TEC Canada is pleased to provide the monthly Andersen Economic Report exclusively to our members to offer professional updates on the current economic environment in Canada, the USA, and globally. As 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.
January 2024 PREVIEW:
Canada | Temporary Economic Slowdown, Short-term Decline in GDP, Increase in Consumer Spending, Positive Economic Outlook
Canada’s economic slowdown in mid-2023, attributed to wildfires, energy production shutdowns, strikes, and port disruptions, particularly affecting exports, is seen as temporary. Despite a decline in GDP, the underlying demand remains strong, with a cautious business strategy contributing to inventory burn. The domestic economy continues to grow, driven by sustained final domestic demand and an expected substantial contribution from the government sector. Wage inflation, personal saving, and job availability are positive factors supporting consumer spending, leading to a positive outlook for Canada’s economic growth into 2024, contrary to concerns expressed by the Bank of Canada.
United States | Job Market Resilience, Historic Low Unemployment Rate, Strong GDP Delaying Rate Cuts
The job market is showing signs of a slowdown, with a decrease in hiring intensity and a decline in temporary help employment, particularly in truck transportation. However, overall job market health is maintained, as job vacancies remain above the number of unemployed, labor force participation increases, and weekly jobless claims stay historically low. Non-farm payroll job growth in November is respectable, with broad-based gains and real income increases for employees, while declining gasoline prices and stable house prices contribute to consumer purchasing power and sentiment. The unemployment rate is at a historic low of 3.7%, and strong GDP growth of 2.6% in the 4th Quarter suggests that the Federal Reserve can afford to wait before considering rate cuts.
Global Economic Outlook | Stabilizing Commodity Prices, Increase in Copper Prices, Fed’s Signaling Lower Interest Rate for 2024, Mixed Commodity Performance
After a significant 2-year increase until mid-2022, commodity prices stabilized in spring 2023, with plywood prices rising since summer and millwork prices showing an uptrend since August. Lumber prices declined in October and November, while industrial chemicals experienced a downtrend in 2023. However, fertilizer prices rebounded in the last two months. Agricultural prices, especially grain, have been weak, down nearly 30% since the beginning of the year. Copper prices, a global economic indicator, have risen due to increased Chinese imports and a weaker U.S. dollar, influenced by the Federal Reserve signaling a potential shift to lower interest rates in 2024. This has led to a 2% rebound in the Canadian dollar.
Excited to dive into the full January 2024 Andersen Economic Report? As a valued member of TEC Canada, you can access the complete report under the ‘Resources’ section of the TEC Canada App!
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