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It Gets Even Uglier In Canada
Wolf Richter www.wolfstreet.com www.amazon.com/author/wolfrichter
The Province of Alberta, the epicenter of the Canadian oil bust, may be sliding into something much worse than a plain-vanilla recession. And it’s not exactly perking up the rest of Canada.
Layoffs are already cascading through the oil patch, as companies are retrenching and adjusting to the new reality. New vehicle sales are plummeting. And home sales are taking a broadside.
In August so far, total home sales in Calgary plunged 28% from a year ago, on flat prices. Condo sales collapsed 39%, with the median price down 8%, according to the Calgary Real Estate Board. Year-to-date, total home sales in Calgary are down 25%; condo sales 30%. And those condos that did sell spent 30% longer on the market than condos did a year ago, as sellers hang on by their fingernails to the illusion of wealth, and sales are stalling.
And the Business Barometer Index for all of Canada, which measures the optimism among small businesses, dropped again in August for the third month in a row. An index level between 65 and 70 indicates that the economy is growing at its potential. But now it hit 56.7, the lowest level since April 2009.
The Canadian Federation of Independent Business, which produces the index, blamed the commodity bust but added additional sectors, particularly those that are considered absolutely crucial for the hopefully coming economic recovery in the second half: construction, transportation, and retail.
The index dropped in 7 of 10 provinces, even in British Columbia, which was weighed down by “domestic conditions, coupled with weakening economic prospects in Asia.”
And that feverishly expected rebound of GDP in the second half from recessionary levels in the first half? Small business owners don’t see it. What they see is a continued downturn.
But it’s in Alberta where small business optimism has totally crashed. The Index dropped 3.5 points in August to 40.4, the worst level since March 2009, and just one such step above the historic low of 37, of February 2009, the very bottom of the Financial Crisis.
A bitter irony: for the years after the Financial Crisis, small businesses in Alberta were practically exuberant compared to those in the rest of Canada. But in November and December, their exuberance dissipated into the oil bust, and the index began plunging. In January, it fell below the national level for the first time since March 2010. And it has continued plunging.
The chart shows how the index for Canada (green line) has hit the worst level since April 2009, and how the index for Alberta (blue line) has plummeted to the trough of the Financial Crisis:
“As businesses are crunched, they’re examining all of their expenses more closely – their taxes, the regulatory costs, their wage costs – and if the government continues to add to the list of things, at some point they simply can’t handle all of those new costs,” CFIB Alberta director Amber Ruddy told the Calgary Herald, with an eye on the province’s new government that is musing about raising royalty rates on energy companies at the worst possible time.
And it’s not just businesses. It’s consumers too. Confidence of Canadian households regarding current economic conditions, according to the Conference Board of Canada, dropped to 91.9. Last year, the index was set at 100. But in the Prairie Provinces of Alberta, Saskatchewan, and Manitoba, consumer confidence plummeted to the lowest level since March 2009.
Sentiment dropped across all survey questions. The chart by the Alberta Real Estate Association (AREA), which is fretting about home sales, shows just how fast household confidence has fallen in the Prairie Provinces (black line, right scale). But the feeble hope is that it will not totally asphyxiate homes sales: the percentage of households thinking that now is a good time for a major purchase (blue bars, left scale) has fallen sharply – and is low (white horizontal line) – but has not yet totally crashed:
It looked dreary in the Prairie Provinces: Expectations for household budgets declined in August, and more households expected their budgets to decline further over the next six months. The outlook for jobs deteriorated, as layoffs of employees and reduced hours or no hours for contract workers – numerous in the oil business – are cascading through the local economy.
So it remains a mystery where exactly the power for that feverishly anticipated rebound in the second half is supposed to come from, unless a miracle happens to commodity prices. But miracles have become exceedingly rare these days.
The commodities rout is tearing into Canada’s broader economy, but this is even worse. Read… Canada “Getting Clocked” by Something Far Bigger than Oil
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Canadians have nothing coming except a mini-iceage and 80 years of snow and ice all year round. I'd get out of there before it is too late.
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Just got Back from Canada,, the women in the highway rest stop areas are definitely better looking.. takes a lot longer to eat a Burger up there Eh.
Watch your mouth talking 'bout our truck stop whor... Uuh, carry on.
Favorable racial demographics.
NOT abutting Mexico and subject to a continuous, absolutely unlimited flood of illegals.
Generally clean environment, plenty of water and land.
Canada has much to offer.
You haven't been to Canada in awhile then? Where da white women at? is not a strange question these days.
In the big centers, for sure. You're as likely to see a hijab in a calgary mall as you are flowing blonde or brown locks.
Geez!
It ain't like this has never happened before.
I blame un education, and the banksters of course.
The oil problem is bad enough. Equally devasting is the fact that Alberta just elected an NDP government. Talk about screwing yourself at exactly the wrong time!
It was 43 years of incestuous conservative governments that have screwed Alberta. Norway, same population, same geography has 1.1 Trillion in the bank. Alberta, after 43 years of conservatives has zero in the bank and will have to run 50 Billion in deficits over the next 4 years just to keep the lights on. The people of Alberta are rightfully completely disgusted with the provincial conservatives and the lone remaining federal conservative party is about to be immolated. There has not been a single conservative government, federal or provincial, in 150 years that has ever balanced a budget; indeed most have left their juridisdictions deeply in debt.
I guess a state-run oil company and socialism simply must be the answer.
Oh wait, I keep forgetting about Venezuela.
If you fucking Americans had left Central and South America alone, instead of overthrowing governments, assassinating political leaders and screwing them out of every penny they ever made, then they wouldn't have the problems they do today. Without a doubt the US is the most evil fucking collection of psychopaths on the planet. Your country is collapsing around your ears, your banks are zombies kept alive by the Fed, you are in the middle of a race war, your politicans have all been bought off by the .001%, you keep threating to start a global nuclear war and half you population is being fed by the government. A real success story. You deserve every fucking thing that happens next.
Yeah you know what you fuck? Norway has a state run oil company and in the last 43 years they have put 1.2 Trillion dollars into the bank. Some fucking failure that is eh?
And they will be infinitely more disgusted with themselves in less than 4 years - thinking "Did I actually vote socialist - wtf was i thinking!!?"
Yes, but the grifters will have to splend more money to pay off all these new grifters.
I heard a tree fall in the forest. A small one, but I stll heard it.
Talk about a country that has lived in delusion for the last decade. Canada never thought it would end. This new reality is gonna be a bitch for Canadians.
Most mongoloids here are no different than any other segment of morbidly obese, anti depressant addled "middle class" folk. More concerned with dancing with the stars, and getting a bigger house than critically seeing the world for what it is.Nobody thinks anything will end.
I'm one of the few who is eagerly awaiting the bloodletting. I can't wait for the Grand Mal Seizure in real estate. My ex-wife was eager to sell all the jewelry I bought her and add it to the pile of money I saw leave the confines of my bank account in order to cobble together a downpayment for a house in the calgary area, at or near the top ( which I help pay for monthly ). When the bottom drops out from the housing market and I am walking around with a pile of silver with which to buy something outright for while she faces the prospect of losing her home I'll have a weapons grade boner. Broadly though, at this point EVERYWHERE is so overextended I can't see it being isolated to Canada, but who knows. I think we're appraoching the global end game.
I am American, but live just south of Thunder Bay, so Candian news seeps in around here. I followed Harper's full on committment to Tar Sands miners. Calling Tar Sands the base of Canada's oil future for generations. He really saw Tar as the absolutes saviour of Canada's economy.
Great comment but when you buy your ex wife's house won't she then have your silver?
This is what I don't like about PM holders. You think you're future kings and are protected from the bad stuff. I don't care if a single God damn gold coin buys you the whole fucking city of Calgary. Why do you need more than one house? It's not salvation. You'd be better off with a gun. No offence to you personally, you're just doing what you think will work.
I have guns as well. They aren't hard to get here as you probably know. With respect to precious metals, I don't expect to become some viceroy of central alberta, but at some point it will be better than having a TFSA and an RRSP with the ATB.
Calgary can fuck off. I don't ever intend to own more than one house, well outside of hopefully a small plot of land with a couple of guest cabins on it. I rent now because owning in this market is insane, which will be borne out soon. I wouldn't buy my ex wife's house. I'll just drop by to grab my kids.
Nice play on words there. Worthy of Drudge titles.
"weapons grade boner and overextended"
As the featured story accompanied by a picture of 2 beavers rutting.
Nice to see you posting again bro. You crack me up...
Oh Ya, its really, really bad. Goofs.
Our local rural paper used to have seven pages of classified ads with five pages of help wanted. Now there are four pages of classified ads with two pages of help wanted.
The air is full of grain dust as harvest is underway and the company I work for is hiring a couple young engineers. My children have been working all summer and my wife is back to work at school today.
And in May we threw out the zio-government of Alberta, things are really bad according to the zio-media.
As much as the mongoloid conservatives deserved what they got, I look forward to the next elections when we can replace grocery baggers and college pub bartenders with people who have a clue.
Say what you want about other sectors of the economy, but the oil and gas sector is a source of many good paying jobs. As your 2 new engineers start their job, 200 easily, and perhaps 2000 are out of work in downtown calgary, which will trickle down to bartenders, sandwich artists and bike couriers.
Everyone can spout a nice anecdote but a couple of kids shoveling shit for the summer and a civil servant are hardly smoking gun evidence that our economy is robust.
As if we weren't in the barrel enough due to the policies of the Saudis ( who are left to prosecute financial terrorism now instead of normal terrorism ) and the ficticious casino commodities markets, now we have a ramshackle pinko government in place who has the whole oil and gas industry holding their breath in terms of investment until they can read a couple of books and formulate a policy.
I was unlucky enough to run into a presentation my a newly minted government minister ( she apparently sold scentsy before her new job ) in galt gardens in lethbridge on a bike ride with my daughter. She rolled up in a van with solar panels on the top and proceeded to uncorked a harangue about how much damage the conservatives had done. No policies, no vision, no answer. Unsurprisingly ( if you know the area ) the crowd was made up of a significant number of drunk indians which was good because the quality of the message matched the quality of the messenger.
No patience, eh Dirtlump? I say give the commie pinkos a chance. They weren't my choice either but I'm willing to see how they proceed over the next few years rather than falling back onto 1950's McCarthyism rhetoric.
I see the trains full of 1267 and lumber and grain still rolling south, trains full of 1202 and 1203 going north.
Not as many dying on Highway 63 though...
Pretty hard to see that when your horizon is concrete.
Was Brocket 99 playing on her stereo?
Yeah, Ernie Scar was regaling us with a weather report. Speaking of which. As a kid I got busted with a copy of brocket 99. I waxed out on my bike and ended up in the hospital. When my parents loaded my backpack with personal effects to take to me they found the tape. If I wasn't in the hospital I would have ended up there.
Yes Rock On and they brought in the commie government of Nutley. Her cabinet consists of day care workers, yoga instructors and gender study majors. Fucking retard losers. One newly minted MLA got lost driving from Fort Saskatchewan to Vegreville and ended up in Saskatchewan.
Maybe daycare workers might care about the people rather than the corporations unlike zio-Prentice. Obviously you're one of the losers that would prefer me to pay more tax while corporations pay less.
Roger the fucking NDP just raised the personal income tax, increased gasoline tax and want to bring in a carbon tax. Our Jobs minister is busy campaigning in BC for the fat commie frog Mulcair. Our health minister cancelled the lab service contracts because they want civil servants doing the work and in the meantime lab work that took an hour can take up to two weeks.
Let's tell the fucking truth for the American audience shall we. The province of Alberta has had a 10% flat tax for 40 years. So all the CEO's, CFO's, Board Members, highly paid engineers and geologists, even the truck drivers who were making a 250,000 a year only paid a pittance in tax. They have NO provincial sales tax. Yet every single fucking penny of the Heritage Fund, that was supposed to be for future generations has been spent. After 43 years of conservative government, in which the ruling conservatives allowed political tax credits up to $30,000.00 PER PERSON (that was the quid pro quo), the province is flat fucking broke. All the god damned red necks howl and scream because they aren't making a quarter of a million bucks anymore to drive a fucking truck. And every single time they have gotten theselves into this situation they turn around and blame the public service. They never bother to take a look at their idiotic royalty structure, or their unsustainable flat tax rate, or their subsidized gasoline rates. They just complain, and try to get you to feel sorry for them and jump on the blame bandwagon. The conservatives were thrown, nay ripped out of office by an opposition party that got a landslide majority vote from the people of Alberta who are fed up to the gills with the kind of carpet bagging that this person wants to see restored, so he can suck more money out of the province and buy himself another couple of snowmobiles and maybe a new 4x4 with a 550 HP Hemi. It's all too sick to even imagine.
Only complete retards would support the NDP. Maybe one of the worst political parties ever.
Alberta is going down the tubes now, no doubt about it. Give it a couple years and that place will be truly fucked. Watch and see.
House prices have not dropped much in Canada because you can't walk away from a mortgage like you could in the '80's. Unless you have put 20% down people have to have CMHC insurance on a mortgage. It is a scam but most homebuyers are pretty retarded now and don't really care.
Canada, the Canadian Dollar and Canadians are for the most part completely irrelevant. Huge landmass with small population. From an investment standpoint, it's a waste land. Might as well throw money away in Iceland. At least Iceland is attractive and in proximity to the huge European market.
Whatever Canada has to offer, it is cheaper in Mexico or better in the US.
Canada's economy is done for a while until resources recover .. if ever. Expect another 30% to 50% drop in C$ value.
There are so many crazy fucks like you on these boards, it is getting annoying.
That sounds dire. Up north of me, Thunder Bay was ravaged by the collapse of paper production brought on by the end of newspapers, magazines and post offices! Once the news print trucks rolled south non stop. A local trucking compnay hauled Thunder Bay news print south to USA markets, for years they rolled on, a few years back they folded. Went BK and 700 local people here were fired outright! Thunder Bay was lumber and paper dependent. No oil in the Canadian Shield rock!
Totally agree. This place sucks. However, there have been no increase in prices with the 75 cent dollar. What happens is the sellers of goods priced in US dollars take the hit. They were making big profits when the dollars were more or less at par.
I see prices starting to rise now. Have you checked the price of heavy equipment lately?
Changing gears, to me this place doesn't suck. At least it sucks less than comparable western countries. Our multicultural system is shit, but we aren't the burgeoning third world wasteland that europe has been transformed into, and we aren't treated to hordes of central american welfare savages ( every one of whom I hope dies ) that the US is - voluntarily.
Either way, whatever we are, we are a small time player following the lead of the 1 true world menace to the south of us. That sucks.
If you make an offer on Detroit..............?
Didn't Harper recently commit $500 million to the bunch of fascist, fat, fucks in Kiev?
As long as that spineless neo-con piece of shit is appeasing his masters in the U.S he couldn't give a fuck about Canada...ergo, neither do I.
Fuck Canada. I'm just here for the free ride.
Spoken like a true man of character.
What, you think all these third world scum are here for the warm weather?
The dominance in ice games is the hook, eh?
The Libertarian Party of Canada is the only viable option in Canada's federal election on October 19th.
The Conservatives are now more Socialist than the Socialist NDP was 20 years ago! ...and I would rather slash my wrists than vote for Justin Trudeau's hair...he's a punk-ass bitch.
Trudeau --> Desmarais --> Rothschild
It's so easy to follow a caveman could do it.
Do they want Mark Carney back? Cause he has done sweet Fanny Adams in the UK.
No wonder Scot wants to build a wall. He is afraid the mad Canuks will conquer Wisconsin.