Weekly Economic Report
September 2, 2014
Introduction! This year, the Crescent School Investment Club has an additional executive position, Chief Economist. As one of the responsibilities, the Chief Economist will be producing Weekly Economic Reports summarizing the important economic news from the past week and discussing its potential impact. As well, the Weekly Economic Report will contain a section which quickly reviews the important economic statistics as well as highlighting the economic news which will be released in the following week. Should anyone have any questions regarding economic news, feel free to contact the Chief Economist, Ronald Chow at ronaldchow@crescentschool.org
Q2 Real GDP (Canada) Canadian GDP experienced a 3.1% annual growth rate in Q2, noticeably higher than 0.9% in Q1. This statistic was significantly higher than the consensus view of 2.6% and Bank of Canada’s latest estimate of 2.5%. In other words, the economy grew beyond consensus and thus companies are likely to be more profitable than expected in the past quarter; we can hope for a price increase. Although this upswing is not as dramatic as that in the U.S. GDP, Canada’s average GDP growth still weighed in at a mild 2.0% pace, in line with the Bank’s view of potential growth. As impressive as the report may seem, it will not significantly alter the Bank’s big-picture view of the economy.
U.S. Personal Income and Consumption - July Personal spending was weaker in July than expected, falling 0.1% (0.2% after inflation). As well, personal income rose a less-than-expected 0.2% in July. Unlike businesses, American households are not spending the way they used to, and weak wage growth is probably a factor. The expectation for the Q3 GDP growth estimate may need to lower due to this economic release, and hence do not expect extremely impressive profitability from companies in the next quarter.
Important Economic Statistics
The Week Ahead Bank of Canada Policy Announcement - Wednesday, September 3, 2014 at 10:00 am
Canadian Employment Report for August - Friday, September 5, 2014 at 8:30 am
Labour Productivity - Friday, September 5, 2014 at 8:30 am
U.S. Employment Report for August - Friday, September 5, 2014 at 8:30 am
Ronald Chow, Chief Economist • ronaldchow@crescentschool.org