THE BAD NEWS
Faulty towers
Commercial real estate is seen by many as the next shoe to drop in the recession, and there are signs that may already be happening. Prices in the U.S. plunged 5.1 per cent in July from the month before, and are down 37 per cent from their peak in 2007, according to the Moody’s/REAL Commercial Property Price Index. In Canada, commercial real estate vacancies are surging in Toronto, Vancouver and Calgary, according to CB Richard Ellis Limited.
Labour pains
The U.S. unemployment rate rose to 9.7 per cent in August from 9.4 per cent a month earlier, and up from 6.2 per cent last year, according to the Labor Department. The pain was felt in the majority of states, with joblessness increasing in 27 states from July, while 16 saw rates decrease. The rest stayed the same.
Delinquents
For all the talk of a recovery in the U.S. housing market, mortgage delinquency rates continue to surge. The rate hit a record high in August, as 7.58 per cent of homeowners were more than 30 days behind in their mortgage payments, up from 4.89 per cent last year. It was the fourth straight month of rising delinquencies. Among those with subprime mortgages, delinquency rates were an astonishing 41 per cent, up from 39 per cent the month before.
SIGNS OF THE TIMES
- FedEx reported that its profit fell over 50 per cent in its latest quarterly results, as people shipped lighter and fewer packages during the recession. That’s troubling news coming from a company that is often looked to as an economic bellwether. But there are some positive signs of a turnaround down the road, said the company, like a pickup in the number of international shipments.
- Gas prices may be down compared to last year, but Canadians have been driving less during the downturn. According to Statistics Canada, Canadians drove 70.8 billion km in the first quarter of 2009— 2.7 per cent less than last year. They were also downsizing their rides, from SUVs and pickups to cars and station wagons. Meanwhile, the demand for used cars is surging, along with their prices, according to DesRosiers Automotive Consultants.
LATEST INTELLIGENCE
In his first visit to the White House since President Barack Obama was elected, Prime Minister Stephen Harper last week once again expressed his concerns about the “Buy America” provisions in the U.S. stimulus package. The President offered calm words of reassurance, but many, including Harper, worry trade wars are on the horizon.
“The worst possible signal that we could send to the world right now would be an increase in protection and particularly a procurement trade war between Canada and the United States.”—Prime Minister Stephen Harper
“There is no prospect of any budding trade wars between our two countries.”—U.S. President Barack Obama
“The protectionist juggernaut shows no sign of slowing down.” —Simon J. Evenett, professor of international trade, University of St. Gallen, Switzerland
“We look like Boy Scouts down there. You can’t fix it in 42 minutes or an hour with the President.”—Liberal Leader Michael Ignatieff
“The provinces and municipalities will say, ‘Why keep our markets open if we’re being locked out of the United States?’ ”—Jayson Myers, CEO, Canadian Manufacturers and Exporters
“Quite a few Americans believe that defeating new trade agreements and gutting existing ones would protect American jobs. In reality, those actions would . . . repeat the mistakes of the 1930s.” —David Rockefeller, former CEO, Chase Manhattan Bank
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