Video - February 2016 - Canadian Economy
In this webcast on the Canadian economy, our experts Michel Doucet and Jean-René Ouellet from Desjardins Securities Portfolio Advisory Group discuss the collapse of commodity prices, Alberta, household debt, and more.
SUBJECT : Canadian Economy
EXPERTS : Michel Doucet and Jean-René Ouellet
Note: The information in brackets "[...]" describes the visual and audio content of the video other than the dialogue or the narration.
[Elegant music begins. The firm's logo appears on screen, as well as the video’s title: Market Trends – February 2016 - Canadian Economy. These images give way to Mr. Michel Doucet and Mr. Jean-René Ouellet sitting in a newsroom like set, in front of a screen on which the following is written: ‘’Market Trends’’].
Michel Doucet (B. Sc., CIM®, Vice-President and Portfolio Manager, Portfolio Advisory Group)
Hello and welcome to Market Trends.
I’m Michel Doucet, along with Jean-René Ouellet. Today, we'll be focusing on the Canadian economy.
Jean-René Ouellet (MBA, CFA, Portfolio Manager, Portfolio Advisory Group)
An economy that seems to be running out of steam after a long marathon! Am I right?
Yes, our analysis of the economic backdrop shows that the engines of growth that have driven economic activity in Canada since the 2000s are showing signs of wear.
I imagine you're referring to the collapse in commodity prices in general and, more specifically, in the oil prices?
As a consumer, the drop in gasoline prices hasn't been as big as expected, but I'm not going to complain here. A year ago, the price at the pump was around $1.50 a litre. Today, I recently saw it at 90 cents.
With a barrel of oil below $30, I would have expected a lower price at the pump!
Another time, another subject. The drop in gasoline prices has benefited some consumers, but it will barely offset the forecast increase in a basket of groceries.
Don't forget that the fall in oil prices has had a major impact on Alberta. Long favoured by the commodities boom, Alberta is now in recession, with an oil-based economy that is not very well diversified.
Apart from Alberta's slowdown, Canada is also facing a debt challenge. One of the reasons why Canada was not hit as hard by the 2008 recession is that consumers continued to spend. However, their spending was fueled by credit and debt. Household debt as a percentage of disposable income is now close to 165%, a record level! Hard to ask more of households in this context! Note that consumer spending accounts for almost two thirds of the Canadian economy. If households are tapped out, this will impact economic activity.
Along with the Alberta slowdown and the debt problem, housing is also showing signs of fatigue.
Yes, it may take longer to sell a house, and prices are starting to fall.
In conclusion, the Canadian economy is currently faced with a combination of challenges, which will result in growth of less than 2% in 2016. This said, it will be able to count on the Bank of Canada, the dollar and the federal government for support.
Be sure to join us for another Market Trends webcast.
[The music begins again. The firm's logo and the dsia.ca website address appear in the middle of the screen. Then the following text appears on the screen « This presentation is given for general information purposes. Desjardins Securities will not be held responsible for errors or omissions in the presentation. The information in this presentation should not be construed as legal, financial, accounting or tax advice. Desjardins Securities strongly recommends that you consult experts in those fields if necessary. Desjardins Securities and its directors, managers, employees and agents will not be held responsible for damages, losses or fees resulting from the use of information contained in this presentation. This presentation may contain statistical data cited from third-party sources believed to be reliable, but Desjardins Securities does not represent that any such third party statistical information is accurate or complete, and it should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this publication and are subject to change without notice. Desjardins Wealth Management Securities is a trade name used by Desjardins Securities Inc. Desjardins Securities Inc. is a member of the Investment Industry Regulatory Organization of Canada ( IIROC ) and the Canadian Investor Protection Fund (CIPF). ». End of the video. ]