The Advancing Leadership Blog

Peter Andersen Monthly Economic Report – October 2013 – Summary

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“No lasting damage from U.S. shutdown/debt crisis”
– Peter Andersen Report, October 23, 2013

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Were you surprised the stock market treated the U.S. government shut down as a virtual non-event? Economists were certainly worried the debt ceiling fight and possible default would have triggered a global recession. Yet, despite all the handwringing about political leadership, 2013 has been a good year for investors who hold U.S. stocks. It appears the U.S. stock market has become desensitized to the political antics in Washington.

A recession may have been narrowly avoided, but the shutdown and debt crisis may still have a negative effect on the economy if foreign investors react badly to the perceived reckless behaviour in Washington. Higher growth rate projections have been pushed back to later in 2014 as consumers, banks and businesses remain cautious and sensitive to uncertainty. Currently, U.S. growth rates remain at 2%, but America’s energy sector is making an important contribution to economic growth. U.S. oil production has now caught up to that of Saudi Arabia.

With all the chaos south of the border, one would think Canada would be viewed as a safe haven. Not so. Canada stands out as an underachiever as a result of its weaker economic performance, with a growth rate of only about 1.4% since mid-2012. A growth rate of about 2.5% is needed in order to meet today’s standards for acceptable performance. Exports remain $35 billion below the pre-recession peak and the Canadian dollar is still eroding.

It’s not all gloom and doom. Despite slow national growth rates, Calgary, Edmonton and Toronto are all showing strong employment gains. Calgary and Edmonton show YTD increases of 8% and 5% for single-detached home starts.

The Peter Andersen Monthly Economic Report is provided to TEC Canada members. Not a member? Sign up to receive a copy of the latest report here.

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