Canadian Economic Slowdown Will Be Brief

Canada's economy will manage growth of just 1.4% in 2008 but stage a quick recovery next year when it is expected to expand by 2.5%.

Weakness in the U.S. economy has had an impact on Canada's economic growth, but domestic demand has helped mitigate the drag.

The surprise economic contraction will be short-lived as growth prospects for the remainder of the year should brighten, with financial market pressures starting to ease, the U.S. economy getting a boost from the issuance of tax rebate checks, and commodity prices remaining historically high.

Canada's core inflation rate will trend higher this year but remain below the Bank of Canada's 2% target and stay there through 2009.

Canada's housing market is also poised to cool as soaring prices have driven the cost of home ownership beyond the reach of many families. Housing affordability in most major markets across the country has deteriorated to its worst levels in almost 20 years.

However, the extent of any weakening is expected to be much less pronounced than what is occurring currently in the U.S. as the Canadian market did not experience many of the excesses evident south of the border.

U.S. economic growth to be modest this year, rising 1.5%. Growth is projected to strengthen to 2% in 2009. We believe that the U.S. economy will avoid a contraction this year and should start to see sustained upward growth momentum in 2009.

Canada's Cautious on Economy

Canadian Finance Minister said he was concerned that economic weakness in the United States, his country's top trading partner, could hold back the domestic economy in the coming months.

He welcomed Monday's stronger-than-expected report on April gross domestic product, which showed Canada's economy had expanded for the first time in three months.

Even so, "one month does not make a trend.

He was concerned about the impact of the U.S. housing crisis on the economy south of the border and believed the property market would not sort itself out until next year.

Despite the headwinds, he believed Canada's economy could continue to grow, though at a slower pace, due to the country's solid fundamentals and a strong labor market.

A rebound in manufacturing helped Canada's economy grow by 0.4 % in April after two months of contraction. The April performance was slightly more robust that market expectations of a 0.3 % increase, and it followed contractions in March and February of 0.2 % and 0.3 %, respectively.

The Canadian economy shrank by an annualized 0.3 %in the first three months of the year, the first quarterly contraction since since April-June 2003.

He was still confident that the government would show a budget surplus this year.

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.

Two-thirds Disapprove of Ottawa Mayor Larry O'Brien

Ottawa City council itself took a beating in the survey, which ran from May 2 to May 30, after garnering at 80.7 disapproval rating. Ottawa Mayor Larry O'Brien generating a 68.7 per cent disapproval rating after nearly 2 years in office.

Though most councilors polled at under 50 % individually, there were some bright spots. Osgoode Councilor Doug Thompson ranked the highest, with an overall approval rating of 71.4%. Gloucester-Southgate Councilor Diane Deans, meanwhile, finished with the highest disapproval rating of 75%.

Though experts have often disputed the accuracy and reliability of online polling, their popularity has skyrocketed in recent years. Over 700 individuals rated city council in their survey, which asked respondents to answer 47 questions on councilors' performance.

Ottawa Approves Plasco Tax Break

Ottawa city committee endorsed a property tax exemption for Plasco Energy.

The company is running a test waste-to-energy plant on city property at the municipally owned Trail Rd landfill, and the municipality is a partner of the company's. The city has an agreement with the company stating its garbage disposal technology, which eliminates the need for new landfills, will be used to handle all city garbage if the company wins approval from the province's environment ministry.

Plasco officials requested to be exempted from paying property taxes of about $72,000 per year. The exemption will be before city council next week for final approval.