Canadians not using their cars as much (*Gas too expensive?)

Canadians are putting off summer vacations, new car purchases, and are becoming more strict with budgets so they can better handle higher gas and food prices and reduce their debts, according to a survey by Royal Bank.

The Canadian Consumer Outlook Index released Wednesday suggests Canadians are looking for ways to save as they grapple with gas prices that rose 29.5 per cent in May alone and food prices that grew 4.2 per cent that month.

"Canadians are continuing to focus on managing their debts - a very good sign as we enter the second half of the year," Richard Goyder, vice-president, Personal Lending, RBC said in a statement.

"It's encouraging to see consumers are trying to live within their means and seeking out very practical ways to not only pay their bills but also to save and invest."

The survey was released the same day Bank of Canada governor Mark Carney warned in a speech that agricultural product prices are up substantially since interest rates last went up, and will continue to rise.

"As we tried to explain in April, our expectation was that these food prices would come into the economy over about a six-month period. That's been the historic experience and that's exactly what's happening."

"So there's a bit more to come, given the recent rises in food. Food, unfortunately, is going to remain relatively expensive and get a little more expensive in the coming months."

How the economic storm battered St. Thomas, Ont.'s factories

In the depths of the recession, John LaCroix stopped at a traffic light in his green Ford Windstar and found himself struck by a wave of anxiety.

He had been working only part-time since being laid off at the Sterling Truck plant in St. Thomas in 2007 and fears about running out of money had been waking him in the middle of the night. Now, they were beginning to dominate his daytime thoughts as well.

“You’re stopped at a red light. There’s nobody around; you’re looking at your gas gauge and thinking of your money. ‘I’m wasting gas that I need. This is serious. This is food for my table. I’m not sitting here when there’s no other cars around. I’m going through this red light.’” And he did.

Mr. LaCroix’s journey through the recession reflects the devastation the manufacturing crisis has wrought on St. Thomas, the one-time railway capital of Canada that now has a strong claim to another, more dubious title: the Canadian city hit hardest by the recession and factory closings.

The shutdown of the Sterling heavy-truck plant, the looming closing of a nearby Ford Motor Co. factory and numerous other shutdowns have rippled well beyond Mr. LaCroix and thousands of others whose jobs have vanished, hitting social service agencies, the United Way, local school boards and taxpayers in the city and the surrounding area.

Some Americans believe the Economy will "Never Come Back"

"Americans are growing increasingly doubtful about direction of the US economy, according to the latest survey from business-advisory firm AlixPartners.

In fact, an increasing number, some 61 percent, say they don't expect to return to their respective pre-recession lifestyles until the spring of 2014, if ever.

What's worse, a full 10 percent said they expect they will never return to pre-recession spending.

That's a more pessimistic view than last year, when those surveyed expected that they could be back to pre-recession spending levels by the middle of 2013.

"Americans continue to push their expectations for return to a pre-recession 'normal' further and further into the future—close enough for comfort, but far enough away to seem realistic," said Fred Crawford, CEO of AlixPartners. "But as that happens, more and more it seems normal is actually where we are right now."

Comment: 

There is an overwhelming feeling of dread that seems to pervade everything these days. The news is full of Natural disasters, and now E-coli in food, and Fukishima, and yada, yada, yada.

The worst story is housing. More and more people were sucked into the Bush Era - HELOC madness that gripped the world, and now, millions are losing their homes.

Here in Canada, it's still bizarre. Some pockets are holding up = but the econony sucks. More and more closed up shops. Small business is weighed under by red tape and taxes, and the prices of homes in Vancouver, and other centers would make Greenspan puke.

Here's the deal.

No one is sure what is coming next.

One thing is FOR SURE. Volatility, insecurity and Black Swans.

Be ready - be liquid and if you have been trying to get rich on your house, bunky - sell, before you find out what the therm debt slavery means.  MORT GAGE = French for DEATH CONTRACT.