Economy Showing Signs That Worst Is Already Past: Economists

(The Canadian Press)

The loonie once again worth about the same as the U.S. greenback, employment, exports and consumer spending continuing strong – what is happening to Canada’s year of economic discontent?

Just as the Canadian and U.S. economies were expected to be at their gloomiest – falling into negative numbers or close to it in the second quarter – some economists are entertaining the notion that the worst may already be in the past.

“What’s with the doom and gloom in Canada lately?” asked BMO deputy chief economist Doug Porter this week in a list of 10 reasons to feel good about the economy.

Among the categories – strong income growth and employment, no real credit crunch, rising equity prices, a surprising trade surplus and a healthy housing market.

“We know that bad news sells, but this is ridiculous,” Porter said of the hand-wringing in face of the positives.

Even in the U.S. – which is the real threat to the Canadian economy in terms of falling exports – the news has not been as uniformly bad as most economists had been forecasting for months, and the talk that the U.S. had already dipped into recession has not been supported by the numbers.

Growth in the U.S. has been tepid at best at 0.6% the past two quarters, but it has remained above the line. And while many had pointed to the second quarter as the time the American economy would cross the line, the early numbers are at best mixed.

This week saw another “surprise” when the U.S. Commerce Department reported retail sales had actually risen 0.2% in April, or 0.5% if auto sales are excluded. Read the complete article.