Notes

^1.

Chief Economic Analyst (613-951-9162)

^2.

For real GDP, in the third quarter the shortfalls from pre-recession highs range from 0.6% in the US to 1.8% in Germany and France, 3.1% in Japan, 3.9% in the UK and 5.4% in Italy. For employment, the shortfall was 0.6% in France, 0.9% in Germany, 2.1% in Italy, 2.5% in Japan, 3.7% in the UK and 4.8% in the US.

^3.

Besides production problems at offshore oil platforms at the Terra Nova oil field and fires in the oilsands, output also was dampened by a new February holiday in some provinces and record snowfall in parts of central Canada.

^4.

It is noteworthy that the diffusion index (or the share of industries posting output growth) hit a low of 35.8% early in 2009, above the low of 31.3% in December 1990 and 33.6% in August 1981. Diffusion hit its all-time low of 25.4% during the electrical blackout in August 2003.

^5.

This underscores an important point about the relationship of output and labour input as measured by hours worked. The two broadly move together, separated only by minor changes in productivity which usually is relatively stable in the short-run. The idea of a 'job-less recovery' is predicated on the fallacious notion that the dynamics of the labour market are separate from output: in reality, the two are inter-twined and move closely together in response to macro-economic forces.

^6.

In mathematical terms, the integral of the area below the zero line denoting no change in jobs is greater during the 1990-1992 cycle than in 1981-1983. Since the drops that occurred in the first year of each of the two recessions were essentially the same, and since both shared common losses for much of the second and third years, the comparison of which was worst is decided by comparing the shaded areas A and B.

^7.

See M. Elsby, B. Hobijn and A. Sohin "The Labour Market in the Great Recession." Brookings Papers on Economic Activity, Spring 2010, p. 10.

^8.

P. Cross, "Slowdowns during periods of economic growth". Canadian Economic Observer, Statistics Canada Catalogue 11-010-X, December 2010.

^9.

Employment in the US fell 0.2% in the second quarter of 2007, and overall was unchanged in the four quarters of 2007 even as real GDP grew 2.3%. Real GDP posted its first decline of the recession early in 2008.

^10.

Real GDP in the US shrank by 4.2% during the recession, while jobs fell 5.5% on a quarterly basis. Monthly employment fell 6.1% between December 2007 and December 2009.

^11.

Business Cycle Dating Committee (BCDC), National Bureau of Economic Research, September 20, 2010. While the BCDC looks at other variables such as industrial production, sales, personal income and hours worked, the Chair of the BCDC wrote that "the two main indicators the committee considers in deciding on the dates of turning points in economic activity [are] real GDP and payroll employment." Robert Hall, "Economic Fluctuations and Growth." NBER Reporter, 2010, Number 1, p. 1. The BCDC decides how to weight output and jobs on an ad hoc basis for each turning point.

^12.

The graph shows nominal exports, as both volumes and prices fell sharply during the recession, and the latter is important in understanding the drop in corporate income and outlays. In real terms, exports fell about 5% in both 1981-1982 and 1990-1991, versus 20% in 2008-2009.

^13.

Araujo, S. and J. Oliveira Martins, "The Great Synchronisation: tracking the trade collapse with high-frequency data." VoxEu.org, November 27, 2009.

^14.

Export earnings fell by $170 billion during the recession, and have risen $48 billion in the recovery, recouping 28% of its losses. Real exports have recovered one-third of their losses in 2008-2009.

^15.

P. Cross, "The role of inventories in recent business cycles". Canadian Economic Observer, Statistics Canada Catalogue 11-010-X, July 2010.