As I watched the news in recent weeks, I cannot fathom the glee on the faces of media anchors as they report a possible Canadian recession( a mild one at that). They obviously wish for the demise of the Harper government, but rarely provide explanations as to the real reasons for the economic slowdown. An uninformed Canadian electorate should really think hard before considering a change to the NDP or Liberal. Since the media is not being forthright, I will attempt to explain the real reasons behind the economic slowdown.
First, we have a collapse of the oil market as Arab producing countries strategically produce more and flood the market with cheaper oil. Their strategy is to make North American oil more expensive to extract and thus control the market. Since Canada, is a major producer we take a hit and the dollar loses value. As a result we pay more for imports, but in the long run may benefit for increase exports as our goods become cheaper. Furthermore, we may continue to see oil prices fall as Iran, thanks to Obama, will flood the market with more oil as all economic sanctions are removed.
Second, the U.S continues to see the slowest economic recovery in decades. Obama’s policies have done nothing to improve the economy. Instead unemployment although showing some improvements continues to be higher than expected. GDP is mired at around 2% -3.0% not enough to generate demand for goods and services, which could be provided by Canada. Slow growth around the world is also affecting the Chinese economy as its biggest customer Europe remains in economic doldrums..
Despite the fact that some banks have declared that Canada is bordering a ‘recession, there does not seem to be any real evidence as stated by the C. D. Howe Institute’s Business Cycle Council The council defines a recession as a pronounced, pervasive and persistent decline in aggregate economic activity. The fact is that Canada’s economy may have dipped but is not on the verge of a recession. This is pure politicking by Harper’s opponents who have seen an opening for their electoral campaign.
During the past years of the ‘long recession’ Canada has fared better than most of the G7 countries. We have been lucky that the Prime Minister is an economist and not an ideologue lawyer like Mulcair, or a neophyte politician like Justin Trudeau. The NDP and Liberals would love to see Canada in a recessionary state, so has to implement more Keynesian economic policies in order to tax and spend.
Canadians should be very careful in accepting what the media portrays without real evidence. Talk of a ‘recession’ can quickly become a self-fulfilling prophecy, which both Trudeau and Mulcair will promote as Harper’s economic blunder. Supporting the NDP and/or Liberals at the next election may in fact take Canada into a real economic downturn which may continue for years to come.
Beware of socialists bearing gifts.