'Mark it on your calendar, the recession ended in June' - CIBC economist
Some months ago I said nobody should be surprised if the economy starts to grow again and economists dance on the grave of the recession.
That actually happened today as GDP data showed the economy inched ahead a little in June. You can be sure of one thing: it’ll be trumpeted by advertising-starved media and distorted to mean something it does not.
(At this point, letâ€™s doff our caps and squeeze a wet one out for CHEK and RDTV, long-standing television stations about to go black in Victoria and Red Deer.Â CanWest Global is shutting them down, along with dumping its stations in Hamilton and Montreal for less money than my bike is worth â€“ and still the company, which owns some of the countryâ€™s biggest dailies, teeters on the edge of insolvency. I hope itâ€™s lost on nobody what this means about (a) service to the communities you serve and (b) why the news mediaâ€™s no longer in the news business.)
While the economists grab wenches, drink from their slippers and stop traffic at King & Bay with their dancing and nakedness, letâ€™s also remember this is no signal for people to think 2007 has returned. Bummer. When they all sober up, weâ€™ll still be shedding jobs and watching small businesses close for the next few years.
And while Iâ€™m as happy as the next guy about life improving for people, there are profound reasons nobody should be misinterpreting what this means. After all, we almost sank into a neo-Depression last autumn as a result of risky behaviour, a debt binge, greed and authorities asleep at the switch. And what profound changes have resulted?
Yeah, weâ€™re more in debt â€“ the government and the rest of us, weâ€™re snapping up houses at new pinnacles of pricing, our trade picture sucks, 1.5 million people canâ€™t find a job and policy-makers have decided to save their political rumps by shafting your kids. In short, we fixed diddly.
At the same time, the BoC had to trash monetary policy and crash interest rates in order to stave off disaster. But that simply leaves the door open to unbridled inflation and a hurtful romp higher by our currency as oil prices pace global recovery. So the bank has to choose its poison (I mean, yours, actually): start doing its job again by raising rates and stemming an unwanted rise in the cost of living and further goosing the loonie, or stay the course and preside over a massive bubblification of the real estate market and a bloat in consumer debt.
After all, higher rates are inevitable. The consequences are obvous. The question is, when?
My guess: a whole lot sooner than Mark Carney is letting on.
And Monday will be one of the days he eventually points to, when he says the central bank must once again worry about the money supply instead of the governorâ€™s future Senate appointment.
In the meantime, hey, grab a girl.