David Rosenberg: Tanking economy, productivity mean Bank of Canada should cut rates with or without the Fed

financialpost.com:

We find it rather incredible that the Bank of Canada is so nonchalant when it comes to the state of the Canadian economy. The degree of excess capacity is expanding by the month, inflation has swung to disinflation and the economy (in real output per-capita terms) is contracting at a two per cent annual rate. Yet the folks in Ottawa fiddle as the macro landscape burns.

Business insolvencies have soared 87 per cent over the past year to the highest level since the peak of anxiety in 2008 when the global financial crisis was raging. The number of people entering the labour market without landing a job has practically doubled those who found one over the past year. That has resulted in more than a 20 per cent year-over-year surge in the ranks of the unemployed and it seems amazing to think that Bank of Canada officials are unaware of that statistic.

Any concerns over a resurrection of the housing bubble should be put to rest by now, with home sales in the once-hot Greater Toronto Area chilling 3.4 per cent month over month in April, losing ground in each of the past three months and down five per cent from year-ago levels. At the same time, new listings have ballooned 47 per cent year over year, and this new demand-supply backdrop has created the conditions for a flattening out in residential real estate prices.

Now that shelter costs are beginning to stabilize in real time, it won’t be long before its inflationary effects fade from the consumer price index data because the headline inflation rate in Canada, absent the housing component, is running at a grand total of 1.5 per cent, melting before our very eyes from 3.9 per cent a year ago and 6.6 per cent two years ago.

If you don’t think the Bank of Canada can cut rates