A full house in a conference room of the Federal Reserve Bank’s Detroit Branch sat in attentive silence as two economists explained the outlook for both the United States and Canadian economies in 2013.
The event hosted by the Canada – United States Business Association (CUSBA), kicked off by Dickinson Wright Attorney and President of the CUSBA Board of Directors Mark High, and featured a duo of highly respected economists in Martin Schwerdtfeger, Senior Economist for the Toronto-Dominion Bank and Paul Traub, Business Economist for the Federal Reserve Bank, Detroit Branch. Moderating the discussion was Daniel Howes, Associate Business Editor for The Detroit News.
Each economist spoke about the current state of the economies as 2013 got under way. Among the highlights from Paul Traub were that the U.S. economy grew 2.2% for 2012, mainly based on growth in consumption and investment. He mentioned that the main question surrounding 2013 is whether the U.S. economy will ever get back to its potential and what the U.S. Congress will do about the fiscal ledge (tax rates, Medicare, etc.), as he calls it. In terms of the U.S. relationship with Canada, they are still the #2 trading partner for the U.S. on imports and the #1 trading partner for exports.
Martin provided details about Canada’s recovery from the recession pointing out that Canada outperformed all other G7 countries in terms of recovery based on their strong showing in consumer spending and the housing market. He said that Canada has seen subdued inflation and moderate economic growth which has sidelined the Bank of Canada. Now, the Canadian government is turning its attention to the deficit created in part by the 2008 stimulus package and according to Martin they hope to have a balanced budget in 2015. To conclude his presentation, Martin said that the Canadian interest rates should rise gradually beginning in early 2014 and that the Canadian dollar is expected to remain strong for the next two years.
Following their presentations there was a short question and answer session led by Daniel Howes. The session covered a range of topics from the first quarter numbers of the U.S. economy to Baby Boomers and the European Union recession. When asked what could happen in 2013 that would lead either economy into a tailspin, Paul mentioned that an event in the Middle East and North Africa could derail the U.S. economy while Martin mentioned complacency in Europe could derail the economies this year.
The Canada – US Business Association is a nonprofit, non-partisan association that focuses on issues affecting Canada and the United States. Established in Detroit, Michigan, CUSBA members are business leaders and stakeholders from both sides of the international border.
