depression.

You'd think we'd learn from others, like Japan, but apparently we don't. And you'd think we'd learn from history, but apparently our leaders prefer to stay blind and make up convenient lies than deal with reality.