(The following article is from the June 1-15, 2009, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.)

Special to PV

After a few weeks of unfounded claims about so-called "green shoots", based mainly on temporary stock price increases, the North American and global economies continue to slide. The only positive news is from China, where the domestic economy appears to be holding steady.

     On May 21, the Dow Jones industrial average lost 125 points, after new auto layoffs pushed the unemployment benefit claims to 631,000 during the previous week. The number of Americans on unemployment insurance hit nearly 6.7 million, a 16th consecutive weekly record.

     The TSX index fell sharply on the same day, falling back below the 10,000 mark. The Globe and Mail reported that the market is "reconsider(ing) its optimism over early signs of recovery in the economy, which helped propel a two-month rally that lifted stocks off of 12-year lows in early March." The selloff began a day earlier after the U.S. Federal Reserve said the economy was likely to shrink by between 1.3 and 2 percent this year, up from earlier estimates of 0.5 and 1.3 per cent.

     There are many other signs that investor exuberance has been premature, such as a drop in U.S. retail sales and the ongoing decline in housing prices. The number of new housing starts in the U.S. plunged by 12.8% in April to their lowest level since records began in 1959.

     Credit ratings agency Standard & Poor says it may cut Britain's rating because of rising debt levels, which would raise borrowing costs for the British government.

     Japan's GDP fell at an annualised rate of 15.2% in the first quarter. The Economist magazine states that "the depressing effect on demand of another big decline in exports was compounded by a collapse in business investment."

     In the Euro area, total GDP fell by 2.5% in the three months to March, down to 4.6% lower than a year earlier.

     Spain's economy suffered its largest contraction in 50 years in the first three months of 2009, as GDP fell 1.8% from the previous quarter and was down 2.9% year-on-year. The near-collapse of Spain's key construction industry has hit the economy hard.

     During the same quarter, Germany's economy shrank by almost 7% from its peak in the first quarter of 2008, compared with 5.9% for Italy and 3.2% in France.

     Mexico's economy shrank by 8.2% in the first three months of 2009 compared with a year earlier. Mexico's finance minister has warned that economic output could decline by 5.5% in 2009, the biggest contraction since 1995. Mexican exporters have been hit by the US recession, at the same time as the amount of money sent home by migrant workers declines. On top of these problems, economists estimate that the H1N1 "swine flu" outbreak which began in April could cost the Mexican economy more than $2 billion.

     The fall in exports from China has also been worse than expected. China's exports in April were down 22.6% from a year ago, the sixth successive month of decline, and also bigger than the 17.1% annual drop recorded in March. On the other hand, investment in industrial plants and property in cities was 30% higher in the first four months of 2009 compared to in the same period of 2008. In recent months, the Chinese government has encouraged banks to lend huge amounts to businesses to help them get through the downturn. That money has being spent on new equipment as well as massive infrastructure projects.