Canadian economy heading for recession

[captain morgan]

The Dutch disease is simply the relationship between oil price and the dollar. In a country like ours, where the oil industry is the most important one, that causal relationship should appear stronger. And the Dutch disease theory appears to ring true in that regard as oil prices and our dollar keep going down.

Mulcair was absolutely right when he said we have a petro dollar.

What makes oil any different from gold?... Softwood lumber?... Beef or pork exports?... All of these are traded on the commodities boards and in USD

Clearly you can't see the big picture here

 

[CDNBear]

Clearly you can't see the big picture here

It's hard to see the big picture from under his bed.

 

[mentalfloss]

What makes oil any different from gold?... Softwood lumber?... Beef or pork exports?... All of these are traded on the commodities boards and in USD

Clearly you can't see the big picture here

What are you actually implying about those other commodities and their relationship with the dollar?

 

[captain morgan]

They are all traded (quoted) in USDs.

Oil is just one of a basket of items that Canada exports that trade in what is considered to be the global currency (USD)

 

[mentalfloss]

The relationship is that they are traded?

I'm asking you about what causal relationship they have with the dollar.

 

[captain morgan]

The relationship is that they are traded?

I'm asking you about what causal relationship they have with the dollar.

I don't really understand what you are asking

 

[pgs]

What makes oil any different from gold?... Softwood lumber?... Beef or pork exports?... All of these are traded on the commodities boards and in USD

Clearly you can't see the big picture here

Don't forget potash and wheat . Poor Sask. might not like being left out .

 

[mentalfloss]

I don't really understand what you are asking

You made the post about other commodities as some rebuttal to the Dutch disease theory.

I'm just asking you to show how the mere existence of those commodities removes the credibility of the theory.

I'm assuming that's where you were going with this.

 

[captain morgan]

You made the post about other commodities as some rebuttal to the Dutch disease theory.

I'm just asking you to show how the mere existence of those commodities removes the credibility of the theory.

I'm assuming that's where you were going with this.

The principle of Dutch Disease is not limited to just petroleum. The same dynamic exists in any jurisdiction that has diamond mining as a major resource, or gold, or consumer goods.

The theory is founded on relative values of currencies, in this case, the USD compared to CAD or Euro or Australian dollars... When the USD is weak, it's great for imports and in a nation like Canada where we import much of what we consume, our CAD goes farther.

The opposite effect is experienced when the local currency is weak compared to the USD... The CAD has less purchasing power and life gets more expensive.

What you and Mulcair were on about some time ago was that because Canada had a strong economy by virtue of a strong energy sector, it cost the export market in Eastern Canada opportunity because they were not competitive on a price basis... That cost the (export) mfg sector, but it allowed Canadians across the country to have a break on prices on imported goods

The flaw in Dutch Disease theory is that it attempts to single out one of two factors (eg. energy) and then blame the entire economic relationship that Canada has with the globe on that despite there being numerous variables in the equation

The very same circumstance would exist if Canada's mining or agri sector saw a high (global) value placed on those commodities (export related)... Those industries would become more profitable, expand, hire more people and increase salaries to satisfy the intl demand.... This would have the same affect as oil did when it was North of 100 USD.


The kicker that Dutch Disease doe not recognize (among other things) is that the relative values of the currencies against the USD act as a natural hedge, both on the way up and on the way down

 

[mentalfloss]

The point is that there appears to be a causal relationship.

You can blast off on Mulcair for taking that further into manufacturing, but the causal relationship between oil prices and the dollar looks less coincidental as time goes on.

 

[CDNBear]

The point is that there appears to be a causal relationship.

You can blast off on Mulcair for taking that further into manufacturing, but the causal relationship between oil prices and the dollar looks less coincidental as time goes on.

Mucliars dreams of rebuilding manufacturing in Canada, is a pipe dream at best. Bought by morons and spread around the net as viable, by dummies.

 

[mentalfloss]

If you run some more calculations what you would find is that for every 10% increase in the value of oil exports, the Canadian dollar increases by roughly 3%. Short term, it means that if the price of oil increases by 10%, the Canadian dollar value (vs. the US dollar) is likely to increase by 3% (or vice versa). Long term, everything else being equal (e.g. interest rate policy), this relation is likely to get stronger as the oil sands production increases.

OpenDataDepot - On the Canadian dollar and the oil prices ...

 

[CDNBear]

If you run some more calculations what you would find is that for every 10% increase in the value of oil exports, the Canadian dollar increases by roughly 3%. Short term, it means that if the price of oil increases by 10%, the Canadian dollar value (vs. the US dollar) is likely to increase by 3% (or vice versa). Long term, everything else being equal (e.g. interest rate policy), this relation is likely to get stronger as the oil sands production increases.

OpenDataDepot - On the Canadian dollar and the oil prices ...

Ya so?

Or is this like WTC truthers that just regurgitate something someone said mattered?

 

[captain morgan]

The point is that there appears to be a causal relationship.

You can blast off on Mulcair for taking that further into manufacturing, but the causal relationship between oil prices and the dollar looks less coincidental as time goes on.

Your flaws are that you believe this is restricted to oil and that currency FX has no impact.... Hell, based on what you have written, you seem to think that Cdn oil is the weather vane for the entire globe

 

[mentalfloss]

There is no flaw. There can be causal relationships with other commodities and I never suggested otherwise.

The degree of proportions in those relationships is what you have not shown yet, whereas I've at least posted some numbers.

 

[CDNBear]

The degree of proportions in those relationships is what you have not shown yet, whereas I've at least posted some numbers.

Sure did, then ignored this...

If you run some more calculations what you would find is that for every 10% increase in the value of oil exports, the Canadian dollar increases by roughly 3%. Short term, it means that if the price of oil increases by 10%, the Canadian dollar value (vs. the US dollar) is likely to increase by 3% (or vice versa). Long term, everything else being equal (e.g. interest rate policy), this relation is likely to get stronger as the oil sands production increases.

OpenDataDepot - On the Canadian dollar and the oil prices ...

Ya so?

Or is this like WTC truthers that just regurgitate something someone said mattered?

 

[mentalfloss]

 

[CDNBear]

Cute...

The degree of proportions in those relationships is what you have not shown yet, whereas I've at least posted some numbers.

Sure did, then ignored this...

If you run some more calculations what you would find is that for every 10% increase in the value of oil exports, the Canadian dollar increases by roughly 3%. Short term, it means that if the price of oil increases by 10%, the Canadian dollar value (vs. the US dollar) is likely to increase by 3% (or vice versa). Long term, everything else being equal (e.g. interest rate policy), this relation is likely to get stronger as the oil sands production increases.

OpenDataDepot - On the Canadian dollar and the oil prices ...

Ya so?

Or is this like WTC truthers that just regurgitate something someone said mattered?

I'm guessing you're just regurgitating than.

You know you can just admit that and not look as stupid as you do, right?

 

[damngrumpy]

But but Harper saved us remember we were all going to sing together that we were
not included in the worlds melt down. Now its election time and we hear those old
world from politicians its the worlds fault.
The conservatives economic policies are the reason. Yes the world is part of it no
doubt but this government prepared to shield business first instead of the people.
God help us if this guy gets elected again. It is time for a change like never before.
I for one although not a hard line anything in politics will support Mulcair unless he does
something stupid. We have had a hundred and forty eight years of Tories and Liberals
and the same old same old needs some real change so lets do it.
A recession is good in that the government that took credit for avoiding some problems
in 2008 must now own the slump they are confronted with.

 

[taxslave]

Canada's employers hit the brakes; rate move still a 'toss up' - The Globe and Mail
Home - The Globe and Mail

Canadian employers put the brakes on hiring last month, trimming private-sector positions and part-time jobs, particularly in Quebec.

Employers shed 6,400 jobs in June and the unemployment rate held steady for the fifth month in a row at 6.8 per cent, Statistics Canada said Friday, as fewer people looked for work.

Globe and Mail Update Jul. 09 2015, 2:33 PM EDT

Employment has swung between monthly job losses and gains all year, with a broader trend showing a deceleration in hiring. Employment growth slowed to 33,000 in the second quarter, after job gains of 63,000 in the first three months of the year, the agency noted. The economy, meantime, contracted in the first quarter and a recent raft of weak data – from monthly GDP to export numbers – has led some economists to say the county likely fell into recession in the first half of 2015.

The report is the last major economic release before the Bank of Canada decision on interest rates Wednesday. Economists’ opinions are split over whether the central bank will cut rates amid a weaker-than-expected GDP growth and global economic uncertainties.

“Job creation slowed in recent months, and this is in addition to the slowing pace of exports, investment and real GDP,” Joëlle Noreau, senior economist at Desjardins Group, adding that these factors bolster the case for a rate cut.

Still, the jobs report offered a mixed picture, as some signs – such as gains in full-time work and wage growth – point to resiliency. “The persistent strength in full-time jobs and wages suggests that income support remains surprisingly healthy from the labour market,” said Douglas Porter, chief economist at BMO Nesbitt Burns – making next week’s rate decision “very much a toss-up.”

Growth in average hourly wages for permanent workers quickened to 3.1 per cent, year over year, from 2.9 per cent in May. Another sign of strength is total hours worked, up 2.1 per cent from a year ago.

Firm wage growth and the bump in full-time positions suggest “the impacts of the slowdown in growth over the first half of the year are not feeding through meaningfully to the labour market,” Toronto-Dominion economist Brian DePratto said.

That said, “as employment tends to have a lagged relationship with growth, we expect to see divergence in the coming months between relatively weak employment data and the anticipated rebound in GDP growth in the second half of the year.”

Private firms cut jobs last month, while the public sector added to head count. Among sectors, the manufacturing, business services and accommodation and food-services sectors shed positions while employment rose in public administration and professional services.

“It’s hard to see the trend of strong public-sector job creation continuing given the message of restraint at the provincial level,” said Avery Shenfeld, chief economist at CIBC World Markets.

Over the past year, employment has grown by 1 per cent, driven by full-time gains. In June, full-time employment rose by 64,800 and part-time jobs fell by 71,200.

Among provinces, employment fell in Quebec and New Brunswick but rose in British Columbia and Newfoundland. Ontario and Manitoba have led job growth over the past year.

Toronto’s jobs market is “smokin’,” BMO’s Robert Kavcic said. Canada’s largest city has added 95,000 jobs so far this year – “one of the best six-month tallies on record,” he said, cutting its jobless rate to 6.9 per cent.

In Alberta, the jobless rate fell to 5.7 per cent, despite a raft of layoffs in the oil patch. Still, the unemployment rate has climbed over the past year, while employment-wise the province saw “no growth” in the first six months of this year, the agency said.

Young people saw job declines. Employment fell among youth by 26,000 and levels are little changed from a year ago. The youth unemployment rate fell to 12.9 per cent from 13.2 per cent as fewer of them participated in the labour market.

Canada’s jobless rate is higher than in the United States. This country’s unemployment rate, adjusted to U.S. concepts, was 5.8 per cent in June, compared with 5.3 per cent in the United States – the lowest in more than seven years.

Economists had expected a decline of 10,000 positions last month and a jobless rate of 6.9 per cent.

Canada's employers hit the brakes; rate move still a 'toss up' - The Globe and Mail

Must be Dutch Disease.