TD/ Canada Trust Economic Highlights – April 7/17


United States
• Following the failure to repeal and replace the ACA, market participants questioned the new administration’s
ability to move forward with pro-growth policies. As such, major indicators opened lower on Monday,
but risk sentiment recovered quickly as the week progressed.
• Positive developments included pending home sales data and an upward revision to fourth quarter GDP
growth. Conversely, new data pointed to a deceleration for real consumer spending growth to below 1%
(annualized) this quarter. That said, this appears to be only a temporary setback.
• Much of the recent sentiment uptick is related to the anticipated implementation of pro-growth policies.
There are certainly risks on this front, suggesting that the Fed’s ‘wait and see’ approach is the right one
as far as baking in any potential impact on the economy.

• The Canadian economy started 2017 with a bang as GDP rose 0.6% month-over-month in January on
broad-based strength.
• This sets the stage for another strong quarter of economic growth. TD Economics is currently tracking a
3.4% (q/q annualized) pace of economic expansion to start 2017, which would mark the best start to a
year since 2013.
• Despite an improvement in the economic backdrop, recent Bank of Canada communication has remained
dovish in tone. This seems to be due to the level of economic slack, which will take time to be absorbed,
resulting in limited near-term inflationary pressure. We remain of the view that the Bank of Canada is
unlikely to raise rates until late 2018.

For further information, please contact:

John Maveety Manager, Residential Mortgages – Greater Ottawa Area TD Canada Trust
T: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5446