Hamilton has yet to experience the full destructive power of the current economic crisis, says a noted economist.
“It’s bad,” said Peter Hall, vice president and chief economist of Export Development Canada. “There is still bad news ahead of us. I don’t know if (Hamilton) can dodge the bullet.”
Mr. Hall spoke to a joint Stoney Creek and Hamilton Chambers of Commerce lunch event at Stoney Creek’s Grand Olympia Hospitality and Convention Centre a day before Statistics Canada revealed further dire economic news.
Canada had shed about 127,000 jobs in January, with Hamilton’s unemployment rate jumping to 8 per cent. A year ago the unemployment rate for the city was 5.6 per cent. Hamilton shares the fifth highest unemployment rate among major Canadian cities.
Mr. Hall said the North American economies have experienced the collapsed of the housing marketing, and financial institutions have gone bankrupted or on the verge of insolvency.
But the third wave of this economic tsunami, he called it, has yet to hit both economies – massive job losses, which he said are inevitable.
“This is not hyperbole,” he said. “These are unprecedent times. It is not entirely inappropriate to refer to the Great Depression.”
People, he said, should brace themselves for further economic impacts, especially higher unemployment figures. Last week residents received a taste of how difficult the economic crisis will be to solve.
“We have not seen the unemployment curve yet,” he said. “It’s still bad news ahead of us. That will translate into poor performances in the financial markets.”
He said as more people lose their jobs, there will be more defaults on debt, which will send banks and other financial institutions into a spiral of further balance sheet losses.
Ontario lost about 71,000 jobs in January, more than the rest of the country combined, and now has an 8 per cent unemployment rate. Among those jobs lost were 36,000 in the manufacturing sector. Since 2005 there have been 272,600 manufacturing jobs gone in the province.
Mr. Hall, speaking to reporters after his presentation to about 120 people, said the federal and provincial infrastructure funding will be “critical” to holding off the effects of the economic downturn. But even with the stimulus packages offered by the American and Canadian governments, Mr. Hall is still forecasting limited growth in 2009. It won’t be until the middle of 2010 when the economies will start to revive, he said. Mr. Hall predicts the housing industry will be the first to turn around.
“This will not be corrected overnight,” he said.
Mr. Hall is looking to the U.S., which is about 20 per cent of the world economy, for the first signs of recovery.
For Canadians, he said, the only positive economic indicator they should look forward to is lower gas prices. The dollar, for instance, to the disappointment of snowbirds, he said, won’t exceed 85 cents for the next two years.
But despite the doom and gloom, Mr. Hall does see opportunities. Companies that have invested in research and development and are poised for recovery by 2010 will take off once this recession is over, he said.
“And to survive the recovery, you will need skilled labour and technology solutions,” said Mr. Hall.
Businesses that emerged from the slowdown in the nineties, took off in the high technology sector and had the skilled labour to take advantage of the recovering, he said. The same blueprint should be followed during this dislocation, he said.
“A downturn is always a good time to invest in skilled labour,” said Mr. Hall.
By Kevin Werner
News Staff, Stoney Creek News