The Advancing Leadership Blog

Peter Andersen Economic Report – January 2014

With 2014 in full swing, American banks are very well-capitalized and more willing to lend, which has boosted American consumer confidence to new heights. The U.S is forecasted to have its best growth year since the recovery began, with an annualized real GDP growth rate not far below 4.0%. At the same time, the output of oil and gas is accelerating, which will make an important contribution to the GDP this year. The dramatic shift in U.S. oil import dependence will be a defining event over the remainder of the decade.

With the accelerating output of shale oil and gas in the U.S., Canadian energy exports are being depressed. Export volumes have flat-lined and prices of key export commodities such as crude oil and base metals are slumping. Business confidence also appears to be slipping, with 46,000 jobs lost in December. Employment figures remain strong in Calgary and Edmonton, but are not performing as well as anticipated in Vancouver and Atlantic Canada.

The sharp depreciation of the CAD and the onset of a stronger U.S. recovery will improve Canada’s economic performance, but this will not happen immediately. At 89.97 cents (U.S.), the CAD is not in a highly sensitive psychological trading zone. Market forces could soon push it down further into the mid-80 cent range. While other factors appear to be more sensitive, the Canadian new home market appears to be showing great promise with strong home sales and construction starts.

In global markets, emerging market currency turmoil is a warning sign for the global economy. Rising interest rates in the U.S. will weaken international currencies, reverse capital inflows and tighten emerging market conditions. Any improved global growth momentum will come from the industrial countries.

Internationally-traded commodities such as crude oil and industrial metals are more likely to decline than increase. Even with a slight increase in the growth rate for the global economy, these commodity markets will continue to be oversupplied.

While it appears that economic growth is occurring, talk to your group members about the best growth strategy for your business. If you’re looking for specific information or connections, talk to your Chair or log into MyTEC (formerly Vistage Village) to take advantage of the global network of business leaders to which your TEC Canada membership provides access.

Resources:
Staggering unemployment figures in December, click here
Canada’s housing market to stay the course, click here
Falling Canadian Dollar impacting profitability of Canadian air travel, click here
U.S. oil production keeps rising beyond forecasts, click here 
Falling Canadian Dollar will spur inflation and growth, click here

To receive one complimentary copy of the Andersen Report, sign up here.

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