We are living in “unprecedented” economic times due in part to debt problems in the U.S. and Europe, and plunging consumer confidence, but the housing market is helping the United States economy to turn around, an Export Development Canada official suggested today at CanaData Construction Industry Forecasts Conference in Toronto.
There are several unprecedented economic indicators since the 2008 downturn, said Peter Hall, EDC's vice-president and chief economist.
Since then, we had the “biggest drop of world activity we have seen since the great depression,” Hall said to an audience of about 150 at the CanaData Construction Industry Forecasts Conference in Toronto.
In his presentation, titled The Planet, the Powerhouse and the Prognosis, Hall initially painted a bleak picture of the world economy, noting the length of growth cycle we lived through before 2008 was double the length of a normal growth cycle.
“We all lose our reason and do silly things” at the end of a growth cycle, he said.
There was an unprecedented “vast outpouring” of fiscal and monetary stimulus and U.S. consumer confidence plunged, Hall said, showing a graph depicting U.S. consumer confidence since 1978, showing the last three recessions. After 2008, “confidence collapsed to depression era levels and recovered to recessionary levels,” he said, adding the ratio of accumulated government debt to GDP rose from 65 per cent in 2008 to 105 per cent today.
But despite this, corporations have $1.8 trillion in spare cash and housing starts are about to rise. While showing a graph displaying U.S. housing starts, which have been hovering around the 500,000 per year mark in recent years, he said the number of households have been increasing by about 1.4 million a year, while the graph depicted starts well in excess of 1.4 million before 2007, leading to the bubble.
“It can’t stay like that forever,” Hall said, noting people don’t want to buy houses when prices are dropping. But prices started to rise in June – affecting most regions, he said. “I believe the U.S. is turning a corner.”
He added industrial construction in Canada “is about to fire up” and we will be “in dire need” of institutional construction projects in Canada.
Returning this year was Peter Norman, Chief Economist, Altus Group and General Manager, Altus Group Economic Consulting. Other speakers this year were: Stuart Barron, National Director of Research and Director, Real Estate Finance for Canadian Markets at Cushman & Wakefield Ltd.; Ryan Berlin, Economic and Housing Market Analyst, Urban Futures; and Dina Ignjatovic, Economist, Autos, Commodities and Other Industries, TD Bank Financial Group.
DCN DIGITAL MEDIA