This month’s Peter Andersen Report paints an overall positive forecast for the Canadian economy. Although Dr Andersen acknowledges the European financial situation could be contagious, it isn’t presently. He points out the current pessimistic attitudes are largely the result of psychological ‘soft data,’ with the emotional negativity it generates clouding the positive story that the ‘hard data’ is telling.
One of the clouds is the US’s recent S&P credit rating downgrade from AAA+ to AA+. The ratings reflect political and economic risk that may affect a country’s ability to service its debt (http://www.standardandpoors.com/ratings/sovresearch/en/us). While it has little direct effect on America’s ability to conduct business on a day-to-day basis, it has a significant psychological impact, as demonstrated by the extreme stock market reactions to the downgrade announcement (http://www.theglobeandmail.com/globe-investor/the-week-the-world-went-wild/article2128520/).
Members can read more about Canada’s, the US’ and the world’s economic outlook in the Andersen Report.