BAD NEWS
Bringin’ down the house
America’s housing recovery still looks dubious after sales of new homes plunged 3.6 per cent in September, disappointing economists and sending markets worldwide into a tailspin. Home sales fell to an annual rate of just 402,000, nearly 40,000 below what the analysts were expecting. Economists attributed the drop to the coming end of a tax credit for new homeowners. Congress has proposed extending the program.
More pay, but fewer jobs
Non-farm payrolls in Canada continued to fall in August, dropping 0.8 per cent as another 110,200 jobs were cut. Job losses were felt across all private sector industries, with manufacturing being hit particularly hard as employment fell 1.3 per cent. There was some good news in the data from Statistics Canada. For those who still have their jobs, average weekly earnings grew two per cent over the year before, outstripping inflation.
Shrinking GDP
Canada’s economy fell back into the red in August, shrinking 0.1 per cent. That follows flat growth in July. Behind the contraction were the energy and manufacturing industries. The poor showing also raises serious questions about whether the Canadian economy will be able to grow in the third quarter, as expected.
SIGNS OF THE TIMES
- Buying a Wii this Christmas could be a lot easier than in years past. Japan’s Nintendo, which makes the video game console, has slashed its sales forecast amid the weak economy and mounting competition from the Sony PlayStation and Microsoft Xbox platforms. Even last year, with recession fears near their peak, hopeful buyers faced huge lineups for a chance to snag one of the gaming systems.
- Who says luxury is dead? Toyota has been suffering steep losses and slumping sales, but that hasn’t stopped it from building a new US$375,000 super-car, the 552-horsepower Lexus LFA. In fact, there is so much demand that Toyota won’t actually sell the cars. It will only lease them for the first two years to make sure they aren’t snapped up by brokers who want to flip them for a profit. Toyota says it plans to make just 500 LFAs.
LATEST INTELLIGENCE
Jubilation, the U.S. economy is growing again! Or is it really? When GDP rose 3.5 per cent during the third quarter, the first gain in two years, some hailed it as proof a recovery is in full swing. Others warned much of the improvement was due to Uncle Sam’s spending. Either way, for many people, it still feels like a recession.
“The benchmark I use to measure the strength of our economy is not just whether our GDP is growing, but whether we are creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well.”—President Barack Obama
“For every person out of work, for every family facing foreclosure, for every small business facing a credit crunch, the recession remains alive and acute.”—U.S. Treasury Secretary Timothy Geithner
“We’re beginning to crawl out a very deep hole.” —Ken Mayland, president, ClearView Economics
“If, as we fear, consumption growth remains unusually lacklustre, then GDP growth will slow to a crawl again.”—Paul Ashworth, Capital Economics
“The challenge here is to get organic growth—growth that isn’t helped by fiscal steroids.”—Brian Bethune, economist, IHS Global Insight
“While some may promote the stimulus as the saviour of the economy, it is a claim only the Balloon Boy’s dad would make.” —Republican Rep. Kevin Brady, Texas
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