Canada has fared pretty well, considering the global economic conditions, but a professor from Ivey at the University of Western Ontario says that the economy should have seen more painful readjustments. So are we out of the woods or not?
While Canada has poured tons of money to counteract a painful adjustment, the question remains: will this simply postpone the adjustment?
The stimulus package has made the Canadian government run a bulging budget deficit, which may prevent the government from coming to the rescue of the economy if serious problems arise in the future, when the stimulus runs out.
The Globe and Mail
So for now, as interest rates are low and the government continues to spend, the best advice for consumers and businesses is to keep riding the government gravy train. But when it runs out, we may still experience the harms of the recession– but with a boatload of public debt to go along with it.