1. www.conferenceboard.ca The Economic Outlook: A Multi-speed Recovery in a Turbulent World Burlington Economic Development April 28, 2011 Glen Hodgson Senior Vice-President and Chief Economist hodgson@conferenceboard.ca

2. www.conferenceboard.ca Global Outlook The global economy has recovered, but with sharp differences among regions Japan’s natural disaster and aftermath has severely impacted short-term growth Slow recovery in W. Europe, with continuing public debt and energy price risks Medium speed in North America – real growth in Canada, too much artificial growth in the U.S. High speed growth in emerging markets

3. www.conferenceboard.ca A Risky World Plenty of risks to go around: Global imbalances remain Earthquakes and aftermath in Japan, New Zealand Public sector debt in EU, Japan, U.S. Political turmoil in N. Africa, Middle East Higher oil and food prices Inflation in emerging markets

4. www.conferenceboard.ca Uneven Growth in Global Economy (per cent change, real GDP) Source: Consensus Economics.

5. www.conferenceboard.ca Government Debt as a share of GDP (per cent, 2010) Source: IMF

6. www.conferenceboard.ca U.S. Outlook U.S. growth set to expand by around 3.0 per cent over the near term Better prospects in labour markets as well as rising consumer and business confidence But housing sector still a mess Extension of Bush tax cuts and lower payroll and business taxes will result in trillion dollar-plus deficits and massive public debt over the medium term. Oil price impact: every $10 increase in a barrel of oil chops 0.2 percentage points from U.S. GDP growth www.conferenceboard.ca

7. U.S. Vehicle Sales (millions, annualized) Source: Moody’s Economy.com

8. www.conferenceboard.ca U.S. Commercial Bank Lending Finally Turning the Corner (commercial and industrial, $ billions) Source: FRB

9. www.conferenceboard.ca U.S. Labour Market (Change in U.S. Employment, 000s) Source: Bureau of Economic Analysis.

10. www.conferenceboard.ca U.S. Consumer Confidence (1985=100) Source: The Conference Board Inc.

11. www.conferenceboard.ca U.S. Real Consumer Spending (per cent change) Sources: BEA; CBoC.

12. www.conferenceboard.ca U.S. Existing Home Sales and Prices (millions SAAR; $thousands) Source: National Assn. of Realtors.

13. www.conferenceboard.ca US Housing Starts (millions, SAAR) Source: Moody’s Economy.com

14. www.conferenceboard.ca U.S. Federal Deficit (NIPA basis, $billions) Sources: CBO; CBoC.

15. www.conferenceboard.ca U.S. Debt as % of GDP (net debt) Source: IMF

16. www.conferenceboard.ca U.S. Real GDP (per cent change) Sources: BEA; CBoC.

17. www.conferenceboard.ca Canadian Outlook Fiscal and household restraint will hold overall GDP growth to 2.4 per cent this year. U.S. economy seems finally to have found its footing—a relatively solid expansion is expected this year and next. Inflation expectations remain muted despite high gasoline and food prices—still rate hikes are on the way. Economic outlook is positive enough to allow the federal government to return to fiscal balance but provinces will continue to struggle. Numerous external risks can still derail the near-term growth path.

18. www.conferenceboard.ca The Loonie and the Oil Price WTI $US, $US/$C Sources: The Conference Board of Canada; U.S. EIA; Statistics Canada.

19. www.conferenceboard.ca Sources: The Conference Board of Canada; BEA; Statistics Canada. Canada Interest Rates (90-Day T-Bill) Quarterly 1999–14 U.S.

20. www.conferenceboard.ca Employment Growth Canada, 2001–12 Sources: The Conference Board of Canada; Statistics Canada. 269,000 jobs lost 231,000 jobs gained

21. www.conferenceboard.ca Sources: The Conference Board of Canada; Statistics Canada. Unemployment Rate Natural rate Unemployment Rate vs. Natural Rate (percent), 1981-2015

22. www.conferenceboard.ca Growth in Industrial Composite Average Weekly Wage versus CPI (per cent change) Sources: The Conference Board of Canada; Statistics Canada

23. www.conferenceboard.ca Index of Consumer Confidence, Canada Jan 2004–Feb 2011 (2002 =100) Source: The Conference Board of Canada. 1982 Recess ion Averge = 51 1990-95 Average = 67.2

24. www.conferenceboard.ca Real Consumer Spending Growth Canada 2001–12 Sources: The Conference Board of Canada; Statistics Canada.

25. www.conferenceboard.ca Housing Starts vs. Demographic Requirements Canada 1997—15 (000s) Sources: The Conference Board of Canada; Canada Mortgage and Housing Corporation. Household formation

26. www.conferenceboard.ca Pre–Tax Corporate Profits (per cent share of net domestic income) Sources: The Conference Board of Canada; Statistics Canada. Historical Peak of 18.2 per cent

27. www.conferenceboard.ca Real Business Investment Growth (Canada 2002–12) Sources: The Conference Board of Canada; Statistics Canada.

28. www.conferenceboard.ca Non-Residential, Capital Investment ($ billions of $2002, 2003–15) Sources: The Conference Board of Canada; Statistics Canada.

29. www.conferenceboard.ca Real Government Spending on Goods and Services Canada (per cent change, 2001–12) Sources: The Conference Board of Canada; Statistics Canada.

30. www.conferenceboard.ca Federal and Regional Balances National Accounts Basis ($ billions) Sources: Statistics Canada; The Conference Board of Canada.

31. www.conferenceboard.ca Federal and Provincial Gov’t Debt (as a Share of GDP 2010-11) Sources: The Conference Board of Canada; Statistics Canada; various government budgets.

32. www.conferenceboard.ca Real GDP Growth Rate Canada 2002–12 Sources: The Conference Board of Canada; Statistics Canada.

33. www.conferenceboard.ca Conclusion A turbulent global economic environment Canada’s growth will moderate in 2011 as consumer and government spending eases The strong dollar is here to stay; Canadian firms will need to stay focused on remaining competitive The U.S. economy is recovering but better job gains are needed The path back to balanced budgets will be painful for America

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