TD/ Canada Trust Economic Highlights – Nov. 3


United States

  • The Federal Reserve announced the end of its quantitative easing (QE) program this week. The accom­panying statement was optimistic on the prospects for economic growth and the recovery in the labor market and downplayed the recent moves in inflation. Financial markets took the end of QE in stride. Bond markets sold off at the short-end of the curve, but equity markets rallied, with the S&P 500 up 2.5% on the week.
  • The American economy grew by a better-than-anticipated 3.5% in the third quarter of the year. Strength came in net-exports and federal defense spending, while private consumer spending and business invest­ment growth decelerated.
  • The global economy continues to be a headwind to U.S. economic growth and inflation. Economic data out of Europe point to continued weakness, while ongoing monetary policy support abroad augurs for a further appreciation in the dollar.


  • Following a flat July, real GDP growth contracted by 0.1% in August, confirming the economy hit a soft patch in the third quarter, partly driven by lower energy prices.
  • With lower oil prices expected to continue to put downward pressure on output, price, and income growth, we have pushed back our call for the Bank of Canada rate hike, from July to October 2015.
  • Lower energy prices will also hit government coffers, with energy-rich provinces the most adversely affected. Federally, this negative revenue impact, combined with the cost of the significant tax relief announced by Prime Minister Harper this week, will likely absorb the entire $5 billion surplus that we had estimated for the current fiscal year.

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) 767-5442