Canada safe from U.S. double dip

Financial Post

David Pett July 12, 2010 – 12:56 pm

Add Moody’s to the list of those who think Canada’s economic recovery is safe, even if the U.S. economy falls back into recession.

In the wake of last Friday’s stunning jobs report that saw 93,200 new jobs created in June, Jimmy Jean, an economist at Moody’s Economy.com said a “collective effort” in dealing with the financial crisis has made Canada less vulnerable to U.S. shocks than it used to be.

“It is often thought that when the U.S. sneezes, Canada catches a cold, but with the shift toward a service-oriented economy over the last three decades, Canada has grown more immune to U.S. woes,” he said in a report.

“The last two U.S. recessions are solid proof that Canada is now better able to withstand strong headwinds from the south. Not that they’ve decoupled altogether, but should a downside mild double-dip U.S. recession materialize, Canada’s recovery would very likely survive.”

In addition to the country’s strong commodity sector, Mr. Jean said the success of Canada’s recovery is thanks to policy makers acting quickly in the depth of the crisis, consumers who shrugged off the recession and started spending again and employers who believed in the recovery and hired backed their workforce swiftly.