Spring 2011

At the end of the 2010, the outlook for the global economic recovery had brightened considerably. In just three short months, new threats have emerged.

Winter 2011

A year ago, the concern was that government stimulus would diminish in 2011, the inventory cycle would wear off and central banks would raise interest rates prematurely. Now with the after effects of the financial crisis beginning to fade, business conditions have improved, hiring has picked up, balance sheets are being repaired and the outlook for 2011 has brightened.

Fall 2010

Many of the concerns that gripped the world economy just three months ago appear to have faded. However, continued weak economic growth is not among them.

The threat of a European financial crisis now seems past its peak intensity. Although Europe’s debt problems are not going to go away, there is confidence in how Europe is handling the crisis and investors are now willing to buy Spanish, Portuguese and Greek government bonds. Concerns that China was in the midst of an economic slowdown have been diffused by a string of indicators (industrial production, retail trade, imports and fixed asset investment) that have been stronger than expected. In addition, the risk of another global financial crisis has been reduced through the proposed Basel III regulations that would require a near doubling of banks capital requirements, boosting their balance sheets and helping them to absorb losses.

Slow growth ahead There is now compelling evidence that the U.S. recession ended in August. A financial crisis has been averted and we are now in a post-recession growth phase that should last several years. The key question is how strong will the economy be over the next six to 12 months? It is unlikely …

Summer 2010

Canada has been spared many of the disruptions experienced in the United States and is in much stronger financial shape than the other G7 countries.

Canada is experiencing a new economic expansion with real GDP expected to increase by an average of 4.0% annually. The private sector is now taking over from the public sector as the growth driver. Increases in employment have recovered three-quarters of the jobs lost in the recession. Canadians didn’t experience the kind of wealth destruction that has taken place in the U.S. and although household debt has increased, the household debt service ratio of interest payments to disposable income is still low at 7.44%. Every province is sharing in the growth rebound, with Alberta experiencing the fastest rate of growth. This picture is in sharp contrast to the United States, where real GDP growth is expected to have an average annual increase of 3.0%.

A question of sustainable growth At present, there is enough policy-fueled growth momentum to see the economy grow over the next 12 months. The big question is what happens in 2011 and 2012, when government stimulus has faded and interest rates are on the rise. The sustainability of growth momentum into 2011 and 2012 will …

The shape of recovery to come Progress has been made toward a global recovery but not enough to guarantee an early recession exit. In fact, it is becoming harder to believe that a V-shaped recovery will take hold by 2010. Banking sector stabilizing Stress test results of U.S. banks have played an important role in …

Spring 2009

The financial crisis began in the U.S. housing sector and its recovery path depends on housing stabilizing and, fortunately, there are now encouraging signs of a bottoming in the U.S. housing market.

Winter 2009

On December 9th, the Bank of Canada made it official – the Canadian economy was entering a recession. According to the National Bureau of Economic Research, the U.S. economy peaked in December 2007 and has been in recession ever since. In addition to the recession arriving later in Canada, several other factors indicate that it is likely to be less severe.