And yet, it says Canada's recession is over. How so?
Two answers: China and oil. The bank's hopes depend on the Chinese economy continuing to forge ahead, with its consequent thirst for Canadian raw materials. But most of all, the central bank assumes that oil prices will stay high.
That would obviously benefit Canada's oil producing provinces (and, through spinoffs, the rest of the country). As well, by keeping the dollar high relative to other currencies, a protracted oil boom would, in effect, make all Canadians richer vis-à-vis the rest of the world, causing consumers to buy more things and thus boost the economy.
Yet it's not clear that oil prices will stay high. Thanks in large part to the collapse of the U.S. economy, crude oil inventories are building up – which should dampen prices.
More important, there are indications that the high oil price now is driven less by real demand for energy than by speculation and the desire of institutional investors to park their money in something safer than the U.S. dollar.
All of which casts considerable doubt on the central bank's prediction of steadily high oil prices creating a quick end to this particular slump.
The news out of the Alberta government today is that welfare numbers are soaring in this province*. And the other day, they dropped a bombshell when they announced that home energy bills might triple in the near future as a result of its carbon capture plans.
Calgary's unemployment rate has doubled over the past year and while cheery politicians seem happy that more people are moving out west, (a stark contrast to former Calgary mayor/Alberta premier Ralph Klein who called similar migrants "eastern bums and creeps" during the 1980s' oil boom), what they fail to add is that the migration is happening, once again, because of distressed economic situations in other parts of Canada.
Meanwhile, the land of milk, honey, cows and oil does not have adequate resources to deal with more newcomers and with sky-high rent and food prices, the picture here is anything but bright.
Add a Conservative gov't that for decades has subsidized the oil barons while cutting essential programs for ordinary Albertans, resulting now in the first deficit in 15 years while still fighting against making the corporations pay their fair share of dues and I sincerely fail to see where Wolkum gets the idea that oil will be Canada's great salvation - unless he's strictly referring to the already uber-rich and the corporations they rode in on.
As for China's role in Canada's recovery, Wolkum would do well to take a look at the harsh reality it finds itself in in relation to the US as analyzed by Niall Ferguson. We can't help but feel the ripple effects here.
Most Canadians don't experience recessions as economists do. Numbers don't get us through the day when we're trying to survive. Theories and forecasts don't put food on the table. What may be "good" in an economic sense (ex. the high price of oil) just doesn't translate into what's good for us peasants.
So, no, this recession isn't over. Not out here in the real world. And let's be realistic - because China and the price of oil certainly won't be (and isn't) our salvation.
*Alberta's welfare payout levels are absolutely appalling compared to the cost of living:
The amount a person can collect through income support varies. For example, a single person looking for work receives $583 a month, while a two-parent family with three children under the age of 12 would get $1,240 a month, plus a national child benefit supplement.
EI roll hits highest level since 1997
Alberta showed the fastest increase, and that province, plus B.C., Ontario, Saskatchewan and Manitoba all recorded their largest number of EI recipients since 1997.
In Alberta, the number of regular beneficiaries grew by 16.8 per cent to 57,000 in May.