The Canadian economy has been the talk of the town recently with the dollar reaching parity with the American dollar for the first time since 1976 and the housing market really heating up. These things are both offsetting the effects of inflation and helping to keep the economy running along smoothly. Luckily our economy right now is really based on trading natural resources and with our agriculture. Grain prices are reaching their highest levels in a long time and thats helping farmers make money. Oil is always at or near the highest level it has ever been so thats helping out the Oil companies. The problem with such a hot economy is that it is bound to cool off eventually its just a matter of when. The USA is having a lot of problems recently with its crisis on sub prime lending, a cooling housing market and the poor state of their economy. A lot of that will have trickle down effects into Canada. Today, to add to the whole mess, is a strike by GM workers at their Saginaw plant. This is going to cause over 80,000 workers in Canada to be layed off as a result of the disruption in the automobile creation chain. With such a large lay off this will be a devastating blow to our economy. Unemployment numbers are going to rise big time and the longer the strike lasts the more harm that will be caused to the economy.
So with the high Canadian dollar hurting exports and then the GM layoffs raising unemployment, the economy is going to be in for a great shock. It is hard to believe that this will all just pass by and we will be unaffected. My prediction is for a recession in the USA followed by a recession in Canada. The USA will be harder hit but Canada will be going along for the ride with this one.