The US economy is slowing down. A soft US economy is forecast with growth projected to be less than 1%. It’s unclear if the country will slip into recession, however the Feds are expected to lower the overnight bank rate by 100 bps to stimulate economic growth.
Canada is in a more enviable position with our economic growth expected to be above 2% due to our resource base. However, with about 80% of our exports to the U.S., it’s difficult to see how we won’t be affected by the U.S. slowdown.
Global demand for our commodities will help our economy this year. Did you know that in 1987, our total trade with China was $8.7 Billion and in 2006, it had grown to $42.1 Billion? (StatsCan). According to Dennis Gartman,, writing on January 15th, “gold has become the world’s third reservable currency. It is the anchor or quiet harbour to which frightened…and not so frightened…capital seems to return.” And, the general consensus seems to be that the C$ will remain close to par, while the U.S.$ will remain weak.
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