The recession ended in April 2020, according to a new statement by the official judge of business cycles. Despite the latest pronouncement, nobody feels like we’ve been in good shape the past year. The recession label is given by a committee of the non-profit National Bureau for Economic Research. The purpose is to help researchers have a common and accepted set of business cycle dates. The committee does not make forecasts nor recommend policy. It just determines whether the economic worm has turned.
The committee wrote, “In determining that a trough occurred in April 2020, the committee did not conclude that the economy has returned to operating at normal capacity.” If someone falls down a ten-foot hole, an economist would say the person is in recession. When the unlucky person gets up and takes one step upward, the economist says the person is out of recession. Everyone else sees the person is nine feet down a ten-foot hole.
Looking a little into the future is part of the committee’s work. After the economy has turned up, the committee asks itself: If the economy starts to turn down tomorrow, will we want to call that part of the earlier recession or a brand-new recession? That question delays the answer to whether the recession is over. Because of the time lag, committee pronouncements are not much use in assessing current conditions. And the committee emphasizes their research-oriented approach.
Although the committee can look at a wide variety of economic indicators, they focus on four measures. These range from 70% recovered to more than fully recovered, as of this writing.
Real personal income excluding transfer payments is a broad measure that counts wages and salaries, other employee benefits, as well as income from rents, dividends and interest. The “real” label means that the measure is adjusted for inflation. This gauge dropped sharply in March and April of 2020 and has now more than recovered that loss. If transfer payments from the government are added, income is well above pre-pandemic levels, but this measure doesn’t count the federal stimulus checks that households received.
Industrial production measures the output of manufacturing, utilities and mining, which includes oil and gas production. It has recovered 90% of its loss so far. Within this category, utilities have lagged (reflecting weak industrial demand), manufacturing is almost back to pre-pandemic production, but mining is way down, due to low petroleum production.
Employment is the weakest of the four main measures, having recovered just 70% of its loss. The high unemployment comes with many unfilled job openings, which is quite a puzzle. Possible explanations include a mismatch between the unemployed and the skills needed for open positions; the effect of past stimulus payments and bonus unemployment insurance benefits.
The fourth measure is real business sales of manufacturers, wholesalers and retailers. Again, the label “real” means inflation-adjusted. This tracks the goods portion of the economy, which is less important than it used to be. Real business sales is running nine percent above its pre-pandemic high, but that’s not surprising. Social distancing and lockdowns led to reduced spending on services, such as restaurant meals, travel and hotels, so consumers had more to spend on food on home remodeling and redecorating.
Looking at the data, I suspect that the committee pondered the possibility of a second economic downturn triggered by Covid-19 via lockdowns or social distancing. If that had occured, they might well have considered the whole period as a single recession. Waiting to see if an other downturn occurred, and what its cause would be, justified their long delay in declaring the recession over.
The committee’s decision tells us little about the future. The shortest expansion on record, which is the period between recessions, was just 12 months. It’s been more that long since the official end of the last recession, so anything can happen from here forward.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
