Picked this off the MSN site

OTTAWA - This week's sudden and unexpected plunge in commodity prices, which continued Thursday, threatens to rob the Canadian economy of the fuel needed to power it through a U.S. recession, a senior analyst with a major investment bank is warning.

Adding to the rapidly darkening mood hanging over the North American economy were reports that a barometer of the short-term outlook for the Canadian economy weakened more than expected last month, and that jobless claims south of the border last week rose more than anticipated.

"Sharp across-the board declines in global commodity prices this week are beginning to reverse the sharp run-up since the beginning of the year, a development which could turn an unexpected tailwind for the Canadian economy in the first quarter of 2008 into a headwind in the second quarter," said Ted Carmichael, economist with JP Morgan Canada.

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"Commodity prices are the main driver of Canada's terms of trade, and the sharp run-up in prices through mid-March was providing a large boost to Canadian export income and acting as an important offset to the slowdown in U.S. housing and industrial activity," he noted. "A sharp correction in commodity prices would obviously remove this offset and add to the forces slowing the Canadian economy."

Even before the retreat in commodity prices, analysts were beginning to warn that the Canadian economy would be pushed to the brink of recession, and Ontario and possibly Quebec into one, by what many now say is already a recession in the U.S.

However, Carmichael noted that while commodity prices have plunged nearly 11 per cent over the past week, that followed a 25 per cent rise over a less-than-three-month period.

"It is still too early to declare that the Canadian economy is heading for recession, although the risk has risen sharply," Carmichael said.

If the U.S. rate cuts and and the U.S. government's fiscal package succeed in boosting U.S. growth, Canada could escape recession, he said.

However, even if that's the case, growth here is expected to grow to only 1.1 per cent this year, well below the 1.9 per cent in 2001 when the U.S. experienced a mild recession, and the weakest since the 1991-1992 recession here.

BMO_Capital Markets analyst Bart Melek, citing the impact of tightening credit markets, said oil prices, now at just over $100 US a barrel, could fall as much as $20 US a barrel in the not-too-distant future.

"The credit crunch is undermining the argument that the developing world, where much of the new demand originates, has decoupled from the U.S.," he said, adding that the Chinese government's intention to slow its economy to control inflation also suggests a slowdown in the growth in demand for oil.

On the bright side, however, the fall in commodity prices, plus expectations of lower interest rates, has also pulled down the value of the Canadian dollar, which has been hammering Canada's manufacturing sector as well as its tourism industry.

And the loonie continued to depreciate Thursday, falling 78 basis points to 97.71 cents US, which followed a more than two-cent plunge the day before.

Statistics Canada, meanwhile, reported that foreign visitors to Canada hit an all-time low in January, pulled down by record low visits from the U.S.

The drop in visits occurred despite a decline in the value on the Canadian dollar, whose strength has been blamed in part for dampening visits here by Americans as well as luring Canadians south, especially for cross-border shopping trips. However, travel to the U.S. by Canadians also fell in January.

Statistics Canada also reported that its index of leading economic indicators, a barometer of the short-term outlook for the economy fell 0.3 per cent in February, more than wiping out a 0.1 per cent gain in January.

Most of the weakness originated in a sharp contraction of manufacturing, especially autos, at the turn of the year, but also reflected weaker home sales, which were only partially offset by an improvement in household demand, it said. Household demand improved across the board, spending on durable goods rose modestly, even before the reduction in the goods and services tax rate gave a further boost to auto purchases in January.

"This big drop in the leading indicator suggests that the economic outlook for Canada may have softened somewhat, though it does contrast with other economic indicators that have suggested some modest upswing in economic activity," said TD securities economic strategist Millan Mulraine.

The U.S. leading indicator also fell in February, the fifth straight monthly decline, which Desjardins Group economist Francis Genereux noted "signals more trouble for the U.S. economy."

And 'NO' I don't work for Zerox, I see their ad got in there.

Anyway, I'm sure that NOT will be back at the top of the news within a few weeks.

Happy Easter.

RM