The Globe and Mail reports in its Saturday, Sept. 13, edition that Canada's economy may be facing a recession, but the situation could be worse in the U.S. The Globe's guest columnist John Rapley writes that while inflation is slowing, the Bank of Canada is expected to cut interest rates. Lower interest costs and a manageable fiscal deficit will provide some flexibility to handle increased spending during a recession. Inflation in the U.S. is more stubborn than in Canada. Mr. Rapley says the task of the Federal Reserve is a good deal more complicated than the Bank of Canada's. Amid policy confusion, other countries present clearer investment opportunities than the U.S. As a result, after years of underperformance, the Canadian stock market is starting to outperform the U.S. market. Even though interest rates in Canada are nearly a full percentage point lower than the U.S.'s, the loonie has held its value, suggesting continued investor confidence. So, while the situation in Canada may look dire, the country's prospects for navigating the coming recession do not look too bad, comparatively. The U.S. fiscal deficit is four times Canada's in proportionate terms and is on track to get worse.