Canada has avoided a recession so for, but just barely, figures being released this coming week are expected to show.
But we're not out the woods, analysts warn, including one financial institution that says Ontario will go into recession while Quebec will just skirts one.
"The Canadian economy likely managed to eke out a trace of growth in the second quarter, just avoiding a second consecutive quarter of declining GDP and averting a technical recession -- for now," says BMO Capital Markets economist Douglas Porter, projecting that Friday's report will show growth was at an anemic annual pace of just 0.6 per cent.
And another financial institution, Desjardins Group, warned that the country's largest province will fall into recession.
"It now looks fairly clear that, unlike Quebec, Ontario will not be able to sidestep a recession," it said.
The weakness in the Canadian economy, and the impact of the financial crisis that erupted last year, will also continue to be reflected in the coming week's quarterly bank earnings reports, analysts warned.
"Canada's six big banks report third-quarter earnings ... and they are not expected to be pretty," CIBC World Markets warned. "To date, Canadian banks have announced approximately $10 billion in write downs since last summer's financial crisis began, and while a third consecutive quarter of lower aggregate earnings appears to be a given, it will be the magnitude of further write downs that will be closely watched.
Bank of Canada deputy governor David Longworth will outline what the central bank has done to deal with that crisis in a speech Tuesday that will likely include an update of its assessment of the current financial situation and outlook
Meanwhile, it won't be all bad news this coming week.
A Statistics Canada report on Thursday on how Canada fared in its dealings with the rest of the world during that quarter should show a fat $8.2 billion surplus, which works out to an annualize $33 billion and which "would mark one of the largest nominal surpluses on record," BMO's Porter said.
The recovery from a near deficit last year is thanks to soaring world prices for commodities that Canada exports, and in part to the stabilization in the value of the Canadian dollar, Porter said.
The Canadian economic reports will likely look a lot better than what's expected out of the United States this coming week. That, of course, is small consolation to Canadians, considering America is the market for more than three quarters of Canadian exports.
"While we may see a small gain in existing home sales in July as more foreclosed houses are put on the market at bargain prices, new home sales are expected to fall in July," Scotiabank said in an analysis, in which it warned that it will likely be the middle of next year before the bottom of the deeply depressed U.S. housing market is reached.
While a measure of U.S. consumer confidence this month, being released Tuesday, is expected to show some modest improvement from the 16-year low in July, it will be temporary, Scotiabank also warned.
Without the spring fiscal stimulus package now spent or saved, and without a second package coming down the pike, it warned that consumer confidence will likely resume its slide over the next few months.And with the U.S. job market having weakened and real wages moderating, a report Friday on U.S. incomes in July is expected to show a decline in incomes, it said.