Wednesday, May 07, 2008
Canada Faces Economic Dilemma
Oil jumped more than 3 per cent to over $116 (U.S.) a barrel Friday following reports showing the U.S. economy lost fewer jobs than expected in April, quelling worries about the country's economic health. Crude oil futures for June raised $3.80 and settled at $116.32 after touching a high of $116.49 a barrel in late trade.
The U.S. unemployment rate unexpectedly improved, raising hopes an economic downturn was not gathering steam as the second quarter opened - 20,000 jobs evaporated last month, far fewer than the 80,000 that economists had anticipated. The national unemployment rate fell to 5 per cent from 5.1 per cent in March.
Canada's gross domestic product slid 0.2 per cent (not adjusted for inflation) - from it's January level, the second contraction in three months. Over the three-month period, economic output shrank at a 0.7-per-cent annual pace. That's the steepest decline since 1997 and the first since November, 2001, when the United States was in the throes of a mild recession.
Ontario is in economic trouble after decades of generous contributions to other provinces, with soaring energy costs and its manufacturing base eroding. In addition exporters continue to struggle with the Loonie. The TD Bank Financial Group calculates that Ontario could qualify for federal equalization transfers for poorer provinces in 2010-11, and perhaps sooner.