WATCH: Balancing on the Head of a Pin

Date Published: August 25, 2022

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TD’s Chief Economist, Beata Caranci, shares a client presentation from August 18th. Below are some of the highlights (timestamps listed in brackets): 

  • The U.S. is on our recession watch-list, but it's not a sure thing. Several European countries are already heading there. Canada's resilience will soon be tested. [00:45]
  • There's an unusual data discrepancy happening in America. The GDP and GDI measures have the widest gap in history, leading us to believe that the contracting economy in the first half of the year is overstating the weakness. [09:03]
  • Headlines have seized on corporate layoff announcements, but companies don't tend to amplify their natural state of hiring. U.S. corporate layoffs across every industry remain below the prior expansion period, leaving only one direction for this to go…up. But that doesn't mean Corporate America is capitulating. [12:56]
  • We estimate that Canada's economic leverage to housing is about two-times that of the United States. The pull-back will drag growth by 90 to 120 basis points relative to only 60 basis points for our neighbors to the south. [23:01]
  • We decomposed Canadian inflation into external and domestic drivers. A synchronized global slowdown is tapping down inflation on products with stronger ties to external factors. But, Canada has a lot of home-grown pressures. History shows this can take upwards of a year to respond. [26:04]
  • The challenge for central banks will not be in getting headline inflation to retreat. The hard work will be in getting core metrics to go from roughly 5%, back to having a 2-handle. [27:38]