COLLINGWOOD-- A TD Bank financial analyst says the Canadian recovery from the recession is still an uncertain thing.
Francis Fong spoke to a lunchtime crowd at a Chamber of Commerce meeting Wednesday at the Leisure Time Club. He outlined in detail what happened before, during and after the recession that began in 2008 and sup- posedly ended during the summer of 2009.
He called the events that caused "the worst recession since the Great Depres- sion of the 1930s" a financial crisis rather than a more general economic crisis. History, he suggested, makes it clear that such events are more difficult to recover from than more typical recessions.
That's also why the recovery has been so slow as well. Eco-nomic history shows that in typi-cal recessions, there is a pent-up consumer demand that blos-somed when the recession ends, driving a huge spike in eco-nomic growth.
Fong said the numbers show that is hardly the case in the latest economic downturn, par-ticularly in the United States. There, millions of people remain out of work with little prospect of finding any. That has driven a stake through the heart of con-sumer confidence.
Also, the high levels of unem-ployment mean the consumer public simply doesn't have the means to provide a jumpstart to the economy, said Fong.
Coupled with a lack of avail-able credit, the American econ-omy is hamstrung and shows little sign of escaping the down-ward spiral.
"The labour market there is in dire straits," he said. "It's a tough situation to combat."
Overall, the global economy showed a one per cent decline, he said. That's in spite of huge burgeoning economies such as China and India, where growth remained high.
It's also the first global con-traction seen since the 1970s, he added, demonstrating the sever-ity of the recession, which struck worldwide at the same time.
"Different countries are facing different demons," he said. "The mature economies are seeing only trend growth, while emerg-ing economies are seeing strong growth."
Circumstances are somewhat different in Canada, where con-sumer spending has remained strong right through the reces-sion, said Fong. Here, people have seized the chance to take advantage of record-low interest rates and the ready availability of credit to maintain their spend-ing spree.
That's created a different problem nationally, that of mounting personal and house-hold debt.
Fong said that's the major concern of Canadian banks and economists, who are expecting the spending levels stimulating the economy to eventually return to more traditional aver-ages.
They're encouraging Canadi-ans to save more, but even econ-omists like Fong realize that's a double-edged sword in an econ-omy driven by consumer spend-ing.
Fong said he's expecting inter-est rates--which continue to be in a freefall--to creep back up in the next few months.