TD predicts "Bumpy ride" ahead for US, Canadian economies

Yahoo Business News

Manufacturing and exporting businesses in Canada are expected to take a dip as a consequence of declining US purchasing and closer parity between the Canadian and US dollar:

TORONTO (CP) - The Canadian economy will be in for a bumpy
ride as its U.S. counterpart loses momentum over the next year but it isn't
expected to mirror that marked slowdown, says an economic forecast released
Monday by TD Economics.
The report, entitled "U.S. Slowdown Underway, Canada
in for a Bumpy Ride," predicts that U.S. economic growth will hit the brakes and
dip to a modest pace of two per cent before recovering.
This will have a
direct impact on Canada - particularly upon forestry and automotive
manufacturers - resulting in a four-quarter period where economic growth hovers
within a "sub-par" two to 2.5 per cent annualized range.
Nevertheless,
Canada is still expected to fare better than the United States. The report
estimates the Canadian economy can grow at a sustained pace of about 2.8 per
cent without causing inflation to rise or fall.

And what's one key reason why Canada will fare better? The article states:

That's partly because Canadians don't typically leverage
their homes as much as Americans do, making them less vulnerable to softening
housing markets. Consumer spending will also be sustained by solid income growth
and continued low unemployment.

It is both interesting and ominous how often the subject of American Home Equity Withdrawls keeps coming up in discussions about economics. At a time when housing prices, especially in Alberta are spiralling ever upwards, let us hope that Canadian consumer spending continues to be driven by higher incomes, rather than echoing the US habit of using homes as ATMs.

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