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Economic and Financial Outlook

The Extent of the Slowdown Will Vary from One Economy to Another

October 19, 2023
Jimmy Jean
Vice-President, Chief Economist and Strategist
  • Increasingly, the world’s major economies appear to be on divergent paths. While the US economy has been performing above expectations recently, the eurozone and United Kingdom are showing more signs of slowing.
  • In the United States, there are several indicators pointing to a resilient economy, starting with the 336,000 jobs added in September. The ISM indexes have also improved. Annualized real GDP growth is expected to come in around 5% in the third quarter before starting to slow.
  • Canada’s economy continues to flirt with recession, as the forces of elevated interest rates and surging population growth compete for dominance in driving activity.
  • Quebec’s economy took an abrupt turn for the worse in the second quarter. While it’s still too early to call, this may be the start of an economic contraction lasting into early 2024.
  • Good economic data in the US suggests that policy rates could be kept at high levels for longer. This coupled with the prospect of higher issuance is providing a major boost to US bond yields. Canadian rates are following closely behind. In Canada, the first key rate cut is scheduled for April 2024, followed by 5 further cuts over the course of the year. It will probably be summer before the Federal Reserve begins its sequence of rate cuts.