The great global recession is over — or is it?

For all the dramatic clamour and clang that's gone on about the state of the global economy, you'd think the great global recession might have lasted a little longer than 162 days. But you'd be wrong.

On March 10, 2009, Dominique Strauss-Kahn, the head of the International Monetary Fund, formally declared that the world had entered a "Great Recession." He noted that the global economy would shrink for the first time since the Second World War, that poor and developing countries would be choked by a lack of financing, that trade would tumble to its lowest point in 80 years. Depressing stuff that was overlaid by relentless headlines about bank collapses, real estate foreclosures, job losses and business failures.

And yet, on August 19 — just 162 days later — the IMF stated that the worldwide recession was over. The Bank of Canada, however, beat the IMF to the punch, announcing that Canada's recession was over on July 23. Instead of contracting by one per cent in the third quarter of the year as forecast, the domestic economy was actually on track to grow by 1.3 per cent. Furthermore, instead of shrinking by a projected 7.3 per cent in the first half of 2009, it was a much more modest bump of 5.4 per cent.

On top of all that, Canada's rate of inflation fell to -0.9 per cent as lower energy prices offset higher food prices. And a Decima survey indicated that overall, Canadians are feeling relatively jolly about their economic prospects: Six out of 10 indicated a belief that the domestic economy will bounce back twice as strongly as that in the U.S.

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To say that we're going through a remarkably contradictory period would be an understatement. At the same time as there are reports of strong economic growth in Japan, healthy real estate markets, restored production shifts at General Motors Canada and generally improving access to credit and capital, housing starts dropped in July and another 45,000 jobs were lost in the same month, holding the rate of unemployment in Canada to 8.6 per cent.

On top of all that, after a muscular rally over the usually-dormant summer months, world stock markets succumbed to a severe case of jitters. Investors were spooked first by concerns about weak U.S. consumer spending and then by worries about credit policy in China — although between the spirals there was a brief bout of stability.

The truth about the economic picture lies, as it usually does, somewhere in the middle of all these extremes.

On the bright side, for example, at the same time as employment is falling, self-employment is on the rise. In July, self-employment added 35,000 jobs to a scene where 45,000 were lost. And since last October, self-employment has created 70,000 new jobs in Canada.

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On the down side, while the Bank of Canada has said the recession is over, it tempers that with the view that the economy will grow smaller and — because of so many corporate cuts — with a reduced output potential.

And while low interest rates and central government stimulus spending may be having some impact, uncertainty is still sufficiently strong to keep consumers from opening their wallets. Savings as a percentage of disposable income in the U.S. have risen from four per cent to 5.2 per cent, which means any windfalls are being socked away rather than spent.

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Pretty much the only sure thing, based on all of this light and shadow, is that the economy is going to look rather different than we all thought it would two years ago:

1. The exodus of aging Baby Boomers will be further delayed by the fact that they need to work to restore tattered retirement nest eggs and because their experience is required to restore balance at operations that have cut staff and spending to the bone;
2. The traditional manufacturing sector will come through the recession further weakened after contending with the damage wrought by a strong Canadian currency. A large amount of existing capacity will have to be re-deployed - as will the workers who've been employed by these companies. Self-employment will continue to be a powerful trend and many hobbled companies will begin selling assets to entrepreneurs - beginning a new cycle;
3. The environment will increasingly be viewed as a business and trade issue, reshaping the priorities that influence growth, strategy and employee skills and training;
4. Savings will continue at a higher rate and the emphasis on thrift and conservative consumption will be reinforced by environmental standards;
5. The trade climate will be chilled for some time to come by the sort of knee-jerk protectionism that informs the "Buy American" campaign in the U.S.;
6. Investors will selectively return to the stock market as they regain confidence in the economy and the returns on fixed income products remain at historic lows.
7. Real estate markets will recover further as diminished housing starts affect the balance of supply and demand.