By David Ljunggren
OTTAWA, Dec 16 (Reuters) - A little over two months ago, Prime Minister Stephen Harper assured Canadians that the economy was well placed to deal with the global recession and dismissed talk of budget deficits.
That relatively upbeat era is now over, washed away by an ever-widening river of gloom, stark language, pleas for help and relentlessly negative data.
"The truth is, I've never seen such uncertainty in terms of looking forward ... I'm very worried about the Canadian economy," Harper told CTV television on Monday. "Obviously, we're going to have to run a deficit."
His comments further eroded dwindling stocks of optimism in a country were you cannot escape predictions of doom.
Statistics Canada releases a steady stream of downbeat reports and barely a week goes by without an industry group forecasting calamity unless governments step in to help.
Ontario -- Canada's most powerful province -- released a report on Tuesday saying it would lose 517,000 jobs within five years if the Big Three auto makers went bust.
"The demise of auto in Canada is the economic equivalent of a nuclear freeze, with catastrophic effects that would knock us into a deep recession ... Transformation of the auto industry -- absolutely. Armageddon -- no," Economic Development Minister Michael Bryant told reporters in Toronto.
At the same time, the Forest Products Association of Canada was demanding Ottawa take five urgent steps to help.
"Government can't let the current financial meltdown become an industrial meltdown. Inaction isn't an option," said Avrim Lazar, the association's president.
Harper's language has changed from the moment in mid-September when he dismissed talk of a recession.
In October, he said, "I remain fundamentally optimistic about the Canadian economy," yet since then has sounded steadily less optimistic.
Harper spokeswoman Carolyn Stewart-Olsen dismissed the suggestion that the prime minister's comments on Monday represented a sudden new shift into gloominess.
"I believe he has always been very clear we are in an economic crisis. He has said repeatedly the numbers are not good and the forecast is not good," she said.
John Clinkard, chief economist at Deutsche Bank in Canada, said Harper had been reacting to the best information he had available at the time.
"There has been a change and so the information he took back in September has changed significantly and the clouds are much more ominous," he told Reuters on Tuesday.
"To be fair, among G7 countries we are the least impacted to date," he added. He did note, however, that his own forecasts for next year had become significantly more pessimistic in the last month.
There is certainly no shortage of downbeat predictions.
Montreal-based Laurentian Bank on Tuesday issued its 2009 outlook for the Canadian economy, saying it "will face challenges far more demanding than those in previous years."
Both Laurentian and Clinkard pointed to the recent sharp fall in the cost of a barrel of oil as a problem. Canada is a major exporter of energy.
Clinkard forecast the lower oil price would hit Canada's terms of trade -- the relative price a country receives for its exports compared to what it pays for its imports.
"The impact of the terms of trade on Canada's growth has been very positive up until now," he said.
"We're going to lose that, so that will I think have a very significant impact on domestic demand which ... has kept this economy alive, basically." (With additional reporting by John McCrank in Toronto; Editing by Frank McGurty)