10 Surprising Economic Trends That Rule The World

What’s going on in the world today? It’s hard to keep up. Some facts are familiar to anyone who reads the news. Unemployment is high. Growth is slow. Shale gas is a big deal. But beyond the caps-lock headlines, subtler, but no less significant, shifts are changing the US economy and reshaping the global financial order. Here are 10 that have surprised—and might surprise.

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Quarterly Economic Forecast

Highlights

  • Uneven external demand weighed on Canada’s economic growth in Q2, even as domestic consum- ers and the housing market displayed better-than-expected momentum. The Canadian economy is forecast to grow at a modest 1.7% pace this year, before picking up to 2.4% next year and to 2.6% in 2015.
  • Housing and consumer spending are expected to make a larger contribution to overall growth than previously expected. Elevated household indebtedness and higher interest rates should still lead these areas to slow next year.
  • A downgrade to both our U.S. and global economic outlook over the near term will likely translate into weaker export gains, and business investment prospects have been lowered in turn. The transition to more export-led growth is still forecast, only delayed until next year.

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The Weekly Bottom Line - September 27, 2013

Canada

  • This week TD Economics released our latest Quarterly Economic Forecast for Canada, which outlines how Canadian households continue to drive growth, while exports and business investment are stuck in the backseat.
  • A rebound in July retail sales confirmed the resiliency of the Canadian consumer. The retail data rounds out our expectation for July GDP, which is expected to recover after a decline in June.
  • On the other hand, the CFIB Business Barometer for August showed that the mood among small busi- nesses remains quite flat. Stronger business investment is required to help kick start Canada’s economy, but businesses need to become more confident about the future before that takes hold

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The Future of Retirement - Life after work?

Key Findings:

  • One-in-six (17%) people who are not fully retired, expect they will never be able to afford to retire from all paid employment.
  • Over a quarter (26%) of 55-64 year olds have semi-retired, and two-fifths (41%) of 25-34 year olds expect to do so.
  • Encouragingly, more than half (54%) of today’s retirees say that their preparations for retirement turned out to be at least adequate. On the other hand, two-fifths (40%) did not prepare adequately: of these, two-fifths (40%) only realised this at or after entering retirement and nearly half (47%) do not think they will ever make up this shortfall.
  • The majority of both those fully retired (81%) and not fully retired (60%) have never received a significant financial gift or loan
    from parents or relatives. A quarter of the working age people who have received such a gift or loan used it to help with their education (26%), paying off debts (26%), housing costs (25%) or the purchase of a major item (26%).
  • Entering retirement was accompanied by a fall in income for 72% of retirees. However, this drop in income was not matched by a similar drop in spending, with only 48% experiencing a fall in outgoings in retirement.
  • Working age people expect to retire on average at 63, two years older than their parents, who on retired average at 61.

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The Weekly Bottom Line

Canada

  • After Bank of Canada Governor Stephen Poloz gave an economic pep talk on Wednesday, U.S. Federal Reserve Chair Ben Bernanke killed the buzz by not beginning the widely expected “taper” of its asset purchases.
  • But, beneath the din of Fed furor, both Canadian wholesale and manufacturing sales data showed a re- bound in July after weakness in June. This lends credence to our forecast for better Canadian economic growth in Q3.
  • Friday saw another benign reading on Canadian inflation for August. This suggests that Governor Poloz’s activities will be confined to pep talks for awhile yet, with interest rates hikes unlikely before late 2014.

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Degrees of Uncertainty

Often, provincial comparisons will focus exclusively on tuition fees; however, as transfer payments to universities are increasingly insufficient, institutions have implemented additional compulsory fees which students much also pay in addition to their tuition. Because this impacts the overall amount students owe, for the purposes of this report unless otherwise stated we use combined tuition and other compulsory fee projections in both provincial comparisons and the Cost of Learning Index.
Within these broad trends are some key highlights:

  • Since 1990–91, average tuition and other compulsory fees in Canada have increased from $1,464 to $6,348 in 2012–13, are estimated to reach $6,610 this fall and will continue to climb to an estimated $7,437 in 2016–17. Adjusting for inflation, by 2016–17 tuition and compulsory fees will have quadrupled since 1990–91.
  • Ontario, the most expensive province, will see its tuition and other compulsory fees climb from $8,403 this fall to $9,517 in 2016–17

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The Weekly Bottom Line

  • In its interest rate announcement, the Bank of Canada held the overnight at 1.00% and reiterated its forward looking language. The Bank acknowledged that the rotation in economic growth drivers has not been as quick as many had hoped – a theme that was reinforced by data releases this week.
  • Canadian real exports fell 1.2% in July, putting net trade on track to detract from growth for a second con- secutive quarter in Q3. Meanwhile, housing and consumer spending continued to heat up in the quarter.
  • Employment rose 60,000 in August, but job creation remains soft on a three month moving average. The Canadian unemployment rate has been stuck in a 7.1% to 7.2% since December of 2012.

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Market Indices, Asset & Risk Management Numbers: August 2013

Great summary of investment performance - monthly, quarter, Year to date and 1-year stats. Updated performance data: stocks, bonds, mixed portfolios, etc.

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The Weekly Bottom Line

  • The Canadian economy grew by 1.7% in Q2, on an annualized basis, roughly in line with what we were expecting. However, a downward revision to Q1 (2.2% from 2.5%) puts the average rate of economic expansion for the first half of the year at just under 2%.
  • Also this week, we learned that Canada’s current account deficit widened to $14.6 billion in the second quarter. The deterioration was fairly broad-based, but was mostly driven by an increase in the deficit on trade in goods and relatively weak inflows in foreign portfolio investment.
  • Corporate profits were also down by 0.8% in Q2 – weakness in the non-financial sector, particularly in the manufacturing sector, contributed to the headline decline.
  • The second half of the 2013 looks more promising than the first for the Canadian economy. Optimism surrounding future prospects was foreshadowed by the Canadian small businesses barometer reading.

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