Monday, July 12, 2010

U.S. Double Dip Recession Would Have Negative Impact on Canada

(Journal of Commerce – John Clinkard, CanaData)

A number of recent developments in the U.S. and globally have raised the spectre that after expanding for three consecutive quarters, the American economy may have a relapse and experience a second period of economic contraction. If the U.S. were to experience a double-dip recession, it would doubtless have a significant, negative impact on Canada, given the strong trade links between the two countries.

Recent indicators of consumer spending in the U.S., including employment and retail sales, have been disappointing, as have mortgage applications for new homes, which have dropped by 40% since the end of April.

From an international perspective, the Baltic Dry Index – which measures the global demand for global shipping capacity versus the supply of dry bulk shipping – exhibited a significant decline late in May, suggesting that the global recovery may be losing steam. Read more here.