OTTAWA - Economist Derek Holt calls it the "trillion-dollar question" -- just which way is the economy going?
It's being asked by policy-makers, businesses, consumers and economists around the world, and Friday saw more evidence why it is keeping some up at night.
The new jobs and trade numbers from Statistics Canada are the latest but not the only recent evidence of diametrically opposed indicators about where the economy, not only in Canada but also in the U.S. and Europe, is headed.
On the one hand, the loss of 61,300 jobs in March -- 79,500 in the full-time category -- is a massive number for Canada and points to an economy firmly in the grip of an historic recession that could, when all is said and done, be deeper and last longer than any seen since the Big One.
It could also indicate that perhaps we are at the early stage of the next Big One.
On the other, there was encouraging news on the troubled trade front as both exports and imports advanced in February following three months of rapid declines. Exports were particularly surprisingly bouncy, rising 5.2 per cent from the previous month.
That news, on top of another good day in North American stock markets, and Wednesday's announcement of a pickup in housing starts, suggests that while this recession has been extraordinarily steep, it is nearing bottom and could indeed start picking up in the second half of the year.
That's pretty much what a now-infamous Bank of Canada forecast said in January.
"The trillion-dollar question is whether you can extrapolate the recent pattern in a variety of volatile indicators as something indicative of an earlier and sharper bounce-back in global activity," Holt asked.
"I think the answer to that is no. I think the markets have gotten a number of head-fakes... (but) I'm of three minds myself."
As economic consultant Dale Orr notes, the question is not solely an academic one.
Depending on which side of the coin they fall, businesses and consumers are making near-term investment and purchasing decisions that could have a self-fulfilling aspect in either leading to boosting economic activity or further depressing it.
And depending on which outcome they see as more probable, central bankers and governments can either step up monetary or fiscal stimulus, or go to the sidelines -- possibly prolonging the pain if they guess incorrectly.
Royal Bank economist Dawn Desjardins said because of the uncertainty, she believes Bank of Canada governor will stand pat on interest rates on April 21, and won't move quickly, if at all, on non-traditional stimulus such as printing money to buy up government bonds.
"It really does feel different this time," she says.
A lot of individuals on both sides of the border are also thinking along similar lines.
RBC's April consumer attitudes and spending index posted its most significant improvement in seven months among Americans surveyed, with consumer confidence advancing 30.1 points to bring the index to 38.3 from the rock-bottom 8.2 in March.
The most recent consumer confidence surveys in Canada also showed improving sentiment, although at a more modest pace.
"The compilation of low energy prices, low interest rates and lots of talk of stimulus is starting to get some traction on the minds of American consumers and if they bolster their economy, that will be good news for us too," Desjardins said.
The March unemployment numbers, while cause for concern, are still consistent with what economists have been saying for months -- that the first quarter of 2009 would be the worst since the Second World War with an output contraction as high as nine per cent.
BMO Capital Markets economist Douglas Porter says optimists can point to the improving trendline of the job losses over the three month period, with January seeing 129,000 jobs vanishing, followed by 83,000 in February and now 61,000 in March.
"The good news -- such as it is -- is that the job losses are not accelerating, and may even be starting to lighten," he said.
The majority of economists remain reticent about going out on the limb. They caution that the stock markets staged a rally at the end of last year, only to fall further in the new year.
There are more economists, such as the University of Maryland's Peter Morici, willing to speculate about an outright depression than there are openly predicting a strong rebound where the nightmare of 2008-2009 comes to a quick end.
Holt doesn't see depression, but he's no optimist either. He argues that the banking crisis, corporate debt problems, loss of purchasing power among consumers in the U.S., and other excesses are too big and entrenched to simply be washed away after a few down quarters.
"You can come off the bottoms and slow the pace of deterioration of the economy, but don't misinterpret that as meaning that a very rapid recovery lies in store," he explained "I just don't see a V-shaped rally, I see us going to see a series of ups and downs and muted growth for some time."
