Earlier this week, I argued Canada’s economy was contracted sharply in Q2 (-1.6%) not simply due to weak oil and gas prices and a historic fire in Fort McMurray. In fact, StatsCanada reported,
“Excluding the impact of the large decline in crude petroleum output, which was due to continued weakness in the energy sector and the wildfire in Fort McMurray, real GDP grew 0.1%.”
So, Canada’s economy is on the skids, and it’s quite obvious why. The U.S. is by far our largest trading partner, and I’m of the opinion their economy is in recession. Below is an excerpt from my most-recent article:
“Falling Exports hurt Canada’s Economy
Canada’s declining real GDP can be blamed on one thing: exports. Canadian exports of goods and services dropped by 4.5% in the second quarter. This is a stunning reversal from the 1.9% increase in the first quarter. Few countries around the world are more dependent on exports than the resource-rich nation of Canada.”
Click here to read Canada’s Economy enters tailspin.
U.S. economy continues to slide
Metric after metric has been reported by the Commerce Department and other government-run enterprises that all but confirm the U.S. is in recession. The latest was this morning’s report on U.S. factory orders.
While another monthly year-over-year decline was not surprising, this marked the 21st month in a row factor orders have declined in the U.S. This is representative of a dying manufacturing sector, which shed 14,000 jobs in August.
Zero Hedge reported:
“This is the longest period of decline in US history (since 1956) and has always indicated the US economy is in recession…”
US Factory Orders Year over Year
The social sharing economy cannot replace the millions of manufacturing jobs being lost in this current downturn. As sales remain soft, factory orders will continue to dry up and employers will have little reason to add workers to their payrolls. And that:
“Unfilled orders to all manufacturers fell 0.1 percent to $1.13 trillion, the lowest since June 2014, after a 0.9 percent slump
Unfilled orders have increased just once since November”
Click here to read WTF Chart Of The Day: US Factory Orders Tumble For Longest Streak In History.
Factory orders weren’t the only metric to collapse in July…
Bottom line: Canada needs the United States and its economy to actually improve for its exports to rebound.
Before believing weak oil prices are the only reason Canada’s economy is tanking, look beyond the mainstream media (which fails to report on the emerging U.S. recession to bolster Clinton’s chance in November) to the truth of a deteriorating U.S. economy.
Have a great long-weekend,
This article represents solely the opinions of Alexander Smith. Alexander Smith is not an investment advisor and any reference to specific securities in the list referred to in the article does not constitute a recommendation thereof. Readers are encouraged to consult their investment advisors prior to making any investment decisions. The information in this article is of an impersonal nature and should not be construed as individualized advice or investment recommendations.