Our Canadian Economy: Some Encouraging News ...

... or are we being lulled into false reassurance?

Two bits of news reports. First one (emphasis added):

Bank of Canada sees sluggish growth until 2010

Canada's economic performance is expected to be sluggish through the first quarter of next year, the country's central bank said Thursday.

In its Monetary Policy Report, the Bank of Canada said growth is expected to pick up over the remainder of 2009 and to shoot to "above-potential" in 2010, as credit conditions improve and interest-rate cuts take hold.

The bank said it sees GDP growth of 0.6 per cent in 2009. That is forecast to rise to 3.4 per cent in 2010.

(...)

"In line with the bank's new outlook, some further monetary stimulus will likely be required to achieve the two per cent inflation target over the medium term," said Bank of Canada governor Mark Carney.

Asked if Canada was headed for recession, Carney would only say that economic performance will be sluggish for the next few quarters.

The bank said three major factors have been battering the Canadian economy, including:

• The strains on financial markets caused by the growing credit crisis.
• The fact the global economy appears headed for a mild recess led by the U.S., which it said is already in recession.
• Falling commodity prices.

The recent drop in the Canadian dollar will also help to offset weaker global demand and lower commodity prices, the central bank said in its report.

Now, the second one (emphasis added):

Canada's economy still better than U.S.: StatsCan

Canada's economy remains in better shape than the U.S. economy in a variety of areas, and recent indicators suggest the gap between the two has been widening, according to a Statistics Canada analysis Thursday.

As well as a more resilient housing market, the federal agency says Canada also has much stronger employment, financial and auto markets.

The economically reassuring report was released as Finance Minister Jim Flaherty was announcing measures to bolster domestic financial institutions and as Bank of Canada was cutting its forecasts for overall economic growth here and explaining why the central bank cut rates earlier this week and expects to cut them even further down the road.

The Bank of Canada warned that Canada's economy will be on the edge of recession through this year and next, with growth of just 0.6 per cent in each year, and that a recovery won't start until the spring.

OK. So, taken the two together, we can expect a slowdown of the economy ("edge of a recession") but we'll rather quickly pick up again, in parts thanks to our own lowering dollar - right?

Provided, of course that: A) the U.S. and the rest of the industrialized world do not go deeper into global economic meltdown; B) that our banks and financial institutions do not lose big if (and/or when) they spend billions to buy toxic assets in the U.S. in order to help the later recover; and C) that we do not get mired in further budget deficits, especially by bailing out our banks and financial institutions because of B).

Hence my question: is what we are being told based on a house of cards of optimistic assumptions in order to inspire confidence in our economy, or should we take stock in such reassurances in order to follow the advice of Prime Minister Harper to "don't worry, be happy"?

Is it coincidence that he repeated (yet again) that "the fundamentals of our economy are solid" just last week?

Forgive me if I therefore remain skeptical of today's somewhat encouraging news about our economy ... especially in light of other related things like this.