Canada’s gross domestic product data was released on Tuesday and it came in a little lower than anticipated. Experts are saying that the numbers have raised some doubt about whether the Bank of Canada will actually go ahead with a hike in the prime lending rate on September 8th.
The numbers post a growth of 2.0% in the second quarter, falling short of the 2.5% that was expected by many analysts and shorter still of the 3.0% that Bank of Canada forecast this past July. Although the data was softer than expected, it did reflect expansion and therefore it wasn’t weak enough to totally rule out a rate hike next week. Infact, 10 out of 12 bond dealers are apparently still expecting a hike. So it’s clear as mud then, as to what will happen next. Chances are, though if there is a hike, it won’t be aggressive as current economic data points to steady but slow growth.
And in other news…
Across the border in the US, rumblings are hotting up about the sustainability of the US recovery but according to a report from TD Canada Trust, just talking about the possibility of a double dip recession may actually cause one. This interesting report compares the US recovery to the recoveries of other countries that experienced similar meltdowns in the past. The report points to the fact that although the odds of a double dip recession are 1 in 3, the US really is on your A-typical road to recovery, albeit a slow one. Like broken hearts, TD says it, it will simply take plenty of time to heal the current situation and it would be alot better if we all didn’t dwell on it. Concern over another recession immediately tightens the purse strings of the average household and that’s where it all goes South, so to speak.
Although our growth seems stable enough at the moment, it could definitely be a spot of trouble for Canada along with the rest of the free world if the US takes another tailspin. So we won’t speak of it, will we? And after we put a little away for a rainy day, let’s make sure we get out there and modestly keep things going especially locally, both in Edmonton and Calgary. Ok? Ok…we never had this conversation.
Contact one of our Mortgage Brokers today to learn more about interest rates or to not talk about anything negative in regard to the American economy.