No Holiday Break From Bad Economic News

(Eric Beauchesne — Canwest News Service)

The bad economic news is not ready to take a holiday break, with an expected “ugly” report this coming week on growth in the economy, measured as gross domestic product, and further news of falling incomes and spending by consumers in Canada’s largest export market, the U.S.

“In Canada, October GDP will be the only major economic news . . . and it’s going to be ugly,” warned Avery Shenfeld, an economist at CIBC World Markets. It projects the economy contracted by 0.4 per cent during the during the first month of the final quarter of the year, which is projected to have been the start of the recession here.

And it’s going to get uglier.

“The fourth quarter was stumbling on its very first step, and the worst is yet to come,” Shenfeld said. “Shutdowns in major auto plants, layoffs in other sectors and a slowdown in home building will see the quarter end with a thud.”

Don’t expect any growth for some time to come, he warned.

“Indeed, it’s hard to see any growth in the Canadian economy until fiscal and monetary stimulus start to have some effect in the second half of 2009,” Shenfeld said.

The news from south of the border, where the recession began a year ago, will also continue to send chills through Canadian exporters, according to TD Securities analyst Millan Mulraine. Read more here.