10 Second Headline of the Week - Feb. 3, 2017
STEPHEN POLOZ SPEECH AT UNIVERSITY OF ALBERTA SCHOOL OF BUSINESS
- The artificial low rates and bulging government debt is ‘crushing’ our animal spirit.
- Canadian economy has excess capacity (’slack’), and a stronger Canadian dollar is a headwind for the export sector.
- Geopolitical risk, including President Trump, makes it harder to know if policy is on track and it is ‘ill-advised’ to reduce interest rates on economic models alone.
- Old models have provided little insight to the new world and BoC is looking for new models with longer term trends.
- Oil shock has delayed growth in the Canadian economy until at least the fall of 2018.
- Interprovincial ‘free’ trade would add 0.5% to CDA’s GDP.
- President Trump wishes to accelerate NAFTA negotiations; wants ‘fair’ trade.
- U.S. President unleashed a barrage of criticism against key trading partners, including: Germany, Japan, China, Australia, Mexico and Iran.
- Indications that the U.S. President is prepared to jettison two decades of ‘strong U.S. dollar’ policies.
- EU is particularly focused on trade deals with Asian countries, including those that signed up to the Trans-Pacific-Partnership (TPP) trade deal.
- Mexico is interested in trade deals with the EU, its third largest trading partner, as well as partners from the TPP including Australia, New Zealand, Malaysia and Singapore.
- China has interest in joining the TPP after the exit of the U.S.
- U.S. companies including Facebook Inc., Microsoft Corp., and Google are concerned about President Trump’s recent order on immigration and are offering help to adjust it.
- More than 25 U.S. companies formed a coalition to support: lowering income tax from 35% to 20%, excluding export revenue from taxable income, and imposing a 20% tax on imports.
- Over 120 trade groups launched a separate coalition against the proposed border-adjusted tax, claiming it will force companies to pass the increase to customers, boosting prices for goods.
U.S. EMPLOYMENT DATA (JANUARY)
- Unemployment rate is 4.8% versus 4.7% in December.
- Labour force participation rate rose to 62.9% versus 62.7% in December, indicating more people are entering the job market because of increased optimism about their employment prospects.
- Average hourly earnings increased only 0.1% versus 0.2% in December; 2.5% Y/Y.
- Private payrolls increased 237,000 compared to market expectation of 175,000, while retail payrolls surged 45,900, the biggest rise since February 2016.
- Revisions to November and December showed the economy created 39,000 fewer jobs than previously reported.
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