Economy firing 'on all cylinders’ as Canada sees best growth in six months

[mentalfloss]

Walter and Danbones: 'Fake Economy'


Economy firing 'on all cylinders’ as Canada sees best growth in six months

"The Canadian economy fired on all cylinders in November: Production resumptions led the way, but nearly all major sectors reported gains on the month," Toronto-Dominion Bank senior economist Brian DePratto said in a research note. "As shown by this month's breadth of growth, the underlying trend for the Canadian economy remains a positive one."

Meanwhile, the U.S. Federal Reserve decided to leave its key interest rate unchanged in its first rate-setting meeting of the new year.

In Canada, the encouraging GDP rebound added modestly to the chances that the Bank of Canada will follow the Fed's lead and hike its own key rate again in the spring, although the hike is still considered less certain in Canada's case. On Wednesday afternoon, the bond market was pricing in a 60-per-cent chance of a quarter-point increase in the Bank of Canada's April rate decision, up from 57 per cent a day earlier.

The Canadian central bank has already raised rates three times since last July, lifting its key rate to 1.25 per cent from 0.5 per cent in the process, as the Canadian economy's rapid growth in the first half of 2017 has left the economy with little or no excess capacity – raising inflationary pressures and justifying raising rates from their historically low and highly stimulative levels.

Most economists believe the Bank of Canada still has at least two rate increases up its sleeve this year. The solid November GDP report added some confidence to those expectations, as the pace of growth, while relatively moderate, still implies that the economy is eating up whatever spare capacity it has left.

https://www.theglobeandmail.com/rep...november-expands-04-per-cent/article37801536/

 

[taxslave]

Upping interest rates is a surefire way to destroy the economy. But it will make the banisters rich(er)

 

[DaSleeper]

Just another Mentalf*ck attempt at fluffing Trudeau

 

[petros]

A 3, 4, 6, 8 10, or 12 cylinder?

 

[Twin_Moose]

A little thank you to the Oil industry is deserved eh MF

 

[petros]

A big thank you.

 

[10larry]

The Trudough legacy in full bloom with jr. determined to surpass his late father in pawn shop economics. Any moron can look good with a cc in hand til creditors come knocking, a prob jr. does not have as he simply offloads the burden to our kids, unfathomably lib addicts still dance to his tune. My apologies to the genderless gods I don't know the neutered word for his or father.

Congrats, Canadians: You're world leaders in debt - Macleans.ca

 

[Walter]

Why isn't our stock market booming if the economy is firing on all cylinders.

 

[petros]

One reason Walter.

Wynne.

 

[mentalfloss]

Why isn't our stock market booming if the economy is firing on all cylinders.

Because the stock market isn't that important.

 

[petros]

Because the stock market isn't that important.

That's going in stupid quotes thread.

 

[DaSleeper]

Because the stock market isn't that important.

That's going in stupid quotes thread.

I guess self directed RRSPs and company pension plans aren't important.....
Cause where they invest?

 

[petros]

Flosshole is a Bolshevik.

 

[B00Mer]

Thank you Trudeau

 

[White_Unifier]

I could get my car firing on all cylinders all day long as long as I have the money for the gas. the present boom is debt-induced so not sustainable in the long run.

 

[Hoid]

Why isn't our stock market booming if the economy is firing on all cylinders.

A better question is how can the American markets be at record levels when their economy is a lump of crap.

 

[Twin_Moose]

Canada's finance minister unlikely to pile on government spending in next federal budget: Don Pittis

There is never any shortage of people asking for new money in a federal budget.
From indigenous housing to cyber-security to conservation there are always worthy, and popular, ways to spend money. And if Ottawa were ever at a loss, provincial governments are full of helpful suggestions for new federal spending.
Despite the seemingly insatiable urge of governments to chalk up debt, there are some good reasons why finance minister Bill Morneau may show some restraint this time around.
A series of economic statistics, including last week's retail sales figures and January jobs , are further indications that Canadian economic growth is declining from last year's highs.

Following Trump's lead

There is an argument that as central banks move to stop fanning the fire with rock bottom interest rates, the Feds should step in with higher fiscal spending.cuts will stimulate the country's economy by about one per cent of GDP, economists say.
That's the path the U.S. government has followed, cutting taxes while continuing to spend, effectively borrowing from the future to charge up the economy now.
Many Canadian voices have hinted that Canada should follow suit, at least in the area of tax cuts. They say Canadian businesses will be at a disadvantage compared to their U.S. competitors.
Others, including the University of Calgary's Jack Mintz , have warned that lower U.S. tax rates will encourage Canadian businesses to relocate or expand in the United States.
But according to economists at the Bank of America, the stimulative effects of U.S. budget moves will not stop at the border.
In a report titled Sugar rush from U.S. fiscal candy , BofA Merrill Lynch Global Research predicts that U.S. cuts and spending will have a direct impact on the Canadian economy.
It says higher U.S. growth, a direct result of a "U.S. budget deficit of almost one per cent of GDP in 2018," will push Canadian growth up to 2.5 per cent this year and unemployment down, forcing the Bank of Canada into more rate increases.

Monetary or fiscal

"We now expect the Bank of Canada to hike four times this year to bring the overnight rate target to two per cent by year-end 2018," says the report.
The prediction is a bit of an outlier. But if the Bank of America analysts are right, following the January hike, over-borrowed Canadians could expect their mortgage rates to rise by another three quarters of a percentage point this year alone. And one of the problems of adding to federal debt at a time of rising interest rates is that the debt becomes more of a burden, according to warnings last week from the OECD in its latest report on borrowing by the world's richest countries.
According to the Paris-based think tank, "sovereign debt figures remain at historically high levels while elevated debt service ratios pose a significant challenge against a backdrop of continued fiscal expansion in most OECD countries."
That can cause a vicious circle where more fiscal expansion leads to higher debt, contributing to even higher interest rates.
And there are signs inflation is creeping up. Friday's consumer price index demonstrated overall price increases slowed in January. But a glance at Statistics Canada's three measures of core inflation , indicators that remove volatile items, show a steadily rising trend.
The Bank of Canada has said it may begin to work more closely with Finance to coordinate monetary and fiscal policy. But according to the Conference Board of Canada's Craig Alexander , who wrote in the Report on Business last week, any coordination must not conflict with the bank's independence in raising rates.

Oil on flames

So long as that independence is maintained, any fiscal spending that stimulates the economy will be at least partly counteracted by the Bank of Canada's higher interest rates.
As Bank of Canada Governor Stephen Poloz has repeatedly said, even at current levels, Canadian interest rates are low enough that they are still stimulating the economy. And according to everyone's outlook, the Canadian economy continues to grow this year.
When markets plunged earlier this month, we saw how quickly the mood can change. As C.D.Howe policy analysts said in their Friday shadow budget, there are long-term challenges ahead for Canada, including an inevitable economic slowdown and an aging population.
But for now, while spending may make the Liberal government more popular, the economy really doesn't need fiscal stimulus.
In a strategy we've seen before, Morneau may announce spending plans for the coming years. He can certainly decide to change the government's spending priorities. But pouring on new spending in this fiscal year may only serve to overheat an economy that really doesn't need to be any hotter.
Perhaps the finance minister will decide it's best to wait a year and see how things look then. After all that will be the budget, just before the 2019 federal election.

 

[Hoid]

Why isn't our stock market booming if the economy is firing on all cylinders.

Because booking stock markets have nothing to do with economics?

 

[Danbones]

Housing market is dropping like a rock, worse personal debt than Greece...

eeee!

 

[Walter]

Booming not booking. Students of economics know that stock markets are often seen as a forward indicator of economic growth. A booming market usually means growth of corporate earnings in the next two quarters and vice versa.