Don’t Call it a Recession!
“But pretty soon the word “recession” also became too harsh for the delicate sensibilities of the American public. It now seems that we had our last recession in 1957–58. For since then, we have only had “downturns,” or, even better, “slowdowns,” or “sidewise movements.” So be of good cheer; from now on, depressions and even recessions have been outlawed by the semantic fiat of economists; from now on, the worst that can possibly happen to us are “slowdowns.” Such are the wonders of the “New Economics.” — Murray Rothbard, Economic Depressions: Their Cause and Cure
Forty-six years later and Bank of Canada Governor Stephen Poloz has jumped on the semantic fiat bandwagon, calling the “r” word unhelpful. What Canada experienced in the early months of 2015 with the drop in oil prices and its subsequent effects was merely a “mild contraction.”
Okay folks, show’s over, nothing to see here.
“I just find the discussion quite unhelpful,” Poloz told the press, “It’s especially unhelpful when what has happened to the economy is very narrowly defined.”
Yes, narrowly defined to the oil and gas sectors. The other 80% of the economy is doing just fine thank you very much. All those service sector jobs and real-estate related industries, like construction and banking and insurance. Nothing to worry about! Never-mind the fact that energy is a major export and that without these exports there are no imports. Imports that facilitate the real estate, construction, and service sector.
Now Poloz isn’t that clueless. He did mention the “outsize effect” where the oil and gas industry slow-downs start to affect the broader economy. But, remaining in a state of Keynesian ignorance, Poloz felt bold enough to proclaim: “The Canadian economy is undergoing a complex and significant adjustment.”
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