Recession strikes again

Tuesday, March 31, 2009

The numbers are in....and Canada's economy is in big trouble. It shrank 0.7 per cent in January, in line with expectations from economists and a slight improvement over December, when economic output plunged a full 1 per cent.

No one is celebrating: The decline marks the sixth consecutive monthly contraction in the economy, with gross domestic product down 2.4 per cent over the past 12 months and showing signs of getting a lot worse based on recent performance.

Benjamin Reitzes, economist, BMO Nesbitt Burns: “The December/January declines mark the worst two-month performance for GDP in at least 11 years. If GDP manages to stand pat in February and March (which might be wishful thinking), the economy would still be on pace to contract at a more than 6 per cent annualized rate, a record back to 1961. The global recession hit home in the first quarter.”

Millan Mulraine, economics strategist, TD Securities: “There is no getting away from the fact that the Canadian economy is in the depths of a rather profound economic recession, and from the evidence so far this year, it clearly appears that the economy may have taken a dramatic turn for the worse. ... In the final analysis, this report will provide further ammunition for the Bank of Canada to reduce the policy rate even further when they meet late April with a real likelihood that they may engage in quantitative easing as they attempt to provide further monetary stimulus to the Canadian economy.”

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