I keep reading the United States is on the verge of a recession. The Federal Reserve “may have made a huge mistake” by raising its benchmark interest rate from zero to 0.25% in December, according to Wonkblog, theWashington Post’s niche offering for wannabe Nobel laureates and other policy geeks. Jason Kirby atMaclean’s wrote about a fellow who foresaw the collapse of oil prices and now predicts future assessments of current data will show the U.S. was in a recession at the start of 2016. And then there’s the markets: all that volatility must be a sign of something other than good.
U.S. gross domestic product expanded at an annual rate of 0.7% in the fourth quarter, a rather feeble expression of strength by the economy that is supposed to lead the world out of this latest phase of post-crisis malaise. Canadian investors, beaten up by the collapse of commodity prices, are piling sandbags around their portfolios. Benjamin Tal and Royce Mendes, economists at CIBC World Markets,estimate that Canadians currently hold about $75-billion in excess cash that they typically would have used to purchase assets that promise a return. That’s a lot of fear. Given Canada’s tight economic links to the U.S., one has to assume a degree of that trepidation comes from doubts about the strength of the world’s largest economy. Continue reading at Canadian Business ... Comments are closed.
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