Sunday, December 7, 2008

Short and Mild?

Private sector and Bank of Canada forecasts imply that the Canadian economy will experience a brief and mild recession, spanning perhaps the fourth quarter of 2008 to the first or second quarter of 2009. How do these forecasts compare with past recessions? Check out this graph from the Parliamentary Budget Office:

Is it likely that a Canadian recession will be only slightly worse than the 2001 slowdown given a protracted and painful recession in the economy of its largest trading partner? I'll call it now - Bay Street will be revising its forecasts substantially downward in the next couple of months.


Andrew said...

RSS'd! Keep it up.

Shock Minus Control said...

Thanks - i'll do my best.

EclectEcon said...

I'm sure you're right. (1) I don't see how the US can avoid a serious recession, and (2) given that, I don't see how Canada's recession can be as mild as this graph indicates.

Anonymous said...

Indeed, those projections look to be a bit on the rosy side. But Canada's prospects are much better than those of the USA. This is one time we can be glad of our staid, boring, risk-averse bankers. It is highly doubtful that things will get bad enough in Canada to warrant any kind of bailout. The auto industry will get all the buoyancy it needs by riding the coattails of the American bailout, and the rest of the country doesn't need any help... for now, at least. At this point, any industry holding out its hand is just greedy, not needy.

All the more reason to send those thieving three stooges packing!

All ahead dead slow, Mr. Harper! Steady as she goes!

ramster said...

Anonymous: The kudos for our staid, risk averse bankers are somewhat misplaced. IIRC, Canadian bankers chafed against the restrictions placed on them by the government, particularly pertaining to mergers. I recall that they claimed that rules against mergers prevented them from achieving the kind of scale that would allow them to compete globally. I suspect that if they had been allowed to merge, things would be much less rosy here. Given that those rules were enforced by the Chretien government, it's a bit rich to count on Harper's steady hand now. I don't know his position on bank mergers back then but when recently asked about it, he stated:

"The question of improving our regulation isn't a question of bank mergers one way or another."

That quote is from Nov. 14 (google bloomberg) He can't even bring himself to acknowledge that preventing the banks from getting too big was important (let alone critical). His ideological blinkers prevent him from recognizing what led the world into this mess and his default approach of fiscal rectitude works great if you're a household but is the worst possible option if you're a country. Steady as she goes indeed.