current trends in the economy as reported by RBC

These are the current trends in the economy as reported by RBC today. Not the greatest news, but there is hope in the future.

Economy falters badly

• GDP dropped 0.7% in November following a 0.1% drop in October. The big decline is consistent with our current forecast of an annualized 2.5% decline in the fourth quarter overall. This is expected to mark the first of two quarters of declines and thus flag that the Canadian economy has fallen into recession.
  
• Employment fell by a record-smashing 129,000 in January and the unemployment rate jumped to 7.2%. The decline was concentrated in full-time jobs (-113,900) and hit Ontario, Quebec and British Columbia the hardest.
  
• With new motor vehicle sales tumbling and gasoline prices coming down rapidly, nominal retail sales fell by 2.4% in November, their biggest one-month decline since January 1998, thus painting a weak picture of the Canadian economy.
  
• Housing starts fell 10.9% in January to an annualized 153,500 from 172,200 in December. Urban singles plunged 20.2%, while the multiples component dropped 12.2%. This weakness is increasingly a reflection of the macroeconomic impact of the credit tightening on employment growth.
  
• The merchandise trade balance posted a deficit of C$0.5 billion in December, the first since March 1976. Exports fell C$3.8 billion (9.7%) — the largest monthly decline since October 1982 — but imports fell by C$2.2 billion (5.7%), which tempered the deterioration in the trade balance.
  
• Consumer prices fell 0.7% in December and the year-over-year rate slipped to 1.2% from 2% in November. Canada's inflation rate averaged 2.3% in 2008 — the fastest increase since 2003. RBC forecasts that Canada's inflation rate will dip into negative territory mid-year and average just 0.5% this year

I hope this finds you Happy and Healthy!

All the Best!

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

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