Wednesday, July 02, 2008

Canadians Should Expect to See Considerably Slower Gains in Wealth in the NextvTwo Years

Canadians should expect to see considerably slower gains in wealth in the next two years, limiting their ability to spend.

Consumer spending will slow from a more than 5% annualized rate of increase in early 2008 to about 2.6% in 2009.

Canadians have been able to spend "almost like drunken sailors" over the past 2 years because high commodity prices have brought great wealth into the country.

But most factors point to lower household wealth gains in the next couple of years, including stabilizing commodity prices, lower house price increases and higher unemployment.

Nominal gross domestic product, which includes inflation, will fall from 5.9% in 2007 to 4.1% this year and 3.5% in 2009.

Real GDP, which adjusts for the impact of inflation, is also slowing from 2.7% in 2007 to 1% this year, before recovering somewhat to 1.8% in 2009.


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