A Canadian Recession

[sirdoug007]

Looks like Canadian growth has gone negative the last two quarters.

Not really unexpected with the decline in oil prices and every other commodity recently.  I wonder how the Canadian (and Australian for that matter) housing market will hold up. 

It seems to me that Canada and Australia sidestepped the last housing crisis due to very strong commodity driven economic gains.  It will be interesting to see what happens with China showing signs of stress.

What do the Canadian folks have to say?  Do you see this in your everyday lives?

http://www.marketwatch.com/story/canada-arguably-in-recession-after-2nd-straight-gdp-decline-2015-09-01

[forummm]

Since it's barely a recession (less than a percentage point of decline), and probably due simply from oil prices, I wonder if it will be noticeable.

[KMMK]

Maybe it's where I live, but I don't see any effect. I haven't heard of any lay-offs anywhere in my province in years. People still seem to be spending like crazy (with the usual bargain-shopper stinginess) and getting into huge amounts of debt. There was the Target thing, but I suspect that's them, not necessarily our economy.

[sirdoug007]

Here is an article about the similar situation going on in Australia.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCIQqQIwAGoVChMIzb-OorvWxwIViwySCh2eOAZI&url=http%3A%2F%2Fwww.wsj.com%2Farticles%2Fis-australia-sliding-into-recession-1441091988&ei=F-7lVY3YNIuZyASe8ZjABA&usg=AFQjCNGZJigX3QQr5pyrs3x9pNKxkmjc9g&sig2=c_klBa1eqeXuHQT8t978Zw

[fb132]

Well it's a weird recession, because housing has gone up, people have been spending money, I think it went up by 1 or 2%, the only thing that went down is the oil. Canada is sucha big country that the oil industry mainly hits 3 provinces (Alberta, Saskatchewan and Newfoundland).  http://www.theglobeandmail.com/report-on-business/economy/growth/canadas-economy-shrinks/article26172722/?click=sf_globefb

[Cookie78]

Even in Alberta I haven't noticed much difference. There have been a few big layoffs and housing prices dropped a tiny bit and are already going back up. Mostly just the more expensive houses have been impacted. People I know are spending just as much and buying houses, cars, etc. as usual.

[Kaspian]

Mostly just the more expensive houses have been impacted. People I know are spending just as much and buying houses, cars, etc. as usual.

This can't go on.  Blomberg has recently pegged Canada's situation as a bigger threat to the US/world economy than China.  :(

http://www.msn.com/en-us/money/markets/slowing-canadian-economy-may-surpass-china-as-threat-to-us-growth/ar-BBmcL8T

[sirdoug007]

Mostly just the more expensive houses have been impacted. People I know are spending just as much and buying houses, cars, etc. as usual.

This can't go on.  Blomberg has recently pegged Canada's situation as a bigger threat to the US/world economy than China.  :(

http://www.msn.com/en-us/money/markets/slowing-canadian-economy-may-surpass-china-as-threat-to-us-growth/ar-BBmcL8T

I would say the biggest threat is a fast Chinese slowdown-> leading to recessions in Canada and Australia -> resulting in the bursting of Cad/Aus real estate bubbles and significant bank failures. 

Other commodity dependent emerging markets (the BRI in BRICs) would follow China's lead into slowdown and pain.

Of all of this I think a recession in Canada as a main US trading partner would hurt the most but the world is flat these days and the "global economy" is an important consideration.

[Retire-Canada]

Looks like Canadian growth has gone negative the last two quarters.

Not really unexpected with the decline in oil prices and every other commodity recently.  I wonder how the Canadian (and Australian for that matter) housing market will hold up. 

What do the Canadian folks have to say?  Do you see this in your everyday lives?

Yes I definitely see this in what's going on around me in the business world. More uncertainty and less investment in anything new that's not essential. I've seen a number of lay-offs happen in manufacturing not tied to oil and gas.

I have not noticed any change in housing prices. There may be some cooling off on the growth in prices, but no drops.

[nobodyspecial]

What do the Canadian folks have to say?  Do you see this in your everyday lives?

In Vancouver - recession, what recession ?
Still can't find office space, can't find people to hire and they can't find anywhere to live.

[Shinplaster]

It seems to be an issue in very specific areas, rather than a general downturn.  I live in a medium sized (350,000) city 2 hours outside of Toronto.  While Toronto house prices are insane, ours have been very steady, and affordable.  During the recession in the 80's, prices dropped about 5% here.  During 2008-2010, we didn't really see much impact at all on housing.  Some slowdown on construction, and again, a small price drop.  Since then, there has been steady growth in prices year over year that regained the drops, and now pretty much match increases in the COL.  Housing starts are still very strong, and the sold signs pop up quickly on resales.

The malls are busy, and people actually are carrying bags/spending money, not just window shopping.  The manufacturing segment here has had trouble though, and those jobs are disappearing fast.  Lots of white color jobs, but blue collar is getting squeezed.

I really don't know what to think about this downturn, except to say it doesn't "feel" like previous ones.  We are in our 60's now, and have lived through multiple recessions, housing downturns, high unemployment, etc.  This one does not have us worried as of yet, anyway.

[Capsu78]

This guys writes a new post nearly every day discussing the Canadian aspects of housing and recession:

http://www.greaterfool.ca/

Comments section is also robust.

[totoro]

I strongly advise you not to read Garth Turner and believe what he says - read it for entertainment value if you would like.  He has been consistently wrong about Canada's housing market for many years now and makes his living giving paid financial advice and selling his books - both of which are promoted through his blogging.

Canada doesn't have one housing market.  Rates of appreciation have varied widely.   I don't know what will happen to some of the markets light TO and Vancouver but so far there has been no crash despite many years of predictions and interest rates are lower so affordability is still on par with years prior in many markets.  Our lending rules are not like the US so I don't expect that kind of melt-down.  I don't know about other world level factors.

[nobodyspecial]

He is entertaining.
An ex-member of the Harper Party complaining that people don't save enough and paid too much for $MM houses and that Canada's woes are all due to his own party's concentration on oil but that the economy will really go to hell if you vote in the other lot.

[GuitarStv]

I live in Toronto.  For ten years prior to buying my house I read articles describing the inevitable total collapse of real estate here.  It's been five years since we bought, and I'm still reading the same articles.  It's hard to get overly concerned about them anymore.  Prices are high because a lot of people want to live here, a lot of people immigrate here every year, there are a lot of jobs here, property tax is low, and interest rates are low.  When those factors all reverse, I'll be quite nervous.

[Aussiegirl]

It's easy to read these articles and be all doom and gloom.  The property "boom" has only been in Sydney and to a smaller extent Melbourne.  Add that to the facts that unemployment is low still and you can't avoid paying back housing debt less you declare bankruptcy (it's full recourse back to the borrower unlike the US system) - hard to see a housing crash.  Could definitely see a period of low growth or smallish decline though.  That's at the average - could definitely see much larger drops at the top end, which they have on Perth where top end property is off 30%.  Not too many buyers for those $3m properties now the mining boom is no more. 

Interestingly, data shows that Australia has been in an income recession for the last couple of years - ie our standard of living in real terms has dropped.   We haven't felt a thing......but we aren't consumers and live well within our means.

[nobodyspecial]

I live in Toronto.  .... Prices are high because a lot of people want to live here,

Has anyone answered the question "why" yet  ;-)

[daverobev]

I live in Toronto.  .... Prices are high because a lot of people want to live here,

Has anyone answered the question "why" yet  ;-)

Because a lot of people already live there, and there are a lot of jobs there. And because it's pretty nice - mild - vs much of Canada.

You may ;) if you like, but what are the alternatives? Mob-treal? Oilberta?

Vancouver is a long way away, esp. for people immigrating, and house prices are CONSIDERABLY worse than TO.

Don't misunderstand - I live near Ottawa, so Toronto and surrounds' winters seem like magical mild climate to me. I don't think I'd want to live in TO myself, but somewhere down there on the great lakes would be fine - much better than  here!

[okonumiyaki]

In USD terms Canadian real estate has already corrected...

[GuitarStv]

I live in Toronto.  .... Prices are high because a lot of people want to live here,

Has anyone answered the question "why" yet  ;-)

It's like Vancouver . . . but with 300 fewer days of rain each year.

[Retire-Canada]

I live in Toronto.  .... Prices are high because a lot of people want to live here,

Has anyone answered the question "why" yet  ;-)

My parents are living in TO. Thy frequently ask me to move from Victoria, BC to TO. I just laugh.

[nobodyspecial]

It's like Vancouver . . . but with 300 fewer days of rain each year.

But when the rain falls - it's solid