Wishful thinking usually dominates the financial pages, especially after an economic crash. So goes the coverage of the current ‘recovery’. It bears closer scrutiny.
Yes, in September, Canadian house sales jumped 17 per cent from a year ago. The Conference Board of Canada predicts the economy will grow 2.9 per cent next year, and up to 3.6 per cent in 2011. There’s just one catch. The gains are largely the result of government stimulus programmes — which governments are now rushing to reel in and curtail.
Looking to the south, auto sales in the United States plunged 10.4 per cent in September. Overall retails sales were down 1.5 per cent, the worst decline since retail sales fell 3.2 per cent last December. Factory sales in Canada dropped 2.1 per cent in August, due largely to declining automobile shipments.
A record number of U.S. homeowners were forced into foreclosure in the third quarter. More than 930,000 homes received a default notice or were repossessed, a jump of 23 per cent from the year before. Job losses rose another 263,000 in September, pushing America’s official unemployment rate to 9.8 per cent, and that’s not counting the 571,000 workers who simply gave up and stopped looking for work. As a result, the number of bad loans will likely increase in the coming months.
The number of Canadians filing for bankruptcy in August was up 17 per cent compared to the same period last year. Canadian exports and imports fell in August, and the trade deficit rose (for the fifth consecutive month), now at $2 billion. Exports declined 5.1 per cent and imports were off 2.8 per cent. New housing starts dropped 4.6 per cent in September.
So, while investors and brokers are cheering recent market gains — the sharpest rally ever seen in the midst of a downturn — some observers are wondering out loud: Is it too good to be true, given the fragile state of the economy? Is this another bubble?
Indeed, is this another wake up call…. for socialist measures? –Barry Weisleder