Here's a small sample of the bad news from a single edition of one newspaper last week: Value of mergers and acquisitions drops sharply; Canadian new-home prices fall for second straight month; Tourism spending down in Canada; Business sentiment at record low, says Bank of Canada.
The prevailing thinking was nicely captured in the question one national newspaper put to a series of business leaders a couple of weeks back: Have you ever seen the economy in worse shape?
Excuse me for being contrarian, but the Canadian economy has been through much worse and you don't have to go back to the Great Depression of the 1930s to find evidence of that.
Rewind the tape to 1981-82.
Canadians were paying 15 to 20 percent interest on borrowed money. The unemployment rate was more than 10 percent and inflation was hovering at or above the double-digit mark. The misery index - something economists calculate by adding the rates of inflation and unemployment - hit 25 percent. Today, it is less than 10 per cent.
Economists are united in their belief that Canada has followed the U.S. into recession. What distinguishes this downturn from others is its sudden and spectacular onset last fall.
It was triggered by the sub-prime mortgage crisis south of the border, the collapse of several huge Wall Street investment banks and the accompanying panic that drove investors from equity markets around the world. Global stock market indices plummeted 34 percent in the fourth quarter of 2008 while the TSX fell 39 percent.
Canada's unemployment rate jumped from six percent to 6.6 with the job losses of November and December. That is undoubtedly a sharp rise, but it needs to be put in perspective. "The level of unemployment relative to the last 10 years is still quite good," notes Dale Orr, chief economist and managing director of IHS Global Insight in Toronto. "In the early '90s it was up to 11 percent and the average for the past 10 years was 7.3 percent."
Canada's bank economists, a generally sober and prudent lot, are predicting that this country will remain in recession for the first three quarters of this year and then begin to expand, albeit slowly. They are also forecasting that the economy will be in growth mode again next year.
Orr says the unemployment rate will likely hit eight percent by yearend or early in 2010 while Royal Bank economists think the jobless number will peak at 7.4 percent next year.
Those are national averages, which conceal the fact that some parts of the country will be hit harder than others.
"Ontario and Quebec have the weakest economies and the most rapidly rising unemployment rates," says Orr. "Alberta is cooling off from a level that was really crazy. Employers couldn't find people to work there."
Demand for new and existing homes is also tapering off. Canada Mortgage and Housing Corp. predicts that housing starts will fall to 177,975 this year, a drop of 16.1 percent from 212,200 last year. Likewise, sales of existing homes will slump 4.2 percent to 433,375 from 452,225 in 2008.
But these declines should be seen as a necessary and healthy correction in the market rather than a catastrophe.
Housing starts in 2008 exceeded 200,000 units for the seventh consecutive year, the first time that has occurred since the 1970s. As well, demand has exceeded supply since 2002, creating a seller's market in which prices increased from nine percent to 11 percent annually.
Housing prices were down 10 percent in October from a year earlier - bad news for aging Boomers hoping to cash in, but a good thing for first-time buyers.
These turbulent times are producing a couple of other dividends that will benefit the average person.
Energy prices have taken a nosedive since peaking in mid-2008 and, according to the Royal Bank, the rate of inflation is expected to hover between 0.5 percent and two percent this year, down from 3.5 to 5.5 percent last summer.
This year may yet turn out to be a disaster economically.
Or it may be a mere dog's breakfast. So far, the signs are anything but clear.
You'd never know that though when you open a newspaper, turn on the TV news or listen to the political opposition in Ottawa.
(D'Arcy Jenish can be reached at jenish@businessedge.ca)
