Newspaper article The Canadian Press

Editorial Exchange: Prepare for Next Recession

Newspaper article The Canadian Press

Editorial Exchange: Prepare for Next Recession

Article excerpt

Editorial Exchange: Prepare for next recession

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An editorial from the Winnipeg Free Press, published June 13:

Stephen Poloz exuded a new confidence last week in his debut appearance as governor of the Bank of Canada before the Commons finance committee in Ottawa. Mr. Poloz became Canada's central bank chief on June 3, replacing Mark Carney who left to take over the running of the Bank of England.

Mr. Carney's discussions of economic conditions used to reflect the difficult times through which he had led the bank. Mr. Poloz recognized the damage suffered by Canadian industry and employment following the 2008 near-collapse of the U.S. banking system but he also described the stages by which Canada is already recovering.

"Just as the financial crisis triggered an atypical recession, the recovery cycle is unusual," Mr. Poloz said. "The rotation of demand will require more than just the ramping up of production. The sequence we can anticipate is the following: foreign demand will recover; our exports will strengthen further; confidence will improve; companies will invest to increase capacity; existing companies will expand and new ones will be created. In short, we need to see the reconstruction of Canada's economic potential, and a return to self-sustaining, self-generating growth. This sequence may already be underway."

Indeed it may. The following day, Canadian and U.S. statistical agencies produced their monthly employment reports for May. The U.S. report showed that total employment increased by 175,000 from April to May and the unemployment rate remained essentially unchanged at 7.6 per cent. From a high of 10 per cent in October 2009, the U.S. unemployment rate has declined by fits and starts to its present level. In Canada, employment rose by 95,000 in May and the unemployment rate dropped slightly to 7.1 per cent. Canada's unemployment rate has been declining little by little from its October 2009 peak of 8.7 per cent.

Economists have been struck by the slow pace of economic recovery and employment growth in Canada and the U. …

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