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The misery keeps flowing in Cut Town

JEFFREY JONES

Welcome to Cut Town.

Calgary has already weathered months of oil patch staff reductions, capital spending cutbacks, dividend shrinkage and asset sales, all coping mechanisms to deal with the collapse in crude prices.

September, though, feels like the beginning of Phase Three of the downturn that has cast a pall over a city that was the economic envy of Canada just a year ago. Several companies made new cuts, putting almost 1,000 more people out of work.

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Aside from resource slump, evidence for a so-called recession hard to find

BARRIE McKENNA

If Canada is in recession, surely you would see it in Vancouver.

The city is the hub of a slumping resource economy and the gateway to slowing China.

And, yet, Vancouver is thriving. The housing market is as hot as ever. Unemployment, now at 6 per cent, is lower than it has been in years, and consumers are spending fiendishly.

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Canada’s second-quarter GDP figures likely identify a ‘technical recession’

DAVID PARKINSON

Canadians will find out this week if their economy slipped into a so-called “technical recession” in the first half of the year. But more importantly, they will also see how fast the economy is pulling out of it.

On Tuesday, Statistics Canada releases Canada’s gross domestic product figures for both June and the second quarter. In all likelihood, it will report that the economy shrank slightly in the quarter, just as it did in the first quarter of the year – thus meeting the criteria for one commonly used indication of a recession, two consecutive quarters of GDP contraction.

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Unhappy with ambiguity, economists struggling to say ‘I don’t know’

TODD HIRSCH

For as long as humans have walked the Earth and possessed self-awareness, we’ve been contending with ambiguity and uncertainty. Entire fields of academic study – philosophy, religion, psychology, medicine – have had to come to terms with the mystery of certain topics. When confronted with various questions beyond what our finite minds can see or grasp, we’ve had to eventually be comfortable saying: “We just don’t know.”

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Has globalization run its course?

CARL MORTISHED

What ever happened to globalization? Growth in the volume of traffic in stuff between nations is stagnating, if not in retreat. Some economists wonder if this is a sign that we have reached “peak trade.” Could it be that the frantic efforts to create seaborne and airborne highways between Asian workshops and North American and European warehouse shops was just a phase that has now run its course?

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Amid global market turmoil, can the U.S. economy go it alone?

DAVID PARKINSON

The global economy is in peril. China’s growth miracle is unravelling. The world’s financial markets are vibrating like a high-pitched tuning fork being hit by a hammer.

Yet in the midst of all this doom and gloom comes a timely reminder that the biggest economy in the world, the United States, is doing just fine, thank you very much. July durable goods orders – an important indicator of manufacturing strength, business capital investment and big-ticket consumer demand – rose a better-than-expected 2 per cent month over month, adding to a upwardly revised 4.1-per-cent surge in June. It was the best two-month stretch in nearly a year.

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With markets in a spin, odds point to another Bank of Canada rate cut

DAVID PARKINSON

We’ll probably never know what The Two Steves – Prime Minister Harper and Bank of Canada Governor Poloz – said to each other on Monday morning as financial markets melted down like a Popsicle in the mid-August sun. But the mere fact that the PM got the central bank’s top man on the phone (and saw fit to publicize the conversation) speaks to how dramatically the tide may have turned for Canada’s near-term economic outlook – and how quickly another round of rate cuts from the bank has been moved from the back burner and brought back to a raging boil.

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Canada has the potential to be a services superpower

GLEN HODGSON

Many people automatically think about resources or manufacturing when describing Canada’s economy. But that image of Canada as a producer and exporter of forest products, energy or autos is archaic and out of step with today’s reality.

It’s about time that our self-image got in sync with the facts. Canada today is first and foremost a services economy in terms of employment, wealth creation and international business. Services have steadily grown to more than 70 per cent of gross domestic product, with many highly skilled and well-paying jobs. Future economic success will be determined by our ability to stay at the front of the pack in providing services to the world. Does Canada have what it takes to be a services superpower?

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Investors not poised to repeat painful lessons of past economic crises

BRIAN MILNER

Less than a month before the seventh anniversary of the collapse of Wall Street heavyweight Lehman Brothers, which triggered a global financial meltdown, world markets are again in turmoil. And the question now is whether we are heading off the same steep cliff despite strenuous efforts by governments, central bankers and regulators to erect suitable safety barriers.

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U.S. housing’s slow recovery finds its legs

BRIAN MILNER

Housing was a major engine of U.S. economic growth before the bubble burst, triggering the worst recession in decades and wiping out trillions of dollars of home value. The battered sector has been struggling to regain solid footing ever since, typically losing ground again after some hard climbing.

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Milk prices are dropping, but not for Canadians

BRIAN LEE CROWLEY

Here is a pop quiz. What highly prized liquid commodity has seen its global price decline by half in recent months, despite rising world demand? Hint: the price is falling because of increased supply caused by rising production by the strongest suppliers, plus technological change. The result is excruciating pressure on suppliers to reduce costs, but tremendous benefits to consumers, who now have more money in their pockets to spend on other things.

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The reality of Harper’s Conservatives and Canada’s stagnant job growth

DAVID PARKINSON

The Harper Conservatives love to portray themselves as the one federal party committed, above all other economic objectives, to creating jobs for Canadians. Indeed, in the current marathon campaign, we can expect to hear the Tories boast often about their job-creating record. Over the next few weeks, you may well hear “one million jobs since the end of the recession” and “strongest job-creation in the G7” until your ears bleed.

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Divergent inflation trends complicate rate moves in U.S., Canada

DAVID PARKINSON

In the intense discussion about the fast-evolving interest rate policy at North America’s central banks, somewhat lost in all the intrigue has been the critical role of inflation. The trend in consumer prices could still prove the pivotal factor in rate decisions on both sides of the Canada-United States border – and we’ll get an update on the numbers for both countries at a key policy juncture this week.

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The next Greece is closer than you think

Glen Hodgson

Greece has made a deal to remain in the euro zone, but its massive challenges with heavy public debt, a fragile banking system and painful fiscal and economic adjustment have not gone away. And Greece won’t be the last hard case. Other countries have unsustainable economic policies and heavy public debt, and are going to have to swallow some bitter medicine to stabilize their economy and rebuild creditworthiness.

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Co-ordinated market intervention is the way out of this ‘currency war’

DAVID PARKINSON

Until now, most experts have been reluctant to use the term “currency war” to describe this year’s global arms race in foreign exchange markets. But China certainly fired a big shot over the bow this week.

By formally cutting the government-managed value of the yuan, China raised the trend of increasingly competitive currency devaluations to a new level. In a world where struggling economies have been adopting policies that have driven their currencies lower in not particularly transparent attempts to stimulate export growth (30 central banks have cut interest rates this year), the world’s biggest exporter went to a new extreme to defend its turf. Other export countries – including Canada, which has cut rates twice since January and is banking on an export recovery to revive its flagging economy – will surely feel the heat. So will the global financial markets, which look more fragile with every new volley in the currency battle.

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China's devalued yuan bad news for Canadian resources

DAVID PARKINSON

Economists say China’s surprise devaluation of its currency is the latest sign that the country’s massive economy is slipping more than its government wants to let on – which is bad news for Canada’s beleaguered resource-producing industries and regions.

China’s central bank lowered its peg on the yuan by nearly 2 per cent Tuesday, a move that appeared to be at least in part tied to efforts to further liberalize trading in the historically highly state-managed currency. But most observers saw the timing of the devaluation as the latest in a series of escalating steps by the Chinese government to light a fire under the country’s economy, which continues to show signs of cooling. News of the devaluation triggered selling in commodities and commodity-sensitive currencies, such as the Canadian dollar, amid concerns that China’s notoriously huge appetite for natural resources may be waning more than expected.

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Smooth transition needed for carbon pricing and free trade

CHRISTOPHER RAGAN

Christopher Ragan is an associate professor of economics at McGill University and a research fellow at the C.D. Howe Institute.

Even if we weren’t in the middle of a federal election campaign, there would be several important policy issues being discussed this summer. One of the big ones is Canada’s part in the negotiations for the Trans-Pacific Partnership, a free-trade agreement with several Pacific Rim countries. Another is the development of carbon-pricing policies in Ontario and Alberta. Policy makers and ordinary Canadians alike should note that these policies have two big things in common, and one crucial difference.

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July housing data to show Vancouver, Toronto markets still sizzling

TAMSIN McMAHON

For the first half of the year, Canada’s housing market has been a tale of just two cities: There’s Toronto and Vancouver, and then there is everywhere else.

This week brings several new data releases on the housing market, including July existing home sales updates from the Canadian Real Estate Association and Teranet-National Bank of Canada House Price Index, along with figures for new home sales and housing starts from Statistics Canada. All are expected to show more of the same trend that has dominated the national housing picture this year: strong growth in Toronto and Vancouver, with home prices rising far more modestly, or even falling, in other regions.

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Why would Toronto want a money-sucking show like the Olympics?

ERIC REGULY

Is there any spectacle more grotesquely misshapen than the Olympic Games?

No one does fantasy accounting better than the Olympics. Every one of the Games goes over budget, sometimes absurdly, laughably so, with taxpayers picking up the tab.

That’s not the only problem with the Games. Another is that they’ve become glorified with all the same rich athletes you see in the weeks and months leading up to the Games and all the same athletes you’ll see after the games. Do you really want to see zillionaire Rory McIlroy play golf in the 2016 Games in Rio de Janeiro when you’ve watched him all year in the Masters, PGA tours and European tours? Or NBA players dunking for gold?

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Trump misses the boat with manufacturing lament

BRIAN LEE CROWLEY

Republican presidential aspirant Donald Trump is only the latest economic crackpot to attract a significant political following by peddling emotion and anecdote as evidence and stoking the legitimate fears of the economically vulnerable.

Trump’s latest claim is America has been weakened and China strengthened by the move of manufacturing jobs overseas, pinpointing the culprit as poorly designed free-trade agreements. “I always beat China,” he boasts while wearing a ball cap emblazoned with “Make America Great Again.”

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Why conservative governments ought to embrace a higher minimum wage

ANDREW JACKSON

Few Canadian economic debates are as long-standing and as predictable as that over the pros and cons of raising the minimum wage.

Progressives call for a higher wage floor to combat inequality, low pay and poverty; employers and the political right generally argue that a decent minimum wage comes at the cost of jobs, and harms those it is intended to protect. But the political and policy debate, outside of Canada at least, has become much more nuanced and complicated.

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