The Confidence of Economists - Tire Review Magazine

The Confidence of Economists

Ask six U.S. economists when we will be out of this mess, and you’ll get 24 opinions.

But ask 20 Canadian economists, and they will give you one consensus answer: Soon!

According to a Jan. 21 Reuters story: “The Canadian economy should emerge from recession during the second half of the year as stimulus measures take effect, setting the stage for interest rate hikes in a year, a Reuters poll showed.

The quarterly economic survey of 20 economists, conducted in the days before the Bank of Canada made an expected rate cut of a half-percentage point to a 50-year low of 1.0% on Jan. 20, found the economy will contract by an annualized 1.1% this year.

That is in stark comparison with forecasts for growth of 1.1% in a poll three months ago and point to even lower rates at the central bank’s next policy meeting in March.

All the economists surveyed said the economy would contract in the first quarter of this year, but a small number expect growth as early as the second quarter. The median forecast showed growth of 0.9% as soon as July-September.

Growth should then pick up again in the fourth quarter to an annualized 2.0% and the momentum will likely carry into 2010 when it will reach 2.0% for the year as a whole, according to the poll.

"Canada should be out of recession in Q3/09, but only modest recovery is expected in 2010. Patience will be a good ally," said Sebastien Lavoie, an economist at Laurentian Bank Securities in Montreal.”

So, I guess the message here is if you want the recession/depression to end earlier, or prefer unfetter optimism, move to Canada.

If you have comments to share, send to me at [email protected].

– Jim Smith

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