According to the Bank of Canada, the recession is over. However, according to the Bank of Canada’s governor Mark Carney:

• “Unemployment will continue to rise”
• “the higher Canadian dollar, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth." (In other words, people are still losing jobs)
• Carney said the prospect of "extreme financial risk from beyond our borders" is no longer an issue, but the recovery is not certain.

I am confused Mark. The recession is over but people will continue to lose jobs?

As a person who does not have Mark’s financial knowledge, I find it hard to rationalize his statements considering last night’s round of earnings releases; American Express, Microsoft, Amazon all report dramatic declines, Citibank is teetering on the verge of bankruptcy and the UK GDP shrunk significantly more than anticipated. While there are some very good high high points (Intel’s earnings, Ford making a profit), one has to wonder if it is really ‘over’. After all, even with the highlight of Ford, a quick read uncovers a significant truth:

• The car maker reported a profit of $2.3 billion, though that came mainly from gains it recorded as part of efforts to restructure its debt during the quarter. Excluding those gains, Ford would have reported a loss of $424 million, still narrower than a comparable loss of $1.03 billion a year earlier and much better than Wall Street analysts were expecting.

The US Federal Reserve Chairman Ben Bernanke had this to say:

Federal Reserve chairman Ben Bernanke in his semi-annual address before the House Financial Services Committee on 21-22/07/2009 said that he believes there have been “notable improvements” in the U.S. economy lately because the lowering of interest rates and creation of financial programs have provided a support to the economy.

However, the economy will remain weak for some time and unemployment will keeps on rising throughout 2009 before getting better in 2010 and even till 2011. He also pointed out that the economic recovery depends primarily on the improvement of the labor market and the health of the U.S. consumer.

The general consensus is that the worse is over and we will see a slow and painful recovery from now. The price to pay is quite exorbitant and the country is indebted to the hilt with a staggering amount of $12 trillion or 85% of GDP. Nonetheless, we have seen worse during the 40s under Truman administration when the U.S. entered WWII and at the same time ended the Great Depression. The percentage of national debt/GDP peaked at 120% then. Somehow, we managed to bring down it down to 30% at the end of the Carter administration. So there is still hope that history will repeat.

As Bernanke has said, a full recovery depends mainly on employment and U.S. consumer but both factors are still in the red, people are struggling to make ends meet, let alone to consume. The Fed chairman insinuates that we may find trading partners in Asia, for instance in…China to substitute our own domestic demand. That would be quite an irony.

Of note, the US housing crisis continues to churn along with speculation that we have not seen the worst:

RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its Midyear 2009 U.S. Foreclosure Market Report, which shows a total of 1,905,723 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 1,528,364 U.S. properties in the first six months of 2009, a 9 percent increase in total properties from the previous six months and a nearly 15 percent increase in total properties from the first six months of 2008. The report also shows that 1.19 percent of all U.S. housing units (one in 84) received at least one foreclosure filing in the first half of the year.

And of course, like all good weather forecasters (who are really just guessing), Mark provided the following closing comment:

• But "significant upside and downside risks remain to the inflation projection," particularly from the volatile loonie, the bank said.

Way to go Mark – forecast both possibilities. The good thing, for those of us with a mortgage, interest rates are not going up it would appear:

• Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010

We live in interesting times. The fight goes on.