Friday, November 21, 2008

Canada escapes recession?

I dunno... sounds liek the old (now defunked) decoupling theory to me.

Here's the logic:
The logic behind Desnoyers's logic is this: Export income in Canada will be cut by the U.S. downturn and a big drop in prices for Canada's resource products.

That's why we're entering a slowdown.

But to have a severe slump with soaring unemployment, we'd also need a swoon in domestic spending by consumers, businesses and governments.

That's not happening.

Domestic demand, which makes up three-quarters or more of Canadian economic activity, is on track to keep growing, thanks to a central bank that has already slashed interest rates and stands ready to cut even more.

OK, but how are we going to fund that three-quarters domestic consumption if there is a drop in demand for Canadian exports, namely our rocks and trees? Please don't tell me we're going to fund this consumption through added debt.

Why Canada looks likely to escape severe recession