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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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The objective of $40 oil was to not only try to stimulate failing Keynesian economies but to remove governments considered a threat to the PTB. Hasn't worked in Russia yet. Might just in Canada though.
As if our government led by the gay little nerd is a threat.
p.s. I met one of harper's ex girlfriends a few years ago, and she looked like an obese sheepdog in drag who let herself go.
Sad. Canada's a great land. Good people,
DOWN WITH THE FUCKING BANKS!
Canada is now a ward of Israel, you figure out the rest.
Canadians, like most other countries, own nothing, so the house price discussion is moot. Very worthwhile viewing here on how the 'legal name' scam works. Compelling research:
Human Rights Defenders League of Canada
https://www.youtube.com/channel/UCKTn5HKfYakh93oR4T4T_Qw/playlists
Servant King
http://servantking.info/
Well, the good thing about Sask is that we're not drowning in debt. We are the only province to have actually lowereed our debt in the last three years. And our oil is conventional, usually costing around $15-$20 to take out of the ground. So we're not actually losing money, just slowing down a bit. Same with potash and iron, I beleive.
Your oil is conventional? Then why is Estevan currently a ghost town where the local Service Canada location is lined up with people looking for Unemployment Insurance then? If your oil was all conventional then they wouldn't tie wells in with fiberglass pipe to a 400 barrel tank. They would have gathering systems. Which they don't.
A lot of Saskatchewan crude is very heavy oil, The Husky upgrader in Lloyd is set up just for heavy crude.
What madness are you talking of? Lowered your debt? How stupid are your people? Take it! Don't hold yourself back! Dive right into that bubbling sea of sweet debt! The more the better - oh I envy the man that is heavily indebted. Max everything out - every card, every bit, every drop. This is not the time to live in chastity! This is our last evening - our last great feast - you understand? But pray, pray to all seven gods, that you won't see the next morning...It will be cruel.
How's the paper industry hanging on?
Its been falling apart for years. The internet has resulted in a dramatic decrease in demand for paper
Maple syrup futures still looking good?
To be honest, no, not even maple syrup futures look good. The government has intervened with a ridiculous royalties program and made it damn near impossible to make money in that industry.
Cool flag.... The UK without (Northern) Ireland. LOL.
Forgot to mention our rather large gold mining industry- completely in the dumps thanks to vicious manipulation by the banksters
Canistan is about to puke up a harper
hail the queen, you weenies...
Rise up, ye men of Canada! Take back your heritage. Where's Dudley Doright now?
He's keeping it real in Innisfail Alberta with a pile of silver and enough supplies to get fat during the collapse.
He's busy trying to get Nell off the railroad tracks before the bankster express smoshes her.