Modeling Journey

This is what John Stephenson of First Asset says causes him to be bearish on the US economy:

"One of the reasons I believe the U.S. will suffer for so long is so much of their economy was geared to the financial services industry. By the end of 2007, 40 per cent of their GDP was linked to the financial service industry directly and indirectly, and by indirectly I mean hedge funds, insurance companies, sort of the shadow banking system.

What the financial crisis did was it drew back the curtain on America. And the reality is that the vast majority of Americans made no wage gains over the last 10 to 15 years. In fact, they lost money. Not only did they lose money in terms of wage gains, they lost money on S&P 500 stocks, they lost money in the tech wreck and they lost 30-plus per cent from peak to trough in their house values. So if you're the average American, you're in trouble. You don't see a future."

What does that mean for Canada?

We are heavily reliant on the US as our biggest trading partner, and on US consumers to drive their industries through demand for products, which in turn drive those companies to import Canadian services and goods.

So if the US is going to take a long time to recover from the frothy bubble of their financial services as a major driver of their economy, and the US workers are not making more money for them to spend, then we can expect very slow growth in our economy, and hence few new jobs.

What does that mean for the NDP, which wants to prop up Harper's do-little government? And the Liberal Party, which will weigh individual Tory legislation on a case by case basis?

It means more and more Canadians will lose their jobs or have to take jobs which pay less, are less secure and which can disappear in a hurry. And in the meantime, the Tories will continue to stall on the injection of funds into the economy through the stimulus plan.

It is time for a new government to confront the new realities of a slower growing economy, with less demand for our traditional products and services.