It's odd that on the same day, in the same newspaper, you will come across two entirely different assessments about the current economic recession. Depending on what you read and which sector of the government or financial gurus you wish to believe, we are definitely coming out of the recession, we are slowly coming out of the recession, or the worst is yet to come.
Hmmm, so I guess, nobody really knows.
The conflicting reports are not designed to keep us living in a panic. The truth is, they are all correct. Each segment of the economy has its own breaking point, recovery rate and stability pattern. Each area has a different impact on individual provinces and territories, as well as our economy as a whole.
Let's take, for example, retail sales. Statistic Canada reports that retail sales in July are down. Does that mean consumers aren't shopping? Does it means consumers have no money to shop? Most likely, consumers are shopping smart. Retail sales includes things like automobile sales, and let's face it, these days cars and trucks are practically free. Therefore, retail sales figures reflect the amount of money spent, not the number of purchases.
The same holds true for supermarkets and grocery stores. Most grocers have been fighting fiercely to win over the budget conscious consumer. You only have to walk your local supermarket aisles to witness "lower prices" proudly bannered all over the store.
A rainy summer season didn't invoke swimsuit sales, nor did it inspire any family vacations at the beach. People who suffered job losses, pay cuts or work sharing are understandably being frugal with their spending.
Canada's Prime Minister, Stephen Harper, in a news conference stated the recession is only over in a technical sense and "the recovery, while it exists, is extremely fragile." Well, of-course the recovery is fragile. The Big 3 North American auto manufacturers fell apart. All over the world, large banks are failing. Governments in every region are creating deficit budgets to pour money into their stripped economies. The Great Depression of the 1930’s is not far enough in the past for Canadians to believe it will never happen again.
Retail sales numbers indicate consumer confidence. In short, our willingness to believe we can go out and spend money without worry. Do lower than expected retail sales mean we’ve locked up our wallets?
No, not necessarily. Given the effect of the massive changes we have experienced, I think it’s more than reasonable to assume Canadian are simply spending more wisely. Deep down, there is a bargain hunter in all of us, just waiting to be unleashed.
The retail market has seen other recent changes aside from competitive pricing and a summer full of rain, there is the environmental influence. Canadians consumers and businesses alike are making a conscious effort to “go green” which includes garbage-less lunches for kids in school (no juice boxes or sandwich bags please), reusable shopping bags, promoting public transportation, carpooling, walking or cycling, as well as discouraging single use convenience items such as bottled water. Funny thing, being environmentally friendly tends to be easier on the wallet.
However, while retail sales are down, our banks are making billions of dollars in profit. Clearly, our money is at work.
Recovering from a recession is not an overnight process and we will continue to hear about some segments of our economy booming while others are still in a struggle. Yes, we are slowly coming out of the recession, but there is no magic switch to reset all of Canada to the pre-recession status at once.
