GDP growth hits a speed bump - Macleans.ca
 

GDP growth hits a speed bump

Canadian economy grew at a slower-than-expected pace in second quarter


 

Canada’s economic growth slowed in the second quarter due to reduced household spending and an uptick in the country’s trade deficit. Statistics Canada announced Tuesday that GDP growth had slowed to two per cent from the 5.8 per cent growth registered in the first quarter. The lower-than-expected growth figures—analysts predicted Canada’s GDP would grow at a 2.5 per cent clip—is expected to ease the pressure on Bank of Canada Governor Mark Carney to raise interest rates. “Momentum in growth has waned,” Derek Holt, an economist at Bank of Nova Scotia’s Scotia Capital unit told Bloomberg, “but the report still signals a domestic economy that is in fairly good shape.”

Bloomberg


 
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GDP growth hits a speed bump

  1. When economists look back at our so-called 2010 economic "recovery", they will find that, in fact, it was not "W" shaped, rather, it more closely resembles a flat-bottomed "U" with the width of the bottom being undetermined at this time. We need to remember that while the stock market has retraced some of its losses, it is NOT the economy.

    One need look no further than moribund employment growth in both Canada and the United States to see that little meaningful growth has taken place. As well, real estate issues in certain parts of the United States grow worse as time progresses; cities such as Detroit, where manufacturing has been decimated, are seeing house prices that have reached near Depression levels.

    To read more about Detroit real estate, see:

    http://viableopposition.blogspot.com/2010/08/100-

    • While everyone will agree the economies of Canada and the US are strongly linked, I think it's about time we accept the fact that just because the States is still getting hammered, doesn't mean we are too. I think most data points clearly show we are outperforming their economy in almost every meaningful way during the past several months (upwards of a year?).

      • 2 is greater than 1, but neither are really high numbers.

        Along those lines, we're outperforming the US, but that still doesn't put us in a good situation. Our unemployment is lower, but still not at a healthy place. Our budget deficits are more manageable, but when you factor in provincial and municipal debts, they're not that much more manageable. Our economy is growing at a greater rate, but only by fractions of a percent, and 2.5% is still too low to bring down employment much further if it keeps at that pace. And while the US housing market is still suffering, it's out of bubble territory, whereas our's is still dangerously close.

        This slowdown of our GDP growth is unfortunate, but entirely expected. It'll be interesting to see the revision of these numbers that typically comes out a few months later – the US figures got revised down from mid-2% to mid-1%, so hopefully our's doesn't as well.

        The one thing Canada's done better is in easing the human suffering and societal costs. We're not turning off street lights to save on electricity, we're not selling state capital buildings for extra cash, we're not shutting down libraries, we're not cutting back school hours or grinding up paved roads into gravel, all of which have occurred in the US. Most importantly, people who lose their jobs still have health care, preventing downward spirals of health and money that so many in the US are facing.

        Economically speaking, however, we're far from being out of the woods yet.