Saturday, January 9, 2010

Are We Still in a Recession, or Not?

It’s hard to know for sure whether we’re still in a recession. One week in July the front page of a newspaper read, “Recession Over!” in big, bold letters. The Bank of Canada (BoC) said we were bouncing back twice as strong as the United States, and that our economy has started to grow.

The next week, it seems they may have spoken to soon. Finance Minister, Jim Flaherty said it might be too soon to declare an end to the recession, indicating that the recovery is only “beginning.”

Fast-forward to September 10, and the BoC backs up its controversial statement that we are recovering, and faster than expected. Good news, right? Up until you hear Prime Minister Stephen Harper say the recession is only “technically” over… Which is it?

It’s enough to drive you insane. The experts are bouncing back and forth like a ping-pong ball. And they make recovery sound so easy and generalized - that everyone will come out of it and be ok.

Are companies going to bring back the people laid off or fired? Are the publications that folded all of a sudden going to re-appear? Are people going to magically get their homes back? Its one thing to listen to the technical explanations about how the changes will transpire and when, but it’s another thing to live it and see the reality of the impact of the recession.

The reality is that many companies have closed – forever, and thousands of people have been impacted very deeply. It’s sad to think of the degree of distress this recession has had on people, and in ways most of us probably don’t even realize.

It’s not just the lost jobs, houses, and other major disruptions and stressors that we’ve been faced with, there’s a ripple effect that runs much deeper than what we see, that has caused more scars than we’ll ever know, and that will take a long time to recover from, unlike the economy.

And this economic “bouncing back” is dependent on conditions, such as a generous government stimulus package and low interest rates. The goal is an increase in domestic activity and consumer spending.

While this sounds hopeful in some regards - such as our economic recovery occurring faster than expected – it’s still worrisome. Just how long is it going to take Canada to get to a healthier unemployment level - for the wheels to start turning - to a thriving economy again?

I wonder if hoping for things to be the same again is realistic…? Once companies have shut down, that’s it - the damage has been done. All losses can’t be re-couped. I worry about the recovery of some industries and the potential for growth again once they’ve been hit so hard.

Do consumers go back to purchasing the exact same things they did before after a recession, or do they hold back, think differently – maybe more cautiously – and put their hard earned money elsewhere?

Will we indulge in the same luxuries and to the same extent after this recession? Or will there be a shift in those that have suffered - putting some of their eggs in other baskets? It will be interesting to see what happens. I truly hope we come out “stronger” as they are predicting. But we’ll see.

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