By Peter Ward September 4, 2015
Canada Slips Into Recession
Canadian flag © Alex Indigo
The Canadian economy has fallen into recession, official data released on Tuesday shows.
The country’s gross domestic product (GDP) fell by an annualized rate of 0.5% between April and June this year, following a 0.8% contraction in the first quarter of the year. Canada has not been in recession since the global financial crisis in 2008-09.
Canada exports more oil than it imports, and has been hit hard by falling oil prices in the past year. The country’s economy also suffered a 7.9% decline in business investment during the second quarter of the year, according to the Statistics Canada data.
The news is likely to come as a blow to current Prime Minister Stephen Harper, who seeks re-election on October 19. Harper has been Prime Minister for nine years, but the Conservative Party leader faces a tough battle against Tom Mulcair’s New Democratic Party and Justin Trudeau’s Liberal Party. All three candidates are expected to focus their election campaigns on the economy.
A recession is officially defined by two quarters of successive negative growth, but an article run by Bloomberg on Tuesday questioned whether this slump was best described as a ‘technical recession’, rather than a genuine economic slowdown. The article states that employment in Canada is rising, while much of the slump has not been felt outside of the oil-producing state of Alberta.
“I would still lean against it just because I don’t think it was broadly based enough to fully qualify” as a recession, Doug Porter, chief economist at Bank of Montreal told Bloomberg. “The fact that employment continued to rise and consumer spending was still positive” wouldn’t meet the definition of a recession.
Uber Drivers Get Class Status
Taxi-hailing app Uber was dealt a potentially crippling blow to its business model on Tuesday, when a California court granted class action status to a lawsuit filed against the company by three drivers. All Uber drivers in California are now eligible to join.
Hollywood, California. ©Shinya Suzuki
In the lawsuit, the Uber drivers claim that they have all of the obligations of employees, but are treated like contractors-they don’t get benefits such as health insurance. Uber argues it is a technology platform that connects passengers with drivers, rather than a taxi service that hires drivers.
Uber raised $1 billion in venture capital in July, valuing the company at close to $51 billion – a record for a private venture-backed startup. But the lawsuit could require a hefty payout in the short term, and increased costs in the longer term.
Should the court rule that Uber’s drivers are employees, the company would have to shell out not just for health insurance, but would also need to reimburse expenses for toll fees and car repairs.
An Uber spokesperson told Fortune that the company plans to appeal the decision.
IMF Warns of Slowing Global Growth
On Thursday, the International Monetary Fund said China’s struggling economy and the recent turmoil in financial markets could negatively affect global growth this year, and prevent central banks from raising interest rates.
In a report released prior to a meeting of G20 finance ministers in Ankara this weekend, the IMF said that the slowdown in China has hit other countries more than expected. Falling prices of commodities such as oil and copper have hit exporting countries such as Brazil and Russia particularly hard, according to the report.
(©kcp4911)
The IMF’s bleak view was backed up just hours later, as the European Central Bank cut inflation and growth forecasts for 2015 through 2017. ECB President Mario Draghi said that Europe’s economic recovery would continue, albeit at a slower pace than previously expected.
The ECB expects growth in the Eurozone of 1.4% for 2015, down from 1.5%. For 2016, the bank has lowered its projected growth from 1.9% to 1.7%. The bank also said it was willing to extend its stimulus program if needed, news which gave a boost to European stock markets.
Worker Pay Slumps
Take-home pay for many American workers has effectively fallen since the U.S. economy began its recovery in 2009, according to a report by an advocacy group released on Thursday.
That report shows that despite increased hiring, lower unemployment and other economic growth signs, lower income workers saw the biggest drop in their take-home pay during the recovery, according to the New York Times. The declines were most prominent in sectors where hiring has been strong, such as home health care, food services and retail.
“Stagnant wages are a problem for everyone at this point, but the imbalance in the economy has become more pronounced since the recession,” Irene Tung, a senior policy researcher at the National Employment Law Project and co-author of the study, told the Times.
The latest Labor Department data, released on Wednesday, shows that productivity in the U.S. economy rose at an annual rate of 3.3% during the second quarter of this year, the biggest gain since 2013. That may not be of comfort to retail sales clerks, who have seen a 5% decline in their effective wage between 2009 and 2014.
The lowest paid fifth of workers in the U.S. suffered a 5.7% decline in real wages during the same period, compared to a 2.6% decline for the highest paid fifth, the data shows.
The findings come amid a U.S. presidential election season in which income equality is a central issue. Democratic candidates such as Bernie Sanders have campaigned heavily on the subject, and even Republicans like Rick Perry have made bold statements against big business, distancing themselves from Wall Street and corporate America.
Post-Katrina New Orleans, Visualized
On the heels of last week’s 10-year anniversary of Hurricane Katrina, the Washington Post put data to work to help readers visualize the devastation it wrought on the city.
Lower ninth ward, New Orleans ©Heather Phillips
Using a series of aerial images from 2004 through 2015, the paper depicted the evolution of a single block in New Orleans’ Lower Ninth Ward, before and after Hurricane Katrina.
The Lower Ninth Ward is situated directly in front of a levee that breached when Hurricane Katrina hit. In 2004, 14 structures occupied the block depicted in the article. The following year, there were none and the area was entirely under water.
The data from 2005 onwards shows how slowly houses have been rebuilt. Three years after the hurricane there were still no buildings there, and by 2011 there was just one.
