TD Bank says Alberta's recovery 'not heroic,' but economy is improving - Canadanewsmedia
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TD Bank says Alberta's recovery 'not heroic,' but economy is improving

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CALGARY — TD Bank says Alberta’s battered economy is headed in the right direction, but warns there are still a number of hurdles that could hinder recovery.

A report released Thursday by deputy chief economist Derek Burleton is predicting economic growth between two and 2 1/2 per cent for Alberta in the next year which follows an increase of nearly 4.9 per cent in 2017.

“It was a nice bounce back last year, but growth is settling down this year and we’re of the mind that you’re gonna get a continued moderate growth run over the next couple of years as the economy kinds of settles down,” Burleton said in an interview.

“I don’t think many were anticipating a heroic recovery despite the fact that the recession was quite deep. Oil production should grow despite some of the challenges in terms of pipelines. That’ll get us two per cent which is not heroic.”

Burleton said Alberta’s economy is within a year of returning “home” — a term used to characterize full recovery from a recession. However, it could be another two years before the job market fully recovers.

“Employment is back to where it was pre-recession, but a lot of the jobs are self-employment, more of a freelance type,” he said.

“Employers are kind of slow to bring back hiring and part of that does reflect the lacklustre investment outlook over the next couple of years.”

The report also notes that government hiring, primarily in the health and education sectors, rose by nearly 10 per cent. Private sector jobs fell by five per cent during the recession.

Burleton said the lack of investment in Alberta, particularly in the oil and gas sector, remains a concern.

“I think that’s the Achilles heel for recovery so far. It is basically the missing element,” he said.

“Investment is not going to be catching fire soon. We’re not anticipating a lot of growth over the next few years and clearly there are some hurdles there.”

Burleton said Alberta could reassert itself as a leader in growth, but only if it deals with inadequate pipeline capacity, regulatory hurdles, and eliminating the government’s budget deficit.

“We still are of the mind that the economy will reassert itself,” he said. “It may be a bit at odds given the timing of this report just after the Trans Mountain decision and some of the concerns around the oil and gas sector.”

Late last month the Federal Court of Appeal quashed cabinet approval of the Trans Mountain expansion project.

The forecast says there is reason for optimism, including the resiliency of global oil demand and limited supply outside of Alberta, and decreasing production costs.

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Hong Kong economy cools as trade tension mounts

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Hong Kong’s economic growth slowed in the latest quarter and the government warned it could face headwinds from U.S.-Chinese trade tension and higher interest rates.

Government data Friday showed the Chinese territory’s economy expanded by 2.9 per cent over a year earlier, down from the previous quarter’s 3.5 per cent.

Exports rose 5 per cent over a year earlier, but the government said the impact of trade tension and weaker global demand “has begun to surface” and is “likely to become more apparent in the near-term.”

The government said Hong Kong also faces a drag from higher interest rates. The Hong Kong dollar has a fixed exchange rate with the U.S. dollar, which requires the central bank to raise interest rates along with the U.S. Federal Reserve even though economic growth is slowing.

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Global Slowdown Looks More Likely in Trade Turmoil: Economy This Week

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  1. Global Slowdown Looks More Likely in Trade Turmoil: Economy This Week  Bloomberg
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Fed's Powell still has a chance to save the economy before it's too late, Cramer says

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With a month left until the Federal Reserve’s next widely expected interest rate hike, Fed Chair Jerome Powell is facing a critical juncture that could determine the trajectory of the U.S. economy, CNBC’s Jim Cramer said Thursday.

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After hearing Powell’s remarks in a Wednesday interview with Dallas Fed President Robert Kaplan, Cramer felt that for the first time, Powell was growing cautious about the pace at which the Fed is raising rates. The central bank has said it plans to raise rates once more in December and three times in 2019.

In a question-and-answer session during the interview in Dallas, Powell acknowledged that the pace of global economic growth was slowing, but said it was “not a terrible slowdown.” Earlier this year, Powell said the Fed was “a long way” from neutral interest rates, signaling more hikes to come.

“Kaplan’s questions allowed Powell to walk back his sadly intemperate comments from October, comments that seemed to be almost blithely oblivious to some of the more worrisome data out there,” Cramer reflected on “Mad Money.” “After all, there are degrees of slowdowns that, nonetheless, can cause an awful lot of havoc and cost a lot of jobs, and that’s what we’re on the verge of here.”

And after last night, it became clear that “Powell gets it, too,” Cramer said. The central bank chief is realizing that “there’s another side” to the U.S. economy that is splintering under the dual pressures of higher rates and higher tariffs, he said.

“Is it too late? Yes, if we get four more hikes. Absolutely. No if we only get one and we wait,” the “Mad Money” host said. “Powell knows now that normalizing interest rates isn’t the goal — no one knows what normal is these days anyway.”

Instead, Powell has realized his job is to taper the “end-of-cycle talk” that has been filtering through the stock market and the broader economy and that many see as being tied to his rate hikes and the president’s tariffs, Cramer said.

“We know Powell’s now concerned that we actually could be at the end of the economic expansion. That’s a soft reversal of his earlier position from just one month ago, when he was so wedded to the explosive-growth conceit that he talked about overshooting with rate hikes to stamp out inflation,” the “Mad Money” host said. “The guy’s clearly paying attention to the data now. You know what? That’s all you can ask for.”

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