The outlook for the U.S. economy continues to improve. Government stimulus is no longer needed to support economic growth and 2015-2016 are expected to be above average expansion years. The plunge in energy prices is a net positive for the U.S. economy; Consumers will benefit more than producers will lose. Strong gains in consumer demand and spending are also a multiplier effect spin-off from the country’s revival in job creation. Hiring is running at its strongest pace since 2007, due in part to the continuing shale oil boom and the increase in commercial and residential real estate construction. Businesses are responding to the country’s positive economic outlook with expansion plans.
In contrast, economies overseas are struggling. Japan is in recession again and China is experiencing its slowest growth since 1990. Europe is caught up in continuing debt problems and needs fiscal stimulus that may not be politically possible. Emerging economies are facing a year of slower growth than what we have seen since 2008.
While the outlook for Canada is less troubling, we have not yet reached the same period of expansion as the United States. The unemployment rate is down, but much of our 2014 job creation has been part-time and total hours worked are at a stand-still as Canadian companies are focusing more on improving efficiency than expanding capacity.
Oil production will increase in 2015 due to projects already underway, but Canada will see a cutback in new investments if prices do not rise. While this is a setback for oil-rich Alberta, Ontario’s consumers, new home builders, and manufacturers will continue to benefit from the savings.
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