Market Commentary
Report on the Economy March 2013
March 20, 2013 | Posted by: Francine Tracey
The following is a summary of the latest economic report issued by TD Bank:
• Canada’s economic growth slowed to a crawl in the second half of 2012, setting 2013 up for a sub-par annual average 1.6% pace. GDP growth should clock in at 2.1% on a Q4 / Q4 basis.
• As the fiscal drag in the U.S. abates, a stronger U.S. economy should help boost Canada’s export sector and business investment, underpinning a healthier 2.6% growth rate in 2014.
• The national jobless should head modestly lower in 2014, after holding at 7% through 2013.
• A cooling resale housing market should curb the pace of household debt growth per year, helping to stabilize the
debt-to-income ratio, but constraining consumer spending growth over the medium term.
• Mortgage rule changes often prove to be temporary; after falling sharply in 2012, home sales are likely to stabilize
in mid-2013, as low-interest rates support demand. Most of the unwinding of a likely moderate over-valuation
should occur in 2014-15, as interest rates start to grind higher. Amid rising inventories of newly completed homes, residential construction is expected to be a soft spot.
• Core inflation is not expected to return to the Bank of Canada’s 2.0% target until the end of 2014, and therefore, interest rates should remain stable.