THE ECONOMIC OUTLOOK RECESSION AND RECOVERY Paul Darby Executive Director & Deuty Chief Economist Darby@conferenceboard.ca
US OUTLOOK US recession is coming to an end Q3 likely to be positive due to inventory swing Consumer spending has rebounded, but private investment spending remains weak Heavy government intervention has stabilized the financial crisis and provided stimulus More good news with each passing month, but significant hurdles remain
US POLICY ACTION TO DATE Lending guarantees for banks - $1.4 trillion Bank recapitalization - $290 billion Other asset purchases (comm. Paper, MBS, student loans, credit cards) - $3.5 trillion Aggressive monetary policy easing Fed Funds between 0 and 2.5% Bush and Obama fiscal stimulus packages - $1.5 trillion
US POLICY ACTION TO DATE Nationalization of key US institutions (Fannie and Freddie, AIG) GM and Chrysler Bailout Cash for Clunkers program Price tag so far: $5-6 trillion
WHERE ARE WE NOW? Global initiatives have led to a stabilization in global credit markets and a rebound in equity markets S&P 500, Dow and TSX up around 40-50% since March lows Japan, France and Germany recorded positive growth in Q2 Some US banks starting to repay TARP money US vehicle sales soar
US EXISTING HOME SALES AND PRICES (MILLIONS SAAR; $ THOUSANDS Source: National Assn. of Realtors.
US HOUSING STARTS (MILLIONS, SAAR) Source: Moody s Economy.com
US VEHICLE SALES (MILLIONS, ANNUALIZED) Source: Moody s Economy.com
US CONSUMER CONFIDENCE (1985 = 100) Source: The Conference Board Inc.
US ISM MANUFACTURING INDEX Source: Institute for Supply Management
US LABOUR MARKET (CHANGE IN US EMPLOYMENT, 000S) 100 0-100 -200-300 -400-500 -600-700 -800 Sep Oct Nov Dec 'Jan08 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 'Jan09 Feb Source: Bureau of Economic Analysis. Mar Apr May Jun July Aug
US REAL CONSUMER SPENDING (PER CENT CHANGE) Sources: BEA; CBoC.
US FEDERAL DEFICIT (UNIFIED, $BILLIONS) Sources: CBO; CBoC.
US REAL GDP (PER CENT CHANGE) Sources: BEA; CBoC.
CANADIAN OUTLOOK Canada at the bottom; growth recovery expected in second half of 2009 Exceptional monetary and fiscal stimulus slowly pulling us out of recession Recovery in key exports will help Employment will lag recovery and the unemployment rate will peak at just over 9% next year Real GDP growth rebounding to 2.9% next year
RAW MATERIALS PRICE INDEX (PER CENT CHANGE) Sources: The Conference Board of Canada; Statistics Canada
REAL EXPORTS (PER CENT CHANGE) Sources: The Conference Board of Canada; Statistics Canada
INTEREST RATES (90-DAY T-BILL) QUARTERLY 1999 11 8 7 6 5 4 3 2 1 0 99 0 1 2 3 4 5 6 7 8 09f 10f 11f Sources: The Conference Board of Canada; BEA; Statistics i Canada.
THE LOONIE AND THE OIL PRICE WTI $US, $US/$C Sources: The Conference Board of Canada; U.S. EIA; Statistics Canada.
CONSUMER PRICE INFLATION CANADA 2000 10 3.0 2.5 2.0 1.5 1.0 05 0.5 0.0 00 01 02 03 04 05 06 07 08 09 10 Sources: The Conference Board of Canada; Statistics i Canada.
ACTIVE FISCAL SIMULUS: THE BUDGET Stimulus of 1.5% of GDP in 2009 around $20 billion Largely temporary stimulus measures, via spending, butsome permanent moves, e.g. tax cuts Back into fiscal balance but only beyond medium term $12 billion in infrastructure: must be implemented quickly to be effective
GOVERNMENT FIXED CAPITAL FORMATION ($ BILLIONS OF CURRENT DOLLARS, 2003 11) 80 70 60 50 40 30 20 03 04 05 06 07 08 09 10 11 Sources: The Conference Board of Canada; Statistics Canada.
REAL GOVERNMENT SPENDING ON GOODS AND SERVICES CANADA (PER CENT CHANGE, 2000 10) 4.0 3.5 3.0 2.5 2.0 1.5 10 1.0 0.5 0.0 00 01 02 03 04 05 06 07 08 09 10 Sources: The Conference Board of Canada; Statistics Canada.
FEDERAL AND REGIONAL BALANCES NATIONAL ACCOUNTS BASIS ($ BILLIONS) 20 10 0-10 -20-30 -40-50 Federal Provinces Sources: Statistics ti ti Canada; The Conference Board of Canada.
EMPLOYMENT GROWTH CANADA, 2000 10 280,000000 job losses Sources: The Conference Board of Canada; Statistics ti ti Canada.
HELP WANTED INDEX VS. EMPLOYMENT (000S, 2007 = 100) Sources: Wanted Technologies; The Conference Board of Canada.
UNEMPLOYMENT RATE VS. NATURAL RATE (PERCENT), 1981 2013 13 12 11 10 9 8 7 6 5 Natural rate Unemployment Rate 1981 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Sources: The Conference Board of Canada; Statistics ti ti Canada.
INDEX OF CONSUMER CONFIDENCE, CANADA JAN 2003 AUG 09 (2002 = 100) 105 100 95 90 85 80 75 70 65 Source: The Conference Board of Canada.
REAL CONSUMER SPENDING GROWTH CANADA 2001 10 5 4 3 2 1 0-1 2001 2002 2003 2004 2005 2006 2007 2008 09f 10f Sources: The Conference Board of Canada; Statistics Canada.
HOUSING STARTS VS DEMOGRAPHIC REQUIREMENTS CANADA 2001 10 (000S) 240 220 200 180 160 Household formation 140 1 2 3 4 5 6 7 08f 09f 10f Sources: The Conference Board of Canada; Canada Mortgage and Housing Corporation.
PRE-TAX CORPORATE PROFITS (PER CENT SHARE OF NET DOMESTIC INCOME) Peaked at 18 per cent in 2008Q3 Sources: The Conference Board of Canada; Statistics Canada.
REAL BUSINESS INVESTMENT GROWTH (CANADA 2001 10) Sources: The Conference Board of Canada; Statistics Canada.
REAL GDP GROWTH RATE CANADA 2001 09 Sources: The Conference Board of Canada; Statistics Canada.
BRITISH COLUMBIA OUTLOOK British Columbia is facing its worst performance since 1982; the forestry, manufacturing, and construction sectors are suffering. Residential construction has dropped sharply as the housing market crashed at the beginning i of the year. Very weak domestic demand in 2009. Next year will be much brighter for B.C. as it hosts the 2010 Olympic Games and its export sector gets a boost from the U.S. housing market s anticipated recovery.
MANUFACTURING AND FORESTRY British Columbia ($2002, percentage change) 20 Manufacturing Forestry 15 10 5 0-5 -10-15 -20-25 03 04 05 06 07 08 09 10 Sources: Statistics Canada; The Conference Board of Canada.
TOTAL NON-RESIDENTIAL INVESTMENT British Columbia (percentage change) 25 20 15 10 5 0-5 -10 01 02 03 04 05 06 07 08 09 10 Sources: The Conference Board of Canada; Statistics Canada.
HOUSING STARTS British Columbia (thousands) 50.0 40.0 30.0 20.00 10.0 00 0.0 01 02 03 04 05 06 07 08 09 10 Sources: The Conference Board of Canada; CMHC Housing Database.
LABOUR MARKETS British Columbia (percentage change left axis and rate on right axis) 4.0 3.0 2.0 1.0 0.0-1.0-2.0 20-3.0 Employment UR 2000 01 02 03 04 05 06 07 08 09f 10f 10.0 80 8.0 6.0 4.0 2.0 0.0 Sources: The Conference Board of Canada; Statistics Canada
RETAIL SALES British Columbia (percentage change) 8.0 6.0 4.0 2.0 00 0.0-2.0-4.0-6.0-8.0 01 02 03 04 05 06 07 08 09 10 Sources: The Conference Board of Canada; Statistics Canada.
TRAVEL British Columbia (percentage change, overnight province visits) 6 4 2 0-2 Canada British Columbia -4-6 06 07 08f 09f 10f 11f 12f Sources: Statistics Canada; The Conference Board of Canada.
REAL GDP British Columbia (percentage change) Sources: The Conference Board of Canada; Statistics Canada.
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