Ontario forests are full of bears, but many hikers and campers never see the elusive animals at all. These days, financial bears are just as hard to find. I know I’m not the only one puzzled by the buoyant mood among economists and financial writers in Canada — ex-Merrill Lynch economist David Rosenberg and the Other Reader are on my side — but we appear to be alone in our skepticism, in spite of a host of economic indicators and other signs that might be expected to temper the unbridled optimism:
* Home sales have hit highs in some of the same areas (OK, Toronto) where unemployment is at an 18-year high, and is above the national average. How does that make sense?
* Back to unemployment for a second. It rose more than expected in July. Breaking down the figures shows that the part of the workforce actively looking for work has shrunk; another huge number of people are self-employed. Having recently spent a couple of months being counted among the self-employed, I can assure you that it is not an indicator that people laid off from higher-wage positions are replacing their former incomes, or are actually starting viable new businesses. It’s often a stopgap measure to bring in more income than EI would provide while looking for a job in a tough market.
*The number of people collecting EI has ballooned. In Toronto, the number has doubled in a year.
* We have deflation. Economists are spinning the most recent CPI reading the same way they spun the inflation beforehand: strip out crazy energy prices, everything is pretty stable. Except now, as before, we all have to pay for gas, heating oil, etc. Bottom line: not all prices are deflating, but some are. Never a sign of economic health.
All the consumer spending in the world can’t convince me that all the rest of it doesn’t matter.