Today’s release of first quarter GDP numbers shows a minus sign: Real gross domestic product (GDP) edged down 0.1% in the first quarter of 2008, its first quarterly decline since the second quarter of 2003. The economy, which had started to lose momentum in the second half of 2007 as exports declined, stalled in the first quarter due to widespread cutbacks in manufacturing, most notably […]
Read moreHere’s a nice piece by John Stapleton published by the CCPA – pointing out that most past downturns have seen improvements to social programs, rather than the cuts imposed last time around in the late 80s early 90s. Â http://www.policyalternatives.ca/documents/Ontario_Office_Pubs/2008/Last_Recession_Spook.pdf
Read moreIn BC, with a Thone Speech next week and the provincial budget the week after, the speculation has been around what additional measures might be announced in relation to BC’s commitment to a one-third reduction in greenhouse gas emissions by 2020 (relative to 2007 levels) and 80% by 2050. A carbon tax figures among that speculation. Today, just in time […]
Read moreGiven the storm clouds on the horizon, and the prospect of a slowdown/recession, one of the more interesting aspects of fiscal policy has to do with automatic stabilizers. As the economy turns, revenues will fall and expenditures on income support will naturally increase, driving the budget towards deficit and thereby propping up demand just as it is needed. The question […]
Read moreWith the recent turmoil in the markets, and the words “slowdown” and “recession” all over the news, the biggest danger is that it becomes a self-fulfilling prophesy. Consumers slow spending based on concerns about what comes next, and businesses put the brakes on new investments based on perceived soft demand. This could drive the economy into recession, and given the […]
Read moreWith outright panic sweeping global financial markets, the relative calm among Canadian economic policy-makers seems increasingly strange.  Today’s timid quarter point interest rate cut by the Bank of Canada was hugely eclipsed by the US Federal Reserve’s three quarter point cut, rushed out the door to try and soothe the savage beast known as Wall Street just before the much […]
Read moreWith a weakening US economy that may well spill over into Canada, it is time to start thinking about fiscal policy responses should recession rear its ugly head. To date much of the focus has been on monetary policy, with calls for central banks to lower interest rates. This is providing some relief, but as many economists have pointed out, […]
Read moreWake up to the dangers of a deepening crisis By Lawrence Summers Published: November 25 2007 18:51 | Last updated: November 25 2007 18:51 (From Financial Times) http://www.ft.com/cms/s/0/b56079a8-9b71-11dc-8aad-0000779fd2ac.html?nclick_check=1 Three months ago it was reasonable to expect that the subprime credit crisis would be a financially significant event but not one that would threaten the overall pattern of economic growth. This […]
Read moreNouriel Roubini – professor at NYU and noted blogger on the global economy – tends to the gloomy but is now seriously worried about where we are headed. With the Economist now out with a front page story on the likelihood of a serious US recession, his views seem to be entering the mainstream. http://www.rgemonitor.com/blog/roubini With the Recession […]
Read moreSome good points in this piece. I just love Baird’s argument that “275,000 Canadians would lose their jobs, gasoline prices would jump 60 per cent and natural gas prices would double.” Sounds like just what has happened over the past couple of years as the result of the oil boom. Did 250,000 manufacturing workers lose their jobs because of […]
Read moreThe framing of the Kyoto Accord by the Harper government, that is. I suppose this is progress for Harper, who had essentially dismissed climate change a year ago, but as the polls moved he has had to follow. I’m not as pessimistic about the economic fall-out if we are creative in developing just transition strategies for affected workers and are […]
Read moreCompare and contrast. First, the “soft landing” view, from Carlos Leitao, Chief Economist of The Laurentian Bank, as quoted in the Globe and Mail: [T]he Canadian economy is in the midst of â€a significant slowdown that we still think should be relatively short-lived. Nevertheless, the downside risks are important and far outweigh upside risks.†[T]he U.S. economy â€has proven to […]
Read morePaul Krugman is in the bears’ camp for 2007 (thanks to Economist’s View for posting NYT Select content): Economic Storm Signals … Before I explain what the bond market is telling us, let’s talk about why the economy may be at a turning point. Between mid-2003 and mid-2006, economic growth in the United States was fueled mainly by a huge […]
Read moreIn the current political environment, a government running a deficit is bad bad bad. We have reverted to ideas that dominated economic thought in the 1930s – that budgets should always be balanced. This sentiment is reflected in modern budgeting practices that add contingency reserves and fiscal cushions to already lowballed estimates of revenues, so that even if the economy […]
Read moreDean Baker looks back to 2001 for a reality check (note: Canada, unlike the US, did not technically have a recession in 2001) about the reliability of most forecasters: Virtually all economists missed the 2001 recession, in most cases not even predicting it until it was almost over. The main reason was that the recession did not follow the usual […]
Read moreNouriel Roubini in recent posts has provided some of the best economic analysis of the housing bubble and debunking of the spin from optimists. Full posts are here and here. Analysis is focused on what is happening in the US. In Canada, we appear to be lagging developments south of the border. What is scary is how quickly the US […]
Read moreThat sinking feeling is coming on. The US economy is slowing and several well-respected economists have made their call. Leading off, Paul Krugman: The key point is that the forces that caused a recession five years ago never went away. Business spending hasn’t really recovered from the slump it went into after the technology bubble burst… Also, the trade deficit […]
Read moreAre we headed towards a recession in 2007? Housing markets have begun to turn, interest rates are back where they were pre-9/11 and oil is near $80 a barrel. Nouriel Roubini puts the risk of a US recession at 50% for 2007. I like this approach – no one can predict the future so we must think ahead in terms […]
Read moreUCLA's Edward Leamer sees a slowdown for the US in 2006, as the real estate party comes to an end. He sets the context well: The discovery of the Internet set off a mad dash for the Web, and that powered the U.S. economy forward at breakneck speed from 1997 to 2000. Every business in America had to have a […]
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