Monday, October 23, 2017

Will the Real Canadian GDP Growth Rate, Please Stand Up: We Have Had Enough of "Sunny Ways"

In a case of monetary and political, "he said, she said" both the institutions of the Bank of Canada and the governing Liberal party are to present their outlooks on the economy going forward. 

The Bank of Canada, fresh off two rate hikes that surprised most, may have a bias creep into their forecasts in wanting to "justify" those curious hikes with a rosier but but lower end of the "believable" and "expectations" range.

The Liberals, on the other hand, will definitely be painting a picture of "sunny ways" using their Liberal math (please see past posts for past examples) to show that the MULTI-BILLION DOLLAR deficits are not that bad, they can borrow more, they can spend more, buy more votes, etc....until the actual GDP numbers are in. But by then, the election will be in full swing.

Two years into their mandate and two more years (less four days...but who's counting?) to go, the Liberal spending and spin machine will be engaging high gear as the countdown is on for 2019.

However, as noted in the Financial Post article above (and is not being fully appreciated by Canadians), two significant wild cards exist - NAFTA results and the housing market results.  Either one of these could provide a sudden shock to any of the forecasts starting tomorrow and throw all views out the window.

The language around contingency plans will be very important to watch starting tomorrow.  My fear is, there is not one.

Hello 1.0% GDP, lower dollar, higher deficits, stalled housing market, higher interest rates (they are not coming down), higher unemployment...

(Liberals' sunny ways term highlighted below)

No comments:

Post a Comment