I sure as hell did...
Terence Corcoran: The Canadian economy: Nobody saw it coming
Sometimes it looks like the Canadian economy is unraveling like a giant surprise package right in the face of economists and the Bank of Canada. We’ve got big data revisions, shock bank rate cuts, a falling Canadian dollar. Through it all, nobody saw it coming. They didn’t see a thing.
Statistics Canada’s labour force data are notoriously wonky and revision prone. Still, Wednesday’s revamp wiped out 50,000 jobs that economists had assumed had been created during 2014. In an economy with almost 20 million employed, the revisions are small, but they cast doubt on the state of the economy and the outlook for 2015. Institutional economists who did not see it coming now see the labour data as a sure sign the Bank of Canada will lower interest rates again in March.
Down in the U.S., meanwhile, the Federal Reserve bubbled with optimism. It said economic activity has been “expanding at a solid pace” with “strong job gains and a lower unemployment rate.” Best of all, “business fixed investment is advancing,” the Fed said in a statement Wednesday. Some economists say the Fed may raise interest rates later in the year.
With Canada-U.S. employment, investment and interest rates running in opposite directions, the fallout was inevitable. The Canadian dollar fell below 80 U.S. cents amid a consensus that 75 cents seems inevitable.
BMO Chief Economist Douglas Porter commented as he watched the dollar fall: “Just two short years ago to this day, the Canadian dollar was within a cent of parity, back in the days when oil was trading in the mid-90s and a fellow named Carney was still BoC Governor. Given Wednesday’s latest spillage, the currency has promptly shed 19.5% in that two-year span. That is the largest two-year decline in the Canadian dollar ever.”
For this decline in value, added Mr. Porter, “there will be consequences.”
Terence Corcoran: The Canadian economy: Nobody saw it coming | Financial Post