TD/ Canada Trust Economic Highlights – August 15


United States
• U.S. stock markets reached new highs this week, with the S&P 500, Dow, and Nasdaq all breaking records,
but the economic data has been disappointing. Retail sales data for July suggests a slow start to third
quarter consumer spending, which is now tracking 3% – much slower than the 4.2% pace last quarter.
• Data on labor productivity growth released this week indicated a third consecutive quarterly decline. Falling
productivity has highlighted the risks of the U.S. falling into a low-growth phase with persistent weakness
in labor productivity boding poorly for real wage growth.
• In light of the elevated level of global economic uncertainty and the structural headwinds exerting downward
pressure on the long-run growth rate of the U.S. economy, it would be prudent for the FOMC to
delay tightening until there were clear signs that the U.S. economy is generating persistent inflationary
pressures – something that’s unlikely to take place until next year.

• Housing data stole the spotlight this week in Canada. The data continued to point to a hot overall market,
with the Teranet home price index up 10.9% year-over-year in July, and housing starts up at around 200K
on a 6-month moving average trend basis. The regional story also remained very much the same, with
Toronto (+13%) and Vancouver (+19.5%) leading home price gains as prices across most other regions
remained fairly flat (chart 1).
• Preliminary resale data released by the regional real estate boards over the last few weeks suggest that
some underlying tides may actually be shifting and we are looking forward to Monday’s release from the
Canadian Real Estate Association.

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