Andersen Monthly Economic Report – March 2019

avril 22nd, 2019|Insights|
  • Peter Anderson Monthly Economic Report

TEC Canada is pleased to provide the Anderson Monthly Economic Report exclusively to our members. The former assistant chief of the Bank of Canada’s research department, Dr. Peter Andersen provides valuable economic insight to help you make better business decisions.

REPORT SUMMARY

The international commodity outlook has been dimmed by weak economic reports from the Euro Area. The one bright spot is the recent downturn in the trade-weighted USD. A weaker USD increases the commodity purchasing power of global commodity consumers. It also increases world oil demand as the price of oil in local currency terms becomes more affordable.

CANADA

  • Canada’s economy is in trouble. Growth came to a near standstill in the 4th Quarter and the domestic economy has been declining since mid-2018. The Canadian dollar (around 74.50 cents U.S.) is providing key support to Canada’s economy by sustaining the Canadian dollar revenues for Canada’s exporters.*

UNITED STATES

  • The media commentary is that business investment is « waning, » but that is wrong – U.S. business investment is rebounding. There is a recent surge in business spending on « intellectual property products » (software, research and development); is it larger than business spending on non-residential structures.

INTERNATIONAL

  • Weakness is widespread in Europe. Italy is officially in a recession, industrial activity in Germany is down by 3.6%, and continued Brexit uncertainty is dampening economic activity.

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*Made-in-Canada recession: A made-in-Canada recession occurs when the Canadian economy experiences a downturn while the United States, our most important trading partner, experiences growth. With the Canadian price of imported U.S. equipment and supplies now at elevated levels, there is a substitution underway to Canadian sources supplies. If Canada slips into a made-in-Canada recession in 2019, one policy option would be a further devaluation of the CAD. Another possible policy option would be easing in the mortgage stress-test.

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