Today we have official confirmation that Canadian GDP contracted at a 0.6% annualized rate in Q1 2015 and Q4 2014 was revised lower than previously reported. See Canada’s GDP contracts the most since 2009. Much to the surprise of every economist surveyed:
The drop exceeded all 22 economist forecasts in a Bloomberg News survey, in which the median call was for an expansion of 0.3 percent.
But not to worry, those same economists are all predicting a rebound in the second half of the year…
Weakness was across the board with business investment falling 9.7% annualized (led by oil and gas cuts) and consumer spending also falling to just .4% annualized–both the lowest spending since the great recession in Q1 2009. Even vehicle purchases declined–when 0% down and 0% rates for years are no longer moving cars, you know consumers are tapped out.
With Canadian housing and stock market valuations ‘to the moon Alice’, it might be wise to review all those robust earnings and sales forecasts that the sell side has ‘priced in’…
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