Recession
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This would be more scary - if persistent and long, if oil price stays low ( sub$50) for a long time.
DEFLATION!
I still highly doubt the US is headed for recession this year, but it's looking more and more like Canada is. If anything, it'll be the U.S. following us into recession, not the other way around as predicted. But it's also quite possible the U.S. can stave off recession even if we in the north do enter one. This is my hope.
I'm not going to lie, a strong U.S. and weak Canada helps myself and my company out big time, seeing as I mainly sell to the States, and most of those transactions are in USD. Most of my personal investments are also in the States, which means I've gotten a boost of 15% recently just from the dollar disparity! Anyone else in the same boat, hoping for a strong U.S. and somewhat depressed Canada in the short term?
I'm not going to lie, a strong U.S. and weak Canada helps myself and my company out big time, seeing as I mainly sell to the States, and most of those transactions are in USD. Most of my personal investments are also in the States, which means I've gotten a boost of 15% recently just from the dollar disparity! Anyone else in the same boat, hoping for a strong U.S. and somewhat depressed Canada in the short term?
Matt Barasch of RBC spoke at an event I attended. He said the U.S. only exports about 10%. Energy sector jobs are only 4% of the employed. There are job creations in the U.S. Low energy costs are good. The rest of the world is not doing great, meaning imports will be cheap.
In a nut shell, he said no recession. Canada will grow but slower. Manufacturing may regain, but not as fast as in the U.S.
http://www.montrealgazette.com/busi...les+dropped+cent+December/10829304/story.html
OTTAWA - Statistics Canada says retail sales fell 2.0 per cent to $42.1 billion in December, the largest one-month drop since April 2010.
Economists had expected a drop of 0.4 per cent compared with November, according to Thomson Reuters.
The drop in sales came as sales at gasoline stations fell 7.4 per cent in December due to lower gas prices.
Sales at new car dealers were down one per cent as the category accounted for most of the decrease at motor vehicle and parts dealers.
Excluding motor vehicle and parts dealers, sales were down 2.3 per cent.
The largest increase in dollar terms came from a 1.0 per cent increase at food and beverage stores due to higher sales at beer, wine and liquor stores, specialty food stores and convenience stores.
Sales were down in nine of 11 subsectors, representing 71 per cent of retail trade. Sales were also down in every province.
OTTAWA - Statistics Canada says retail sales fell 2.0 per cent to $42.1 billion in December, the largest one-month drop since April 2010.
Economists had expected a drop of 0.4 per cent compared with November, according to Thomson Reuters.
The drop in sales came as sales at gasoline stations fell 7.4 per cent in December due to lower gas prices.
Sales at new car dealers were down one per cent as the category accounted for most of the decrease at motor vehicle and parts dealers.
Excluding motor vehicle and parts dealers, sales were down 2.3 per cent.
The largest increase in dollar terms came from a 1.0 per cent increase at food and beverage stores due to higher sales at beer, wine and liquor stores, specialty food stores and convenience stores.
Sales were down in nine of 11 subsectors, representing 71 per cent of retail trade. Sales were also down in every province.
The article wasn't completely doom and gloom.
The Bank of Canada has argued that the impact of the oil shock on Canada’s economy appears to be “front-loaded” – with the damage across the economy surfacing sooner than many experts had initially anticipated, beginning late last year. The implication is that the economy may have taken the brunt of the damage early in the year, and could emerge with stronger growth in the coming months.
The Bank of Canada has argued that the impact of the oil shock on Canada’s economy appears to be “front-loaded” – with the damage across the economy surfacing sooner than many experts had initially anticipated, beginning late last year. The implication is that the economy may have taken the brunt of the damage early in the year, and could emerge with stronger growth in the coming months.
Canada economy has worst contraction in six years in first quarter
http://ca.reuters.com/article/businessNews/idCAKBN0OE1H620150529
OTTAWA (Reuters) - Canada's economy suffered its biggest contraction in nearly six years in the first quarter with business investment and exports both falling as the country grappled with a steep decline in oil prices, Statistics Canada said on Friday.
The 0.6 percent annualized drop in gross domestic product was unexpected with market players forecasting growth of 0.3 percent. The decline also marked a significant slowdown from the fourth quarter's downwardly revised 2.2 percent growth.
The economy's performance was its worst since the second quarter of 2009.
The Bank of Canada had forecast no growth in the quarter, though it said performance was likely to be "atrocious" as oil-exporting Canada felt the pain of cheaper crude prices.
"It's a pretty clear disappointment," said David Tulk, chief Canada macro strategist at TD Securities.
Economists pointed to a 0.2 percent economic contraction in March as a bigger concern as it may bode poorly for the second quarter.
"It does highlight the underlying weakness of the economy and just reinforces the impression that growth is going to struggle through the rest of the year," said Doug Porter, chief economist at BMO Capital Markets.
The Canadian dollar weakened immediately after the report. Investors were also taking in separate data that showed U.S. growth was revised down to show a contraction of 0.7 percent in the first quarter.
...
http://ca.reuters.com/article/businessNews/idCAKBN0OE1H620150529
OTTAWA (Reuters) - Canada's economy suffered its biggest contraction in nearly six years in the first quarter with business investment and exports both falling as the country grappled with a steep decline in oil prices, Statistics Canada said on Friday.
The 0.6 percent annualized drop in gross domestic product was unexpected with market players forecasting growth of 0.3 percent. The decline also marked a significant slowdown from the fourth quarter's downwardly revised 2.2 percent growth.
The economy's performance was its worst since the second quarter of 2009.
The Bank of Canada had forecast no growth in the quarter, though it said performance was likely to be "atrocious" as oil-exporting Canada felt the pain of cheaper crude prices.
"It's a pretty clear disappointment," said David Tulk, chief Canada macro strategist at TD Securities.
Economists pointed to a 0.2 percent economic contraction in March as a bigger concern as it may bode poorly for the second quarter.
"It does highlight the underlying weakness of the economy and just reinforces the impression that growth is going to struggle through the rest of the year," said Doug Porter, chief economist at BMO Capital Markets.
The Canadian dollar weakened immediately after the report. Investors were also taking in separate data that showed U.S. growth was revised down to show a contraction of 0.7 percent in the first quarter.
...
The Canadian economy is down .6% this quarter.
It will be the start of a recession unless oil prices rebound.
It will be the start of a recession unless oil prices rebound.
They bounced. I'm not sure I'd call it a proper rebound yet. Getting killed today.
Meh... stocks will rebound - they always do. Now is the perfect time to invest! Remember when the TSX and the Dow were between 7000 and 8000 back in 2008? Anyone who put a decent amount of money in then made a killing. What can I say? I'm always optimistic about money! 
That's exactly the point though: the correction is based more on global pressures than on U.S. performance. We've been facing headwinds globally for years, first and continuing with Europe, including the Russian implosion, and more recently with China.
The U.S. has had five straight quarters of growth, with only one of the last seventeen quarters being negative. For your original prediction to be correct, the U.S. would have posted negative growth in the two first quarters of this year, which it didn't. Even if they do enter recession, it won't be until first quarter 2016. Possible, but I doubt it'll happen that soon. I'm still thinking 2017.
Maybe I am off by a quarter or two in how quickly the contagion spreads, but the fundamentals are right. It was obvious that the changes in the global economy resulting from/in oil price drops would force a broad economic restructuring.
Certainly it will rebound and certainly this is a classic correction where resources have been invested in the wrong things. This isn't the end of the world.
But it will hurt, and the stock market drop will be followed by widespread job losses as the new economics result in write offs. Business plans will be chucked out because they were based on false assumptions and it will take awhile for investors to find better opportunities.
Certainly it will rebound and certainly this is a classic correction where resources have been invested in the wrong things. This isn't the end of the world.
But it will hurt, and the stock market drop will be followed by widespread job losses as the new economics result in write offs. Business plans will be chucked out because they were based on false assumptions and it will take awhile for investors to find better opportunities.
That certainly seems plausible, but if one stays the course and continues to invest, they may reap the benefits of dollar cost averaging and likely do quite well over the long term - assuming of course, a long time horizon.
