As the Chinese and Japanese economies keep disappointing high hopes, Europe flat-lines and emerging market economies free fall, the world looks to the US as the best, great hope for global growth. Unfortunately, US households–the driver of the US economy and by extension, the world–are planning to spend a lot less going forward (chart below). Well unfortunate for companies banking on robust consumer demand–but less spending is actually the rational response for households fixated on rebuilding their personal balance sheets and autonomy.
Unfortunate for Canada. Having spent our own collective brains out on credit, the great white north is hoping a weaker loonie will boost demand from our largest trading partner to the south. But with US energy supplies already bursting at the seams and consumers looking at ways to stop frittering away their limited financial resources, the Canadian dollar may be languishing lower for longer than bullish hearts currently believe.