Canada's economy is shrinking — here's what's going on (GGT)

[GennGreymane]

http://www.businessinsider.com/canada-recession-2015-7

Canada's in rough shape.

The country's statistics agency released GDP data on Friday that showed the Canadian economy shrank by 0.2% in May.

That's worse than expectations of 0.0% growth, and it's the fifth consecutive month the economy contracted.

Weighing on the economy were the manufacturing and mining, oil, and gas extraction sectors. Wholesale trade was also down.

Manufacturing output contracted 1.7% in May to its lowest level in a year, following no growth in April, according to the report. Mining, quarrying, and oil and gas extraction fell 0.7%, down for the seventh consecutive month.

The oil crash and a smoked loonie
The drop in oil prices that began more than a year ago has been hard on the net oil-exporting nation.

Oil services companies like Schlumberger are now cutting jobs, and Alberta, Canada's main oil-producing province, saw its unemployment rate jump from 5.5% to 5.8% in May.

It looks like the effect of falling commodities prices on the Canadian economy is not going to let up anytime soon. That's according to a note from BNP Paribas' Derek Lindsey.

The Bank of Canada cut interest rates last month, and now it's likely to continue easing, Lindsey noted.

Bank of Canada governor Stephen Poloz has yet to use the word "recession," preferring to describe the economic situation as a "complex and significant adjustment."

The Canadian dollar — aka the loonie — is weak. Here's what's happened with the currency over the past year:
CAD
Yahoo! Finance
The Canadian dollar, aka the loonie, is weak.

One bubbly bright spot
Not all economic sectors contracted in May. Construction was up slightly, and Canadians continued to spend money on their homes. An increase in retail trade was driven by spending on building material, garden equipment, and supplies, according to the report.

Meanwhile, housing markets in Toronto and Vancouver are still super hot. Canadian home prices did not drop nearly as much as home prices in the US during the housing-market crash, and they've soared ever since.

Canada GDP
Statistics Canada
Real gross domestic product in Canada fell in May.

In Toronto, home prices are reportedly 42% higher than they were in 2008. Homes in Vancouver are the second most expensive in the world.

Economist Robert Shiller suggested back in 2012 that Canada could experience a slow-motion version of the US housing bust.

According to BNP’s Lindsey, "investment and exports remain in contractionary territory and the economy remains vulnerable to a correction in housing and a pull-back in spending due to high levels of household debt."

Looking forward
So what's to come for Canada? The country is due for a general election this year.

Prime Minister Stephen Harper and his Conservative Party have been in power since 2006, and have consistently campaigned on the economy. He's expected to formally launch his campaign as early as Sunday.

A strong economic record leading up to and after the financial crisis meant political success for the fiscally conservative party. Overall, the recession was much less painful in Canada than in the US.


Now things could change for Harper's conservatives. After nine and a half years of Conservative Party leadership, it's hard to gauge what economic policies rival parties would pursue.

A statement on the Liberal Party website reads: "The world has changed in the last 10 years ... Now and in the future, the path to economic growth and good middle class jobs is through strong environmental policy."

The New Democratic Party, the official opposition party in parliament, recently released "5 signs that Stephen Harper's economic plan just isn't working." No alternative solutions were offered.

The upcoming election, expected to be held in mid-October, will be worth watching.

[Endus]

I wouldn't say "in rough shape". Our economy isn't collapsing due to overbearing debt, or something.

But yes; the Conservatives have pretty consistently failed to deliver on the economic gains they keep promising, and the election is shaping up to potentially kick them out completely as either the government or the official opposition, at this rate.

Also, before anyone posts polls; Canadians have a long and storied history of just straight-up lying to pollsters. No polls were predicting the NDP landslide in Alberta, last provincial election, for this reason.

[minteK917]

Its a pretty simple concept, the Conservative party bet everything on oil in the last decade and lost. Alberta was so rich it removed its provincial taxes and now they are in poop. Ontario and Quebec were laughed at with their huge taxes and deficit and now they will once again carry the load of the country. A new government will need to restructure a strategy in which more then one field gets rewarded. The last government cutting all fundings to stuff like entertainment industries, art, tourism. Things that makes big city hubbs in other provinces then Alberta money. If you put all your eggs into the same bag, it gets destroyed. Harper was pretty much just a bush wannabe all his career, the result of his policies just reflect that now.

[Jotaux]

Also, before anyone posts polls; Canadians have a long and storied history of just straight-up lying to pollsters. No polls were predicting the NDP landslide in Alberta, last provincial election, for this reason.

I had no idea we did that. Is it just to screw with a party we don't like?

[Independent voter]

It's all about oil. Canada needs to diversify it's economy more if it can. But then again oil might become expensive again one day. Russia is in the same boat.

[GennGreymane]

It's all about oil. Canada needs to diversify it's economy more if it can. But then again oil might become expensive again one day. Russia is in the same boat.

Iran deal and the Opec fuck up may make that a long wait.

[Deleted]

I had no idea we did that. Is it just to screw with a party we don't like?

Usually a combination of reasons polls can be misinformed:

a) There's a popular party that you don't feel comfortable telling other people you support due to it's reputation or the reputation of it's supporters
b) A lot of people polled don't actually vote, certain demographics are disproportionately less likely to vote than others (and parties often have clear core demographics)
c) Many people change their opinion literally last minute when they vote - entrance and exit polls can often be ludicrously different to each other because the person changed their mind in the damn booth
d) Incumbent parties generally get under-represented in polls compared to actual results

[GennGreymane]

Usually a combination of reasons polls can be misinformed:

a) There's a popular party that you don't feel comfortable telling other people you support due to it's reputation or the reputation of it's supporters
b) A lot of people polled don't actually vote, certain demographics are disproportionately less likely to vote than others (and parties often have clear core demographics)
c) Many people change their opinion literally last minute when they vote - entrance and exit polls can often be ludicrously different to each other because the person changed their mind in the damn booth
d) Incumbent parties generally get under-represented in polls compared to actual results

This is true everywhere and I am glad someone said it

still waiting for Hilary V Guliani 2008

[Forgettable]

Also, before anyone posts polls; Canadians have a long and storied history of just straight-up lying to pollsters. No polls were predicting the NDP landslide in Alberta, last provincial election, for this reason.

Really? Most of the polls I saw had the NDP on top. I recall poll figures close to 34% NDP, 30% PC and 20% Wildrose (with smatterings of the other parties). Not exactly a landslide, but almost everyone I knew (except my mother and some super conservative friends) swapped from voting PC to NDP.

As for the federal election this year... Whoever says they'll get rid of bill C-51 will be getting my vote.

[Gheld]

I think also... when you think about it,

With the oil price crash... naturally the wholesale price of gasoline has also crashed, meaning that prices should go down at the pump, and they did at the onset of the crash, and then they realized they could just keep creeping the price up regardless of what the wholesale price of gasoline has done... So now we're back up to 2014 gasoline prices, so while the drop in the oil price was initially met with Canadian consumers having extra money in their pocket to place elsewhere in the economy they now no longer have that, in addition to the gigantic loss of oil revenues.

Obviously some fat cat executives are now pocketing that money and shuttling it to offshore bank accounts while the little guy gets fucked. They always find a way to turn their problem into our problem (as evidenced with the 2008 economic disaster, which was originally bad for the fat cats, but then ravenous lobbyists convinced enough idiots that trillions of dollars in tax payers money should be funneled over to the idiots that caused the crisis to begin with)

An election isn't going to fix it, not permanently anyways.

What really needs to happen is every politician and every billionaire on the planet should be rounded up and shot. And then ask for volunteers to replace them, and then shoot the volunteers.

[Masark]

No polls were predicting the NDP landslide in Alberta, last provincial election, for this reason.

threehundredeight's projection was looking at the possibility of an NDP majority as far back as the 1st. Their polling numbers rose throughout the campaign. If people were lying to the pollsters, they gradually stopped lying for some reason.



Also, their end projection was pretty close. They overestimated WR and AL, underestimated the PCs, and were considerably off on the vote count for the NDP, but were almost right on on the seat count.

[Yvaelle]

What really needs to happen is every politician and every billionaire on the planet should be rounded up and shot. And then ask for volunteers to replace them, and then shoot the volunteers.

I feel like that's a tad extreme.

I propose non-fatal shootings - just so they know not to be jerks

[Deleted]

How can the economy of one american state shrink? Shoulnd the entire economy of the continent of america shrink also then?

[GennGreymane]

How can the economy of one american state shrink? Shoulnd the entire economy of the continent of america shrink also then?

I see what you did there