Our Canadian economy is in distress and I am not quite sure we know how to fix the problem...except and of course: Ride it out!
A report just a couple of days ago from the TD Bank was quite clear: "Households have been spending almost like drunken sailors over the past couple of years, which provided critical support to the economy when the export-oriented manufacturing sector has been suffering under the weight of a strong currency and falling U.S. demand". As one wag put it: "After spending like drunken sailors, we'd better be prepared for the hangover!"
Pretty much as expected the preliminary second quarter annual estimates out on June 30 showed that Canada's two biggest economies, Ontario and Quebec, shrank for the second quarter in a row. In every one's book that spells "Recession", but since nothing appears black and white anymore the provinces retort...Er, well yes, ahem maybe, no not exactly. As Ontario's minister of Finance Dwight Duncan tried to explain, our manufacturing sector is in trouble, but employment is up, other sectors of the economy are doing well. Have no fear.
If it isn't "black and white" for the politicians it's pretty damn clear for Ontario's economic engine: The automobile industry. Thousands of jobs in southwestern Ontario were unceremoniously dumped just this week when an auto parts manufacturer shut-down its eleven plants. And, over at General Motors talk of bankruptcy protection swept Wall Street just before the break for the American July 4th Holiday. Long gone are the days of that old chestnut about the Israeli officer who promised to conquer the world with just 3 American generals: General Motors, General Electric and General Dynamics!
There's no avoiding it: In Canada, in June, General Motors crashed. Sales dropped 24% and over at Ford 14%. Meantime from all appearances Canadians are over on the other side of the border helping save the American auto industry. Since January, 152,000 cars have been imported by Canadian consumers tired of paying premium prices in our own country. The North American Automobile Trade Association says that is an all time record, and twice as many cars as in 2007.
It may not be taken too seriously yet by Alberta's and Saskatchewan's overheated energy export sector, but perhaps there is also cause for concern to their economic well being. It seems that south of the border America's addiction to oil is weakening. The American Petroleum Institute reports that in May, total petroleum imports into the USA fell 12% from last year...The lowest May level since 2002. The month of May includes America's traditional "take to the roads 'Memorial Day' Weekend". But, with gasoline at more than $4.00 a gallon demand has weakened as Americans are using less gasoline voluntarily; by driving less, buying more fuel-efficient cars and using mass transit.
Midway through the last century; growing-up in 1950's New Brunswick, I remember my grand parents, then my parents fearing the end of time. Back then of course it was the Cold War and nuclear annihilation. We managed to survive. I am starting to "speak old" myself and I fear our economic annihilation. Woe is me!