Briefly: “Economists: Canada’s economy contracted” and more news

Canada’s economy is braking so rapidly that it likely contracted in July for the first time in almost a year, according to a consensus of economic forecasters.

The news may come as a surprise to many Canadians, who are constantly reminded by the government that their economy is among the strongest in the industrialized world.

But analysts note that Canada’s strong rebound occurred mostly at the end of 2009 and the early part of 2010.

Since April, the economy has largely been treading water.

Now the consensus of economists is that Statistics Canada will report Thursday that output pulled back 0.1 per cent in July, the first contraction since August 2009.

That doesn’t mean Canada is falling back into recession, they caution.

By definition, it takes two full quarters of negative growth to constitute a recession, and analysts expect July to be a one-month blip caused by poor exports and the introduction of the harmonized sales tax in Ontario and British Columbia.

What it does mean is that growth going forward is likely to be very incremental as U.S. economic woes continue to weigh on Canada.

By many measures, Canada remains a rock of stability compared with many industrialized countries.

The economy has created 430,000 jobs since last July and recouped virtually all lost output. The United States, by comparison, remains seven million jobs shy of its pre-slump level.

Meanwhile, a new consumer confidence survey released Tuesday shows Americans getting more pessimistic about their future prospects.

The Conference Board index dropped more than expected to 48.5 in September, the lowest it’s been since February and down from a revised 53.2 in August. Economists surveyed by Thomson Reuters had been expecting a reading of 52.5.

It takes a reading of 90 to indicate a healthy economy – a level not approached since the recession began in the U.S. in December 2007

CIBC chief economist Avery Shenfeld says Canadians shouldn’t panic, but have a right to be disappointed that the recovery has slowed so quickly barely a year after the end of the recession.

– Canadian Press

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Black’s appeal on Wednesday

Conrad Black’s lawyer will appear before an American appeals court on Wednesday to persuade a panel of judges that the former publishing mogul’s convictions should be dropped due to a reinterpretation of American fraud law. Defence and prosecution lawyers will make 20-minute arguments for the judges to consider, as they decide the fate of Black and three of his former Hollinger colleagues also convicted of fraud in July 2007.

Black’s lawyer Miguel Estrada says his client, one of Canada’s best-known business personalities, probably won’t attend the hearing in Chicago.

Black is free on bail after serving more than two years of a six-and-a-half year sentence in a Florida prison on convictions for fraud and obstruction of justice. The U.S. Supreme Court set aside the fraud convictions in June, saying the so-called “honest services” argument used by U.S. prosecutors has a more narrow focus than what has been employed in white-collar crime cases. The top court didn’t throw out Black’s convictions, but it did order that the appeal court have another look at the case to see if they held up under the new guidelines.

Black is reportedly staying in his Palm Beach mansion after a U.S. judge prohibited him from leaving the country while on bail. A bail status update has been pushed back several times and is now set for Oct. 19, if the appeals court hasn’t handed down a decision on the case by then.

The arguments will be reviewed by a panel of three appellate circuit judges led by Richard Posner, who presided over Black’s last appeal and took only 20 days to reach a decision. The panel will decide how the case against the former media baron will proceed with the narrowed the scope of the so-called “honest services fraud” argument, which had been used in convicting politicians and corporate executives, including Black and Jeffery Skilling, the ex-chief executive of Enron. The law had stipulated that U.S. citizens were entitled to honest service from government and or private citizens, even when nobody suffered any loss. It holds that the definition of fraud includes a scheme to “deprive another of the intangible right of honest services.”

Black and other former Hollinger executives were convicted of diverting US$5.5 million that could have gone to the company, falsely claiming they were getting “non-compete” payments from buyers of Hollinger community newspapers in return for promises they would not return to compete with the new owners. The government says the money belonged to the company’s shareholders but Black’s defence lawyers say the payments received from a Hollinger subsidiary was money the executives were legitimately owed and they cannot be convicted of fraud when they did no harm to the company.

– Associated Press

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Levitt becomes new TD chairman

TD Bank Financial Group says Brian Levitt will become chairman of its board of directors effective Jan. 1.

He will replace John Thompson, who is stepping down as chairman but remaining a member of the board.

Levitt has been an independent director on the bank’s board since December 2008.

TD Bank Financial Group is the sixth largest bank in North America by branches and serves more than 18 million customers around the globe.

Shares in the bank were trading down 55 cents at $73.30 Tuesday morning on the Toronto Stock Exchange.

(09/28/10)