MetroVanIndependent.com
September 2015
3
News
Canada in recession
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Statistics Canada says the firstquarter performance was weaker than
originally estimated, forcing the agency
to lower its GDP reading for the first
three months of the year from an original
estimate of 0.6 percent.
The new batch of data is likely to add
fuel to the heated, ongoing political debate
over how best to respond to a weakened
economy as parties battle for support
ahead of the Oct. 19 federal election. It is
also expected to intensify the economic
argument over the severity of the technical
recession -- recently defined by the federal
government as two consecutive quarters of
negative GDP.
Prime Minister Stephen Harper has
side-stepped campaign-trail questions
about whether Canada was in recession
this year. On Monday, he also declined to
define a recession when asked about it.
The hobbled economy has so far shaped
up to be the primary issue of the campaign.
Harper has reiterated a stay-the
on-course mantra, insisting the country
must ride out external economic and
market turbulence whipped up in places
like China. He has argued the only domestic
weakness has been in the energy sector,
which has suffered from the steep slide in
global oil prices.
The Tory leader has frequently cited
forecasts that predict the economy will
rebound in the second half of the year,
including a projection by the Bank of
Canada. The central bank, however, has
downgraded its projections for 2015 and
cut its trendsetting interest rate twice this
year to cushion the blow of low crude
prices.
Drilling deeper into the secondquarter data, natural resources extraction
contracted by 4.5 percent.
A considerable amount of growth
in the quarter was found in household
consumption at a time when interest rates
remained low.
Statistics Canada found that household
consumption rose by 0.6 percent in the
second quarter, which followed a 0.1
percent gain in the first three months of the
year. The second-quarter increase was led
Economic Recession
An economic recession is a period of general economic decline and
is typically accompanied by a drop in the stock market, an increase in
unemployment, and a decline in the housing market. Generally, a recession
is less severe than a depression. The blame for a recession generally falls on
the federal leadership.
Factors That Cause Recessions:
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High Interest Rate: High interest rates are a cause of recession
because it limits liquidity, or the amount of money available to invest.
Increased Inflation: Inflation refers to a general rise in the prices of
goods and services over a period. As inflation increases, the percentage
of goods and services that can be purchased with the same amount
of money decreases.
Reduced Consumer Confidence: If consumers believe the economy
is bad, they are less likely to spend money. Consumer confidence is
psychological but can have a real impact on any economy.
Reduced Real Wages: Real wages refers to wages that have been
adjusted for inflation. Falling real wages means that a worker's paycheck
is not keeping up with inflation. The worker might be making the same
amount of money but his purchasing power has been reduced.
An economic recession is typically defined as a decline in Gross Domestic
Product (GDP) for two or more consecutive quarters.
GDP is the market value of all goods and services produced within a country
in a given period of time. An example of one type of GDP would be the value
of all the automobiles produced within Canada for one year. GDP only takes
into account new products that have been manufactured. Therefore, if a preowned car lot were s