1. Moncton, N.B.

For the second year running, Moncton tops our list as the best place in Canada to buy real estate. Not only are houses here very affordable — with an average price of $163,000 — but household incomes average a respectable $72,093. This year, it was the only city out of 35 that got an A+ in our value ranking, meaning that homes are well within reach for local residents who make a typical salary. In fact, it takes only 2.26 year’s worth of the average family’s annual household income to buy (before taxes and other expenses).

With a population of 126,400 — and growing — the city has a wide range of housing. Jobs abound in this diversified bilingual town, with UPS, FedEx, Purolator, Royal Bank and ExxonMobil all calling Moncton their regional home.

2. Regina, Sask.

Four years ago, Regina had the country’s hottest housing market. This year, the city nabbed the No. 2 spot on our list, mainly because its economy is on fire. Sectors such as oil, potash, uranium, diamonds and farming are all booming, and Regina has the lowest unemployment rate of all the cities we ranked, at 4.6 per cent.

Much of the growth is due to healthy immigration into the province, which reached a record 3,400 people in 2010. Although housing prices have more than doubled over the past four years, the average cost is still a reasonable $260,000.

GDP expected to grow by 3.4 per cent this year, and a large grocery warehousing and distribution firm recently opened a one-million-square-foot facility for trucks to drop off and transfer goods, making Regina a new Asia-Pacific gateway for trade and adding 800 new jobs in the city.

3. Fredericton, N.B.

Overall, the province of New Brunswick did well in our ranking. While Moncton topped the chart at No. 1, the provincial capital of Fredericton was right on its heels at No. 3—up from the No. 4 spot it held last year. What accounted for the rise? Its value score jumped up to an A and its momentum score was boosted to B+.

The data shows a cheap average house price of $174,000, coupled with a respectable average household income of $76,659 annually. That may not sound like a lot of money to people who live in big cities, but in Fredericton, an average worker’s buying power is huge. It takes only 2.27 years worth of that annual household income (before taxes and expenses) to buy a home—a close second to Moncton in our measure of affordability.

But though house prices are low, they still made healthy gains of 4.5 per cent over the past year, the second largest increase on our list. Then there’s Fredericton’s rock-bottom unemployment rate, which stands at just 5.6 per cent.

4. Winnipeg, Man.

From manufacturing and government to agriculture and education, Winnipeg boasts a diverse economy that has weathered the recession well. The city of 642,000 people has an average house price of $239,183, an average annual household income of $80,859, and an attractive affordability rating.

The south side of the city has traditionally been the most popular, particularly with families. Neighbourhoods like River Park South, Linden Woods, Whyte Ridge, Island Lakes and Sage Creek all boast top schools and facilities—as well as resale value.

There has been demand for condos in the downtown for a while, and many older factory buildings have been renovated into loft-style condos along the waterfront and are gaining popularity. Downtown revitalization remains an ongoing process with a new baseball stadium, the Forks and the MTS Centre providing a solid base for further development.

5. Saint John, N.B.

Saint John is the largest city in New Brunswick, situated in a scenic spot at the mouth of the St. John River. Though house prices here have risen by 27 per cent over the last four years, demand is forecast to stay strong well into 2011. That’s because the average home costs just $179,000, while unemployment is a super-low 6.4 per cent and projected to keep falling.

While known primarily as an industry town that is home to thousands of refined petroleum, manufacturing and transportation jobs, Saint John has also quietly developed a diverse and vibrant arts scene. The Imperial Theatre, built in 1913 and restored in the 1990s, has been designated a National Historic Site. It plays to packed houses year-round and is home to the city’s symphony, opera, ballet and theatre.

6. Saskatoon, Sask.

Saskatoon made our list mainly because of one thing: its hot economy. The city ranked No. 6 overall and received the highest marks for its growing industry and rock-bottom unemployment rate. Aside from being the world’s largest producer of potash, and home to one of the globe’s largest publicly-traded uranium companies (Cameco), Hub City has gradually evolved into a destination for young people in the technology and health sciences industries. Housing prices have grown by 27 per cent in the past four years and the average is now about $296,000.

For entry-level housing, the west side is your best bet. Though communities such as Stonebridge in the south and Willowgrove in the north are newly established, developers project a high demand and are responding accordingly.

7. Gatineau, Que.

Often obscured by Ottawa’s long shadow, Gatineau — just across the Ottawa River in Quebec — has all the benefits of the capital’s steady economy plus a much more affordable real estate market. It has several massive office towers for government workers, and the unemployment rate is expected to fall in the years to come. Gatineau earned a high grade for value, with the average house costing just $220,500 — about $14,000 less than in Ottawa.

The former city of Alymer is now a suburb of Gatineau where many anglophones are taking advantage of the hot market for new homes—as well as its golf courses, spas, and bicycle paths. The former city of Hull, across the Gatineau River, is also a safe bet.

8. Charlottetown, P.E.I.

No longer known for just lobster and potatoes, Charlottetown has many of the attractions of a larger city — but with less crime and a close-knit community. It received a value grade of A for its extremely low average home price of $175,000. Over the past four years, 65 per cent of all homes listed were sold, making Charlottetown one of the healthiest resale markets in Canada. The unemployment rate is still high at 9.2 per cent, but it’s projected to dip below 8 per cent by the end of 2011.

When scouting out real estate buys, look for gorgeous historical homes in the downtown core that have been completely renovated, or consider a condo at Patterson Terrace. A two-bedroom unit near the ocean starts at $150,000. Second-home buyers will also not be disappointed.

9. St. John’s, N.L.

St. John’s tied with first-place Moncton for the highest score in momentum this year. Its biggest resource is the ocean, which now provides Newfoundland with an offshore oil industry attracting scores of newcomers in search of work. Last year, the economy in St. John’s grew by 5.8 per cent and the area saw the emergence of a new metal mining sector, with construction already underway on a nickel processing plant near Long Harbour, about an hour west of the city.

Although house prices have gone up by almost 36 per cent over the past four years, the average house still goes for just $255,000. http://ca.finance.yahoo.com/news/The-best-deal-real-estate-msense-1349119208.html

OTTAWA – Canada’s economy expanded an impressive 3.9 per cent in the first three months of this year, but there was little cheering in markets with the performance.

Not only was the number slightly below the four per cent consensus expectation, but the elements of growth clearly signalled a sharp braking in the economy ahead.

The most encouraging news in the much-awaited Statistics Canada report Monday is that the last month of the quarter — March — saw a gross domestic pick-up of 0.3 per cent, slightly above consensus.

“Its not just the headline that matters. It’s the composition of (first quarter) growth that is disconcerting,” said Derek Holt, vice president of economics with Scotiabank.

The composition included a heavy dose of production placed in storage awaiting future sales, with inventory build-up accounting for three quarters of the growth. Meanwhile, consumers were in hibernation, contributing only 0.1 percentage points to growth, and net trade was a drag, with the solid 1.6 per cent rise in exports from the previous quarter swamped by a 2.2 per cent gain in imports.

The bright spots were in business investment, manufacturing and housing.

Statistics Canada also made several revisions Monday, upgrading 2010 growth a notch to 3.2 per cent, but downgrading 2009 three ticks to a loss of 2.8 per cent, making it the second worst year for the Canadian economy in half a century. As well, the agency trimmed growth in the fourth quarter of 2010 to 3.1 per cent from 3.3.

Markets reacted negatively to the report initially, shaving one-tenth of a point off the loonie to 102.35 cents US.

The Canadian quarter was still much better than the U.S.’s 1.8 per cent advance, but it was below the Bank of Canada’s call for a 4.2 per cent pick-up. The central bank expects the second quarter, which ends on June 30, to slow to two per cent, but analysts said it could come in lower given the headwinds building in the world economy.

For the Bank of Canada, the report largely removes any question that governor Mark Carney will do anything but stand pat for another interest rate setting Tuesday, leaving the policy rate at one per cent.

Last week, several Canadian banks trimmed mortgage rates in another signal that the cost of borrowing will likely remain at very attractive levels for some time.

Bank of Montreal economist Douglas Porter said the omens are pointing a slower momentum for the economy than the central bank had projected in the spring, which should give Carney reason to remain inactive.

“A couple of weeks ago we pushed back our forecast on the first rate increase to September, and if anything, the risks are that the bank may wait even longer than that,” Porter said. Holt believes the bank may stay interest rate hikes until the end of the year.

Economists have also sounded a mild alarm on the global economy due to the aftershock of the Japan natural and nuclear disaster, the dampening impact of high oil prices and renewed concerns over government debt in Europe and the U.S.

The expectation is that Canadians likely saw the best the economy has to offer in the first quarter, although as yet no reputable economist is predicting an outright contraction.

In the first three months, all major industrial sectors, except for retail trade and arts, entertainment and recreation, increased their output.

Goods production rose 1.8 per cent from the previous quarter while service-producing industries increased 0.7.

Manufacturing as well as mining and oil-and-gas extraction were the largest contributors to growth.

Construction, transportation and wholesale trade also recorded notable increases.

The Canadian Press http://www.therecord.com/news/business/article/539796–canadian-economy-grows-3-9-in-first-quarter

Buying a house in the city or suburbs can be complicated enough, but buying a cottage or vacation property outside of town requires even more due diligence.

In town, you probably wouldn’t ask if the water coming out of the tap is drinkable. Nor would you wonder if the plumbing was hooked up to the sanitary sewer. But these are exactly the sorts of questions you should ask when buying a cottage, plus a few more.

1. Get an inspection: Cottages are usually occasional residences and so may not be as properly maintained as they should be. This is why every purchase should be conditional a satisfactory professional home inspection. If the cottage has a wood-burning stove or fireplace, then a certificate must be requested from a Wood Energy Technical Transfer specialist, to confirm that the system was installed and is operating correctly.

2. Is the water drinkable? There are two areas of potential concern when it comes to water – the quantity and quality. Is there enough to satisfy family needs and is it good enough to pass the local health department requirements.

Ask the sellers for these things:

• A potability certificate from the local health authority, confirming the water is safe to drink;

• Confirmation that the well, the pump and related equipment have performed adequately during the Seller’s occupancy;

• Confirmation that there is an adequate rate of flow for normal household use;

• Provision of a well driller’s certificate, if available; and

• The location of the well.

A separate inspection may be needed by a well specialist. If nothing else it gives you an idea of what it would cost to replace the well if it fails.

3. How’s the septic system? Septic systems present their own difficulties because it is usually difficult to tell during an inspection how long the system may last. The replacement cost can be up to $20,000, especially if there are stringent environmental regulations in effect in your area.

Buyers should ask for confirmation that:

• The system was installed with all necessary permits;

• The system has been adequately maintained;

• The seller is not aware of any malfunctions;

• The seller will provide copies of any inspection or approval reports in their possession;

• The seller agrees to pump out the tank at their expense prior to closing; and

• There are no work orders on file with the Ministry of the Environment or the local municipality.

The buyer should arrange for their own separate inspection of the system itself.

4. What’s the road allowance? Even if your cottage fronts on water, this does not give you ownership of the land up to the lake. The first 66 feet fronting onto the lake is typically owned by the local municipality and is referred to as the shore road allowance.

Although you have access to the water, you can’t stop others from using it. Nor can you build anything on that 66-foot piece of land. Many cottagers have found out afterwards that either all or part of their cottage was built on land that they do not own.

You may be able to buy the land from the municipality, but it is a process. If you can get an up to date survey from the seller, this should answer your questions. Also inquire to make sure that any required permits were obtained to build a dock or boathouse, as there is no automatic right to do this. In all cases, make sure you have title insurance, which should assist with most of these types of issues.

5. Access to the cottage: If you do not have year round access by a city road, then you must ask how you get from the road to your property. If it is a private right of way over a neighbour’s land, you must understand the terms of this agreement to ensure it is year round access and it is clear who is responsible for maintaining the road.

If there is no registered right of way, it can be a nightmare, with owners fighting over who has the right of way and who owns it.

For all of these reasons, it is recommended that buyers work with a local real estate agent who should be familiar not only with each of these issues, but more importantly, will be able to recommend the professional inspectors and town officials who can satisfy a buyer’s concerns.

By being properly prepared before buying a cottage, you will avoid unwelcome surprises after closing http://www.moneyville.ca/article/996575–5-things-to-ask-when-buying-a-cottage

Housing starts and sales will fall more into line with “demographic fundamentals” this year and next, according to the latest housing outlook from the Canadian Mortgage and Housing Corporation.

The crown agency said it expects housing starts will range between 166,600 to 192,200 units in 2011, with a point forecast of 179,500. That’s a slight dip from 2010 numbers, when Canada saw 189,930 housing starts.

“Modest economic growth, in conjunction with relatively low mortgage rates, will continue to support demand for new homes in 2011 and 2012,” Bob Dugan, chief economist for CMHC, said in a release. “Nonetheless, we are expecting new and existing housing markets to fall in line with demographic fundamentals, as changes to mortgage rules take hold.”

CMHC expects housing starts to grow again in 2012, with a forecast of between 163,200 to 207,000 starts, and a point forecast of 185,300 units.

The crown agency also expects home prices to start moderating later this year, and to end up lower next year. In its forecast, CMHC said prices this year will still record an overall increase due to monthly gains seen in the first half of 2011, but moderating prices will take hold in the the second half and continue throughout 2012.

CMHC does expect existing home sales to climb this year and in 2012, however. The crown agency forecasts a range of between 429,500 to 480,000 units in 2011, with a point forecast of 452,100. That’s compared to the roughly 447,010 homes that traded hands over the Canadian MLS System in 2010.

For 2012, CMHC forecasts existing home sales to range between 410,000 to 511,900 units, with a point forecast of 461,3000.

This week on an abbreviated Big Picture podcast (co-host John Shmuel is off in parts unknown): If you’ve been in the market looking for a home the past few years, you’ve likely griped about how seemingly far out of whack prices have become. This is especially true if you happen to live — or want to live — in certain neighbourhoods in Vancouver that have suddenly shot out of your price range.

Phil Soper, chief executive with real estate firm Royal LePage, joins the podcast to explain why the West Coast is the best coast at more than just hockey at the moment (Go Canucks, for some of you out there) and imparts some sage advice to both buyers and sellers thinking about taking the plunge.

http://business.financialpost.com/2011/05/27/podcast-why-is-housing-so-hot-in-canada/

Some 22 years after writing The Wealthy Barber, which became easily the bestselling personal finance book in Canadian history, David Chilton has a dire warning in The Wealthy Barber Returns, to be released this fall.

“The worst thing that’s happening to Canadians in the last 20 years has been lines of credit,” said Chilton, speaking at the conference of the Canadian Pension & Benefits Institute. “If I was prime minister, I’d shut them down. It’s unbelievable how people are abusing these things.”

He helped one person establish a schedule to pay off $30,000 in credit-card debt, only to have the person take on a $150,000 line of credit from a banker, “because the man was so nice and said I needed it.” The banker’s explanation: “It’s my job.”

Chilton’s summation: “That’s the problem. It’s a lot of people’s job to get Canadians to take on debt.

“Our financial institutions, when I was young, were credit providers. Now they’re credit pushers, and they are very aggressively hoisting as much debt onto the Canadian public as they possibly can. The public is taking it in, and it is not a good situation.”

Chilton graduated from Wilfrid Laurier University in Waterloo, Ont., and became a stockbroker. He realized financial education was his calling, and set out to write a book called The Ultimate Guide to Losing Money. Then while watching the TV show Cheers, he changed the book to The Wealthy Bartender, “but by the time I got to retirement savings plans, everybody was hammered. I had guys picking up girls.”

Eventually he did what he advises everyone never to do: He cashed in his registered retirement savings plan. The money was used to self-publish The Wealthy Barber, which held as one of its tenets “pay yourself first,” 10 per cent of your income. The book sold more than two million copies, and led to a U.S. edition and a PBS TV show.

In his followup book, The Wealthy Barber Returns, the message will shift from saving to not spending.

“When I told Canadians to ‘pay themselves first,’ that was three-quarters of the battle; I didn’t care what they did with the rest of their money.

“One thing we’re seeing that we never saw 20 years ago is that all sorts of people who built up their RRSP through ‘pay yourself first,’ have simultaneously built up their credit line through the back end and their net worth has changed modestly if at all.

“People cannot resist lines of credit. And the worst combination in the country is a line of credit and a home renovation — once they renovate one room, the other rooms pale by comparison, so they go on to the next room and it’s a never-ending cycle of renovation as they get deeper and deeper and deeper in debt. The four most expensive words in the English language are ‘while we’re at it.’ And the four most expensive letters are ‘HGTV.’

“We go through a credit crisis brought on by too much private debt in the developed world, particularly in the States, and our response — the Home Renovation Tax Credit. That’s like starting an alcoholic’s rehab by taking him on a pub crawl. The problem with governments is they want to get re-elected.”

“The economy needs to be strong as measured by GDP, and GDP is made up primarily of spending. Government is never going to try to get us away from spending during slow times, through artificially low interest rates and by subsidizing debt. The raison-d’etre of banks is to lend. We are borrowing too much money.”

Chilton says public and private debt in the developed world is “shocking,” and dealing with it through inflation or formal default restructuring is “going to lead to slower economic growth over the next X number of years.”

He also sees an erosion of the middle class in retirement.

“Right now a lot of people 75 or 80 have too much money; they’ve done an excellent job of saving throughout their entire lives, and they had defined-benefit pension plans to boot. It’s so tough to give away money you’ve spent your whole life saving.”

But personal and government debt will cause a new generation of people to run out of money as they live longer in retirement. “Even with pension plans, counting on historic returns is a very shaky move.”

Some people saving for their children’s education or housing will become cash-poor themselves. “Let the kids scramble on their own. You know how many people are headed to retirement with no money now, it’s crazy.”

Chilton reiterated a few topics from his first book.

“Your metric for housing affordability should be: Can you pay it back, can you save for retirement, and can you pay it back before you retire? I think one of the best things that could happen in Canada is if real estate prices fell.”

With life insurance, he said people who need it tend to be 10 to 15 per cent underinsured, but Canadians as a whole are overinsured.

Another way to reduce expenses is by avoiding active money management fees.

“What matters is whether your professional money manager is smarter than the other professional money managers. When you look at Canadian mutual fund sales, it’s amazing how many of the dollars are flowing into funds that have had good recent two-or three-year numbers; the problem is long-term performance has no proven correlation with future performance, and short-term performance has slightly negative correlation with future performance.”

A key is to develop good financial habits early.

“Beyond ‘Pay yourself first,’ I still say ‘Start young’ is the most important personal finance advice by far. It’s getting young kids to save, whether they’re in their 20s or 30s, and to live within their means. Living within their means is what financial planning is all about; it’s still what we struggle most with.” http://www.financialpost.com/personal-finance/retire/Credit+lines+worst+trend+last+years+Wealthy+Barber+writer+says/4862498/story.html

More Canadians are living closer to the edge as consumer debt loads continued to climb in the first three months of the year, a study shows.

Already at record levels, Canadians now owe just under $26,000 on average on their lines of credit, credit cards and auto loans, according to credit rating agency, TransUnion.

That’s an increase of 4.5 per cent, or another $1,000, over the same period last year.

The report comes a day after Bank of Canada Governor Mark Carney warned consumers to curb their spending, saying record low interest rates aren’t going to last forever.

The fear is that higher rates could push more consumers beyond their ability to repay their loans.

“There are going to be a lot of people in the market who are near the edge,” TransUnion vice-president Thomas Higgins said in an interview. “If there’s a drastic change in interest rates or unforeseen unemployment or some other shock from the U.S. or the European Union that throws off a province, or a region, or an industry, the people on the edge have no buffer.”

The news is not all bad.

Debt growth in Canada is slowing from the double-digit pace seen before the recession, Higgins said.

And total borrowing, including mortgages, typically the biggest household loan, is slowing, major Canadian banks said recently in their quarterly reports.

TransUnions’ figures don’t include mortgages, which typically make up two-thirds of a household’s debt.

Finance Minister Jim Flaherty said Tuesday he’s not concerned about a slowdown in consumer spending, as it suggests Canadians are heeding official warnings about spending beyond one’s means.

However, TransUnion said the fact that consumers’ debt load is still rising is a worry.

The Bank of Canada’s trend-setting overnight lending rate is just 1 per cent. But with inflation running at 3.3 per cent, above the central bank’s ideal range, Carney is under pressure to start raising lending rates to dampen demand.

Analysts predict a rate hike could come later this year barring unforeseen circumstances.

Total debt per consumer increased to $25,597 in the first three months of this year, Trans Union said.

Among types of loans, TransUnion said credit card debt, usually the most expensive to carry, barely budged from a year ago, falling $25 to an average of $3,539.

In a sign some borrowers may already be struggling, the national credit card delinquency rate rose 11 per cent. The rate measures the ratio of consumers who take 90 days or more to pay their bill.

The average line of credit, the most popular loans for their low cost and high flexibility, rose 5.9 per cent to $33,762 compared to last year. However, total line of credit debt declined for the first time in five quarters.

One noticeable shift was the decreased use of lines of credit, Higgins said. The category is the largest among consumer loans, making up 41 per cent of the total, and even more in Ontario, at 57 per cent.

But consumers are moving away from these highly flexible, low-cost products in favour of more rigid installment type loans, perhaps in a bid to force themselves to make regular payments, he said.

The average auto loan rose 12.4 per cent to $16,181 compared to a year ago. Total auto debt declined slightly to $45.8 billion.

The study found debt loads rose in all provinces, led by Quebec and Newfoundland and Labrador. British Columbians had the highest load at $36,649.

The average borrower debt on auto loans was also up in the quarter — by 12.4 per cent to $16,189 from $14,402 in the first quarter of 2010. The delinquency rate on auto loans fell slightly to 0.1 per cent from 0.13 per cent a year ago.

Lines of credit are the most popular form of consumer debt, excluding mortgages, accounting for more than 41 per cent of outstanding debt at the end of the first quarter. Debt on lines of credit stood at an average $33,981, up 5.9 per cent from $31,867 in the first quarter of 2010.

The report is based on anonymous credit files of all credit-active Canadians. http://www.moneyville.ca/article/1000720–canadian-debt-load-26-000-excluding-mortgages

WASHINGTON— From Saturday’s Globe and Mail

Whatever momentum the U.S. economy had earlier this year is gone, snuffed out by higher fuel prices and the disruption of global trade caused by the Japanese earthquake.

American employers added a mere 54,000 jobs in May, the weakest showing since a string of four consecutive monthly declines in hiring ended in October, 2010, according to government data released Friday. The unemployment rate rose to 9.1 per cent, the second monthly increase after the jobless rate had dropped one percentage point over four months, to 8.8 per cent in March.

The increase in payrolls was well below the 165,000 jobs projected by Wall Street, a forecast that was itself considerably lower than even a couple of weeks ago, as analysts made last-minute corrections to their outlooks after a run of negative data this week.

The Dow Jones industrial average and the Standard & Poor’s 500-stock index slumped to their lowest levels since March, as analysts variously described the labour report as “bleak,” “terrible,” and “very weak.” The U.S. dollar fell against a basket of currencies, and Treasury yields declined as investors sought the relative security of U.S. debt.

The most recent U.S. data describe an economy bereft of confidence, suggesting economic growth will remain slow because companies are unwilling to take the risks that would drive a faster expansion.

As a result, the seven million people who have lost work since the start of 2008 will continue to languish.

Companies added workers for an eighth month, the longest stretch of uninterrupted monthly jobs growth since 2006. Yet the gains are unspectacular by historical standards, and there is little indication that employers are willing to push through headwinds such as higher energy prices.

Productivity rates in the United States are at high levels, an indication that bosses would rather squeeze more out of existing workers than commit to new salaries and benefits. In May, businesses reduced temporary workers, a bad omen because the addition of short-term workers tends to precede sustained hiring of full-time employees.

“I’m gun shy,” said Peter Bredlau, president of Quality Services Associates Inc., a small construction company based in Roselle Park, N.J., that these days is making most of its money from servicing heating and air conditioning systems.

A little more than a year ago, Mr. Bredlau said he had to write off debt owed to him of about $30,000 (U.S.), a significant sum for a company that employs fewer than 20 people.

“My wounds are still a bit raw,” said Mr. Bredlau, who no longer accepts work without a significant down payment. “History is telling me I have to be careful.”

Coaxing people like Mr. Bredlau to take a leap of faith is not only an economic problem, but a political one, especially for U.S. President Barack Obama.

No president has won a second term when the unemployment rate was higher than 7.2 per cent since Franklin Delano Roosevelt. To win in November, 2012, Mr. Obama almost certainly will have to test history.

Matt McDonald, a partner at Washington-based consultancy Hamilton Place Strategies and a former White House staffer, argues that Mr. Obama’s chances of success would be bolstered considerably if the unemployment rate were to dip below 8 per cent by election day. Such a reading would squelch criticism that the President’s policies are hurting the economy, and show up as considerable improvement from the 10.1-per-cent peak in October, 2009.

The latest numbers put Mr. Obama well off the Hamilton Place target. Before Friday’s report, Mr. McDonald calculated the economy needed to generate an average of 209,000 a month to drop the jobless rate below 8 per cent by November, 2012. Over the eight months of employment growth through May, employers created an average of 150,000 jobs.

Manufacturing employment fell 5,000 in May, compared with an average gain of 27,000 over the previous six months, suggesting the destruction of factories in Japan is forcing U.S. facilities to curb production because of a lack of Japanese components.

State and local governments shed 30,000 workers, a trend that is likely to continue as politicians cut spending to shrink inflated budget deficits. Private-sector service providers added 80,000 positions in May, compared with an average increase of 152,000 over the previous six months, according to Kevin Logan, chief U.S. economist at HSBC in New York.

“Today’s weak report raises more concerns about the underlying strength of the economy,” Mr. Logan said in a note to his clients. Previous releases this week showed that home prices, factory production and consumer confidence all deteriorated in May.

Economists at Barclays Capital in New York cut their forecast for economic growth in the second quarter to a 2-per-cent annual rate from a previous estimate of 3.5 per cent. Many analysts said the weaker economic data would force the U.S. Federal Reserve Board to refrain from raising borrowing costs for longer than previously anticipated.

There was one positive in the May labour market report: Average hourly earnings rose 0.3 per cent to $22.98 in May. It also is important to note that monthly jobs figures are volatile. In 2004, when the U.S. economy was strong, employers added fewer than 50,000 jobs in a month on two occasions.

Tom Porcelli, chief U.S. economist at Royal Bank of Canada in New York, argued that the disappointment with the May jobs data is the result of too many analysts believing the U.S. economy was stronger than it is.

That also is Mr. Bredlau’s perspective. Nothing much changed for him in May. In fact, he’s just added an employee to help keep up with increased demand for his ventilation services, which is the result of

some competitors going out of business.

“I hear we are heading back into recession mode,” he said. “I don’t believe we ever left.” http://www.theglobeandmail.com/report-on-business/economy/jobs/bleak-us-jobs-report-underlines-economic-malaise/article2045797/

Homeowner’s insurance is one of the most common types of insurance and one of the least understood. Many homeowners believe that their policies will cover them for practically any damage sustained to the house or contents. The reality is that homeowner’s policies contain many exclusions and restrictions on coverage that can leave you with a coverage gap. Here are five common myths about homeowner’s insurance. (For related reading, also take a look at The Beginner’s Guide To Homeowners’ Insurance.)

1. Loss-of-Use Coverage

If you have damage to your home severe enough that you cannot live in it while it is repaired, you likely expect that the insurance company will put you up in a hotel while the work is being done. However, that is not necessarily true. Not all policies include a loss-of-use provision. If you have to pay for a hotel, meals and other services out of pocket, it can add up quickly and put you at financial risk. If loss-of-use is covered, it will be stated explicitly in your policy, along with any limits of coverage. For example, your policy may state a maximum per diem amount or restrict the length of time the expenses will be paid for.

2. Replacement Cost

Replacement cost in a homeowner’s policy refers to valuing the loss at the amount it will cost to replace the item. For example, if your four-year-old computer is lost in a fire, replacement cost coverage would allow you to purchase a new one with similar features. Most homeowners believe that is what will happen if they have a claim, however, the bulk of policies do not carry this clause. If not included, losses will be valued at what they were worth in their condition before the calamity. The four-year-old computer might be valued at $250 – not enough to purchase a new one. Replacement cost clauses are a valuable inclusion in a homeowner’s policy.

3. Flood Coverage

Almost all homeowner’s policies exclude flood coverage, along with earthquakes and other natural disasters. Floods can occur from a number of causes, such as a hurricane, burst pipes or sewer backup. A flood is one of the most common causes of home damage and the destruction of contents. There are companies that specialize in flood coverage, and, if you live in a susceptible area, look into having a separate flood policy. Your mortgage company may require this additional coverage as well. (For more information, see Understanding Lender-Required Flood Insurance.)

4. Termites

Termites live all over North America but are most destructive in southern climates, where their lifecycles are not affected by cold weather. Termites eat wood – lots of it – and can eat the supports in your house as easily as fallen leaves in the forest. They live in large colonies and, collectively, can destroy the structure of your home. Repairing termite damage and eradicating them can cost thousands of dollars. Most policies exclude termites and other pest damage. If you live in a susceptible area, the best insurance is to have the house regularly checked and sprayed by a professional.

5. Valuation of Loss

When you have a house insurance claim, the insurance company will send out an appraiser to determine the extent of the damage and the best way to fix it. The appraiser will assess a value to the loss which will be the minimum the insurance company can pay in order to meet their contractual obligations. However, you do not have to take that value as final. If you can prove your loss should be valued higher, you can negotiate the settlement with the company. Keeping receipts and pictures of valuable items will help you back up your claim.

The Bottom Line

To really know what is in your homeowner’s policy, you should read it thoroughly. Look for exclusions to coverage and decide how you will cover those risks. In some cases, your insurance company will have separate add-ons that they can attach to your policy or you can get specialized insurance from another company. For those risks that cannot be insured, analyze how you will financially cover those risks if they should happen. (For additional reading, also see Insurance Tips For Homeowners.) http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/five-myths-about-homeowners-insurance/article2034273/

The risk that the economic slowdown in the United States will turn into another North American recession is not high, Canada’s finance minister said Tuesday as he cautioned that too many people nevertheless remain jobless in this country.

“I do not think the risk is great,” Jim Flaherty said in response to a reporter’s question at the International Economic Forum of the Americas taking place in Montreal. “There are risk indicators with respect to which we are concerned which we reviewed in the budget [Monday] and which I reviewed with the private sector economists with whom I met last week. The nature of the risks have not changed. We are concerned about debts and deficit in the United States and the need for a convincing longer term plan in the United States” to deal with those problems.

Ottawa is also concerned about some evidence of continuing slowness in the U.S. real estate market which puts a damper on consumer confidence in that country, Mr. Flaherty said. As well, it is worried about the sovereign debt situation among some eurozone countries, including Greece.
“These are all risk factors but they are known risk factors,” Mr. Flaherty said, adding that to address the risk in the latest budget, federal finance officials discounted private sector growth assumptions by $10-billion in nominal GDP each year, equalling a revenue markdown of $1.5-billion annually.

The U.S. economy grew at a 1.8% annual rate in the first quarter but job growth remains anemic, prompting U.S. Federal Reserve Chairman Ben Bernanke to say Tuesday that the central bank should maintain monetary stimulus to boost a “frustratingly slow” recovery. U.S. employers hired 54,000 more people in April, well below the 165,000 expected by economists.

“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Mr. Bernanke said in a speech in Altanta.

The U.S. economy is growing above “stall speed,” Deutsche Bank AG foreign exchange analyst Alan Ruskin told Bloomberg in an interview Tuesday.

“A lot of people say that if the U.S. economy slows below 2% in year-over-year gross domestic product historically, we’ve slipped in to recession. The key is that we stay above that line, otherwise that is perceived as stall speed and other issues kick in.”

The pace of economic recovery in the United States is crucial for Canada because America is Canada’s largest trading partner, buying 75% of all Canadian exports like oil, wood and cars. Any major slowdown would hurt Canadian businesses and force layoffs here.

Mr. Flaherty maintained that unemployment in Canada also remains too high, even as his government initiates targeted hiring investments. The country’s unemployment rate stood at 7.6% in April as the economy added 58,000 mostly part-time jobs. Employment has grown by 1.7% in the last year.

Asked if the Canadian government has picked a preferred candidate to lead the International Monetary Fund, Mr. Flaherty said not yet. Former IMF chief Dominique Strauss-Kahn resigned last month amid allegations he sexually assaulted a New York City hotel worker. Agustín Carstens, the head of the Mexican central bank, and Christine Lagarde, France’s finance minister, are vying for the job.

In a speech to conference delegates, Mr. Flaherty stressed the importance of sound fiscal management for an elected government, noting no one truly foresaw the credit crisis in the fall of 2008 and subsequent recession. He said “it’s unpredictable” when the next shock might come.

The finance minister on Monday delivered a budget that included a pledge to bring the federal government back into surplus position by 2014-2015. He said he will do that through a combination of $4-billion in annual spending cuts and closing tax loopholes to generate another $4.1-billion.

The cuts mark the most intense attempt to rein in public sector spending in more than a decade. The government is conducting an operational review of the federal service and some departments have begun laying off staff.

Opposition against the cuts is expected to grow in the months ahead.

Canadian Auto Workers union president Ken Lewenza said Monday the government’s  spending will wipe out thousands of jobs and hurt service delivery. “With the economic rebound being so uncertain and anemic private sector investment growth, these billion-dollar cuts are the last thing Canada needs,” Mr. Lewenza said.

But compared to what a private company would do to trim spending, the government’s $4-billion plan is not very ambitious, Mr. Flaherty argued.

Mr. Flaherty’s savings target represents 5% of Ottawa’s $80-billion in annual discretionary spending. The government won’t book the savings until it achieves them and has not provided any details of which programs and departments will be affected.

http://business.financialpost.com/2011/06/07/canada-can-offer-lessons-for-recovery-flaherty/