Monday, March 26, 2007

Spinning the Numbers

Here is a bit of sloppy propaganda. This article (from Reuters - linked from Yahoo! Canada) claims that the Canadian economy is expected to outperform the US economy in 2007.

In its Quarterly Economic Forecast, TD Economics said the Canadian economy will expand at an annual average pace of 2.4 percent in 2007, slightly slower than in 2006, while the United States will experience a bigger slowdown. ("TD Economics" is Toronto-Dominon, a Canadian bank - author)

Ahem. Note the lack of actual numbers provided for US economic projections. It's a symptom of the whole article - not just this quote. The best we ever get to a real number on projections for the US is "will experimence a bigger slowdown."

Anyone familiar with standard economic indicators knows that 2.4% growth would be very slow for the US indeed. Most industrial economies do about that or slighly less. The US regularly outperforms everyone else with growth rates generally in the 3.5% range. So yes, if the US dipped into 2.4% territory, that would be something to worry about.

I look the liberty of getting a second opinion.

The U.S. economy will grow 2.6 percent, down from the 2.9 percent expansion projected in September, the IMF said in an annual report on the Western hemisphere. The Washington-based lender kept its forecast for this year unchanged at 3.4 percent.

Last time I checked, 2.6% is better than 2.4%. Certainly 2.9% - the original prediction - is. And this year's 3.4% growth positively dwarfs anything Canada did.

It's easy to see the trick being played here. The US economy will lose more momentum relative to itself next year than the Canadian economy will. So in this (largely irrelevant) sense, Canada will "outperform" the US. But in absolute terms, we'll still grow significantly faster than Canada because we're on a better footing in general than they are. And indeed, the only thing that's a drag on the US economy right now really is the housing bubble. Something very similar killed Japan - so it's not to be taken lightly. All the same - assuming that doesn't completely blow up (a possibility, but unlikely), it will work itself out over the next year or two and we'll resume growing faster, both in relative and absolute terms, than our socialist brothers to the north.

I wonder what it must be like to be Canadian and live in a country where your "world-renowned" press regularly pushes feel-good propaganda articles that read like "Canada is better than the US because Canada did x and the US (cough, cough)."


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