Is the recession almost over?

[mr.x]

Can the good economic news keep coming?


By Derek Abma, Financial Post
May 10, 2009

OTTAWA -- What more could come in the way of good economic news in the midst of a recession that has been compared to the Great Depression?

What could follow up this past week's occurrences such as Statistics Canada saying the economy added 36,000 jobs in April, the Toronto Stock Exchange's benchmark index getting back into plus-10,000 territory for the first time in half a year, and the heads of central banks in both Canada and the United States saying the recession will end in a matter of months?

Let's start with Canada's March trade numbers, due from Statistics Canada on Tuesday. Economists are expecting a second straight surplus for Canada.

There were trade deficits in December and January, which were the first of such since 1976. A few months ago, it seemed this might be the start of a long line of trade deficits.

But things seem to have changed. TD Securities economics strategist Millan Mulraine explained that Canada benefited from a demand in auto parts from the U.S. in February as a number of idled auto operations there were back in action.

Mulraine said rising commodity prices, particularly oil, have probably helped bring the trade surplus to about $500 million in March, up from $126 million in February.

"In the months ahead, if the rebound in commodity prices continues, we expect the merchandise trade surplus to improve even further, though additional deficits may only be a hair's breadth away," Mulraine wrote in a research note.

CIBC World Markets economist Krishen Rangasamy had the same outlook for the March trade numbers, citing a "stabilization of U.S. consumption" in recent months, along more favourable commodity prices.

Speaking of U.S. consumers, April retail numbers from south of the border are due Wednesday. TD's Mulraine is expecting a gain of 0.3 per cent for the month, saying that "the recent tone of consumer spending activity has been surprisingly positive as personal consumption expenditures added favourably in economic activity in Q1 after two consecutive quarterly drops."

Meny Grauman, another CIBC economist, is not so positive about U.S. retail, expecting a 0.4 per cent decline in the April numbers. He acknowledged that chain stores have been reporting decent numbers, but much of that is related to the timing of Easter, a factor that will be stripped out of the official government data.

On the other hand, most economists expect to see another monthly gain in manufacturing shipments from Canada for March, which would follow up on February's rise that broke a six-month streak of contractions. This data will be reported Friday.

After a 2.2 per cent gain for February, CIBC is forecasting a 1.5 per cent rise in manufacturing for March, while TD is calling for one per cent uptick.

"The key catalyst for the gains is likely to be auto-related shipments, while higher gasoline prices should also bolster shipments of petroleum and coal products," TD's Mulraine said.

And with the automotive industry undergoing a painful restructuring process, Statistics Canada on Wednesday will say how many new vehicles were sold in Canada in March. In February, there was a 2.2 per cent decline in monthly sales.

Statistics Canada will kick off the business week off on Monday with new-housing prices for March. In February, there was a monthly decline of 0.7 per cent.

In the U.S., April consumer-price numbers are due Friday. After a 0.4 per cent annualized decline in March, economists are expecting the lower-price trend to have continued into April.
© Copyright (c) Canwest News Service

http://www.vancouversun.com/business/fp/good+economic+news+keep+coming/1582269/story.html

[Yume-sama]

It's starting to improve because the media isn't spending every second of every day making a bigger deal about it than it is.

We have Swine Flu, now! Yay! Though I haven't heard about that in awhile, either...

Canada has done much better than nearly every other Country in the World, and we should be proud of that. The fundamentals of our economy are truly strong (cue John McCain).

[Kodii]

What recession?

:haha:

[CBeats]

What recession?

:haha:

Ugh, I definitely can't wonder like you can. I've spent weeks trying to find a summer job, and there aren't any available! It's crazy. Thinking back to the last few years where there were help wanted signs as far as the eye could see just makes me depressed.

But hopefully that will begin to change. ^^Apparently it already has.

[baggab]

36,000 jobs came almost entirely from self employed, which may or may not be good news as there isn't information of what type of jobs those are.

Speaking of U.S. consumers, April retail numbers from south of the border are due Wednesday. TD's Mulraine is expecting a gain of 0.3 per cent for the month, saying that "the recent tone of consumer spending activity has been surprisingly positive as personal consumption expenditures added favourably in economic activity in Q1 after two consecutive quarterly drops."

I guess that fact that the US lost 500,000 jobs last month doesn't matter...

Nonfarm payroll employment continued to decline in April (-539,000), and the unemployment rate rose from 8.5 to 8.9 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.

That was less than the amount lost the previous month, so it is slowing. They are still expecting a 10% unemployment rate sometime this year and that will affect Canada. Thou, I think it's optimistic and even when it recovers you're not going to see 500,000 jobs in increased employment, even in the boom years it was 100k increase in employment on a monthly basis. So, you're looking at a slow recovery.


It's true Canada is doing better than most other countries, but this is a Global economy and we'll get dragged down. I don't think we'll bottom until 2010 or 2011.

[mrjauk]

I was also going to post that the number is due entirely to an increase in self-employed. This data point could be the harbinger of better economic times ahead but, for many, many reasons, I remain skeptical. We're probably near a short-term high in the markets right now (I envision a gradual rise for about two or three more weeks), then we'll drift down over the summer.

I'll be putting my money where my mouth is and shorting the Russell 2000 and a couple of other indexes sometime in late May.

[By the way, I'm not a financial advisor, so take the above as the bulletin board blusterings of a moron and do not follow my advice. As always, when it comes to financial decisions, DYOD.]

As for the employment numbers, it'll be interesting to see next month's numbers to determine whether March's numbers were an anomaly.

[mrjauk]

Well, as far as the markets are concerned (and they are decidedly not the economy), we're in an area of great indecision. We're right on the verge of a potential inflection point, but it's hard to know which way it will go and how much signal-versus-noise there is in the typical end-of-month shenanigans. Next week should be interesting.

As far as the general economy is concerned, everything--unemployment, foreclosures, consumer spending, etc., etc., etc., keeps getting worse. Even the so-called good news is really bad news camoflouged. As an example, new orders for manufactured durable goods in the United States increased in April by 1.9%. Exclude defense spending, however, and orders in the rest of the economy actually decreased by 2%. Now, a job is a job, and a dollar of GDP is a dollar of GDP, but there will come a time when the US government will realize (or foreign bond investors will make the US govt realize) that it can not continue to spend more than half-a-trillion dollars annually on the military.

Conclusion: Fastern your seatbelts we're still in for a hell of a bumpy ride over the next few years.

P.S. Specific to Canada, we learn that the federal government has underestimated the extent of the budget deficit, and the BC government has come out and said the same thing. Whocouldanode?!?

http://www.theglobeandmail.com/news/national/cost-of-bailout-sheds-light-on-deficit/article1158751/

[Canadian Mind]

Any financer who screws up the deficit by that high of a percentage should be fired. the 35-ish billion we were expecting was supposed to be the worst case scenario.

[Stingray2004]

And some good positive stuff with BC's consumer confidence level jumping a whopping 22.2 points to 109.1 in January and, according to the Conference Board of Canada, the highest level in Canada:

Consumer Confidence Rose To Two-Year High In January

OTTAWA, Feb. 1 /CNW Telbec/ - The Index of Consumer Confidence rose 13.8 percentage points in January to a 23-month high, according to the Conference Board's Index of Consumer Confidence-January 2010.

"The index is over 40 points higher than it was one year ago. This suggests that Canadians are seeing a light at the end of the recession tunnel," said Pedro Antunes, Director, National and Provincial Forecast.

The Index of Consumer Confidence now stands at 96.6 (2002 = 100).

All five regions moved significantly higher, with the Western provinces leading the way:


- The index reached 109.1 in British Columbia, thanks to a 22.2 point
increase - the largest monthly gain ever recorded for the province;
- The Prairies increased 15.3 points to reach 106.8;
- The index in Atlantic Canada rose 13.6 points to 103;
- In Ontario, an increase of 12.3 points in January boosted confidence
in the province to 93.7, more than double its December 2008 level of
45.9; and
- Quebec's index rose 9.4 points, but confidence in the province is
significantly lower than it is in the rest of Canada.

http://www.newswire.ca/en/releases/archive/February2010/01/c5513.html