U.S and Europe saw the worst of the downturn
OTTAWA— The recession wasn’t as painful for Canada as economic slumps in 1980’s and 1990’s, but Canadians still felt its pain, says Statistics Canada.
StatsCan issued the most comprehensive comparison of recessions since the Second World War and says Canada didn’t have it bad as we thought. That conclusion may shock those who see the economic meltdown of 2008 as the most troubling economic free-fall in financial history.
But, the numbers show that Canadians didn’t come even close to feeling the pressure the U.S and Europe continue to endure. There is also evidence that Canada is rebounding a lot faster than the two recessions prior, being the only G7 country to recover all its lost output (GDP) and jobs.
StatsCan’s best estimate is that the economic slump lasted about eight months, taking 10 months to reverse. The slump did, however, set a record, seeing eight straight months on consistent decline. The agency says the recovery started in the summer of 2009 and never really looked back, recovering all lost GDP in about 18 months.
Canada lost 417,000 jobs during the most recent meltdown. Still, these numbers were not as low as the recessions of 1990-92 when employment rates fell 2.4 per cent and in 1981-82 when the rate fell an astounding 5.4 per cent. But, like its GDP, Canada’s job market recovered much faster this time, recovering less than two years after its initial stumble, says the agency’s chief economic analyst, Phillip Cross.
Not all is good, though. Canadian exports plunged and have yet to recover. This is significant, considering exports represent a third of the economy.
Unlike the last two recessions, however, the Bank of Canada reacted aggressively, basically zeroing out the policy interest rate and kept it there for over a year. That move boosted borrowing and spending, allowing Canadians to keep consumerism cycling, buying new cars and houses throughout as lenders continued to issue credit.