TD/ Canada Trust Economic Highlights – Sept 1


United States

  • The week kicked off with another bout volatility in financial markets. However, comments by N.Y. Fed president Dudley that the case for rate liftoff appeared to be “less compelling” as well as positive U.S. economic data lifted sentiment in the latter part of the week.
  • Upward revisions to GDP showed that U.S. economy grew by 3.7% (annualized) in the second quarter, considerably better than the 2.3% pace reported earlier. More timely data on new home sales, durable goods orders and personal income & spending pointed to an encouraging start of the third quarter.
  • PCE inflation edged down to 1.2% in July, and recent international developments may pose additional downside risk to price growth. As a result, we expect the Fed to sit tight in September, but still make good on its pledge to raise rates later this year, unless the global macro backdrop deteriorates substantially.


  • It’s been a wild week for financial markets. The weakness that started the week had faded by Wednesday, and equity indexes look to be starting the weekend roughly at week-ago levels.
  • Real GDP for Q2 is set to be released on Tuesday. It is expected to decline by 0.8% (annualized, q/q), for the second consecutive quarterly contraction. This is due to widespread weakness, albeit with the biggest declines in the resource sector.
  • In contrast, the economy is expected to return to growth in Q3, with gains likely in most sectors of the economy outside of business investment. Lower oil prices have raised the specter of another Bank of Canada rate cut, but a likely advance in Q3 real GDP should kick this down the road.

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