TD/ Canada Trust Economic Highlights – May 1


United States

• First quarter GDP growth came in at just 0.7% (annualized) – slightly weaker than consensus. The main
culprit behind the slowdown was consumer spending, which barely grew. Much of the drag on growth
appears to be temporary and we expect activity to rebound above 3% in the second quarter.
• The U.S. administration brought tax reform back into the limelight by releasing a revised one-page blueprint.
An emphasis on tax cuts, coupled with a sigh of relief stemming from the French presidential election
results, revived appetite for risk assets and helped lift major U.S. stock indices.
• The possibility of a government shutdown remains a near-term risk. Should it take place, the impact would
likely not be enough to derail the economy, provided the shutdown is not prolonged.

• It was a rough week for the Canadian dollar. With the announcement of 20% tariffs on Canadian exports
of softwood lumber by the Trump administration, the loonie fell to just $0.73 U.S., its lowest level since
February 2016, when oil was trading at $30 U.S. a barrel.
• Canada’s dairy and lumber industries alone are two small too small to throw the overall macro-economic
outlook off course (exports to the U.S. represent just 0.5% of GDP combined), but continued uncertainty
on the trading relationship between Canada and the United States risks delaying the transition in Canada’s
growth drivers toward exports and non-residential investment.
• This suggests continued caution from the Bank of Canada. As long as Canada continues to be front-page
news in the U.S., monetary policymakers on this side of the border are likely to hold their fire.

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