Grim news just arrived from north of the border that is telling us something gloomy about our economic health.
New data show Canada's economy unexpectedly went into reverse gear in the second quarter of the year, declining 0.1%. That's an annualized drop of 0.4%, down from growth of 3.6% in the first quarter.
It matters because Canada is our principal trading partner. Some politicians hoped that international trade would help the U.S. gets its economic mojo back.
But when we look inside the Canadian data that's just where the weakness is. The big driver in Canada's weakness was a huge drop in exports, down 2.1%. At least part of the drop can be explained by a fall in energy sales due to wildfires; and lack of components caused by the earthquake in Japan .
What it also points to is a slowing U.S. economy.
There is just no way Canada can escape that, says Win Thin, a currency analyst at Brown Brothers Harriman . He also mentions the weak euro zone as a contributing factor.
The thing I know about economics is as one economy starts to slow, it drags on its trading partners and so on, and so on. You can easily get into a vicious cycle where economic weakness begets more economic weakness.
(This story has been posted on The Wall Street Journal Online's Real Time Economics blog at http://blogs.wsj.com/economics.)
By Simon Constable
No comments:
Post a Comment