Remember the recession? That is, the Great Recession of 2008-2009, otherwise known as The Great Downturn, The Great Slump, and The Worst Economic Crisis Since the 1930s? Those of you who were there know it was a difficult time — there were layoffs and plant closures across the board, job sharing and wage clawbacks became the norm. We watched, helpless, as whole industries — automotive manufacture, banking, pornography — teetered on the edge of collapse.
It may be hard to imagine, in these heady post-recession days, but the very culture changed. Elaborate travel plans got downgraded to “staycations,” luxury items were suddenly seen as, well, luxuries. To keep warm, musicians and hipsters were forced to grow beards that would have shamed a Russian novelist. Things got so tense, even music video award ceremonies were interrupted by cries of “injustice!”
But those days are, thankfully, behind us…
Some say the party began again in mid-September, 2009, when U.S. Federal Reserve Chairman Ben Bernanke said that “from a technical perspective, the recession is very likely over at this point.” He said more — something about it feeling “like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was,” — but that was all lost amid the joyful hollering and popping of champagne corks.
All of sudden, optimism was breaking out all over. Around the same time as Bernanke was declaring economic peace in our time, Sam Stovall, chief investment strategist at New York’s Standard & Poor’s, told the Christian Science Monitor that “the recession came to an end at the end of August.” Here at home, Bank of Canada governor Mark Carney declared that “we are on track for the recovery both in Canada and globally.” To top it off, a report from the International Monetary Fund said that Canada would recover faster than most other wealthy nations.
(On a side note, it will be very interesting to see, nine months on, how many “Bernanke Babies” were conceived during all the R-Day revelling.)
And yet, there are those who say that these celebrations were premature, that, even if one were to accept the notion of a “technical” end to a recession, things are still sufficiently crappy as to make all talk of an ongoing recovery all but worthless. Nassim Taleb, author of The Black Swan: The Impact of the Highly Improbable, told The Globe and Mail that the central bankers declaring the end of bad times “have no clue” and that “all of the problems that caused the crisis are all still here.” About Bernanke, Taleb said that “he shouldn’t be allowed in Washington. He’s like a doctor who misses the metastatic tumour and says the patient is doing very well.”
Certainly, some of the people you’d think would be toasting a recovery are not feeling exactly jubilant. A survey conducted over the summer of 2009 by RBC Capital Markets found that “despite signs of economic revival, the world’s finance executives fear a slow, weak recovery, are uncertain about the economy’s direction and anticipate major changes in borrowing sources and the relative growth and stability of countries’ capital markets.” In fact, of the more than 700 financial bigwigs surveyed, only around 40 of them foresaw “a sharp economic rebound in the next six months.” Translation: hold off on the hookers and gin.
(Actually, people appear to be already holding off on the gin. When we asked Chris Layton, the media relations coordinator for the Liquor Control Board of Ontario whether his company, at least, was enjoying the good times, his reply was fairly blunt: “Our sales are still soft,” he wrote in an e-mail. “No signs of recovery at this point. From April 1 to September 12 [2009], our net sales were up 1.6 per cent versus the same period in 2008 but this represents a slowdown in sales growth as by comparison in fiscal 2008-09 sales were up almost four per cent over 2007-08. We have been seeing consumers shifting to lower price points and many are choosing to consume and entertain at home. Licensee sales were down about eight per from April 1 to August 15 versus the same period in 2008.”)
After Statistics Canada released a report at the end of September showing that the Gross Domestic Product had stalled over the summer, Doug Porter, the deputy chief economist at BMO Capital Markets, said, “We’re not talking about a shot across the bow of the optimists, this is more like a torpedo through the hull.”
On his blog, author and former MP Garth Turner mocked the economists and politicians who “fell over themselves lauding an historically short downturn and a return to our normal ways… There is nothing normal about current times. Days ahead will be even less predictable. We’re in the throes of a battle between inflation and deflation, between those betting on economic breakout thanks to government trillions and others convinced we’ve not paid yet for the sins of a generation of mindless borrowing and over-consumption.”
Even Prime Minister Stephen Harper, the most frequent target of Turner’s bile and the man you’d think would be quickest to tell us all to turn those frowns upside down — even he went the cold shower route: “As long as we continue to have challenges in the labour market that affect Canadian families on the ground,” Harper told reporters a couple of weeks after Bernanke’s momentous announcement, “then I don’t think we can truly say the recession is over. So I think the recovery, while it exists, is extremely fragile.”
So, are we out of the woods or still up the creek? We asked Toronto Star business and current affairs columnist David Olive if he could clear things up. “Realistically,” he said, “we’ll be waiting quite a long time for all-important employment numbers to improve, and it will very much feel like a continuing recession to folks on Main Street. Some experts are saying it will be as much as four years before we return to pre-recession employment levels. I don’t think it will be quite that long, because of the forceful economic stimulus President Barack Obama and Congress will want to make to jolt job-creation, but it will be a longer-than-normal post-recession recovery.”
So, we are in the midest of a the Great Recovery, but don’t expect anything to get better anytime soon. How exactly does one celebrate that? With an empty bottle of champagne?
