The doomsayers were wrong again. There’s no great depression, as some were forecasting last fall. And the recession, while serious enough, will not be one of dire magnitude. Experts are now suggesting we’re already past the worst of it.
“We are in the process of turning the corner,” said Aron Gample, deputy chief economist at the Bank of Nova Scotia. “Bonds, stocks — every market is telling you we are at this transition from recession to recovery.”
Unemployment has reached an 11-year high of 8.4 per cent. Compared to the years from the late 1970s into the 1990s when double-digit joblessness was the norm, it’s hardly earth-shattering.
The relatively good news changes the political equation. A summer election has suddenly become a better bet. The Liberals are divided on the prospect, but the latest economic outlook gives the party’s election hawks more ammunition. The Grits’ chances of winning an election today are good.
Tomorrow, who knows. The economy was supposed to be the Conservatives’ death trap. Given time, it could turn into their lifeline.
The Grits won 26 per cent of the vote the last election. They’re about 10 points higher in most polls now and hold a narrow lead over the Tories. Pollster Frank Graves said in an interview if he were Liberal leader, he’d push for an election right now. “With a decent campaign, they’ll likely win.”
Given the changing economic tides, the Conservatives no longer fear an immediate election. It’s even possible the Liberals won’t need the support of the other opposition parties to force a campaign. If they signal their wish for one, Prime Minister Stephen Harper might well say, “OK, let’s go.”
Whether it’s now or later, it’s a good bet Harper will lead his troops into a fourth campaign. That prospect would have been unlikely had the economic plunge been as deep as originally expected. The new tidings mean Finance Minister Jim Flaherty, he of the boneheaded economic updates and wonky deficit forecasts, will likely stay in place as well.
Many were hoping the PM would turn to the steady Jim Prentice to take over finance. It would have positioned him as the Harper heir apparent. But Flaherty is safe and Prentice will be left holding the bag in the environment portfolio where the government’s foot-dragging on a carbon emissions regime has become embarrassing.
For the prime minister to move Flaherty now would be an admission of failed economic management.
That’s the case the Liberals have been trying to make. It will become harder as time moves on.