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TRENDLines Recession Indicator downgrades Q3/Q4 GDP due to bursting Canadian Housing Bubble

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TRI Canada GDP Targets (2011/6/21)



  2010Q4 3.2 %  
  2011Q1 5.3 %  
  2011Q2 3.1 %  
  2011Q3 2.0 %  
  2011Q4 2.6 %  
  2012Q1 2.3 %  
  2012Q2 2.3 %  
  2012Q3 2.2 %  
  2012Q4 2.4 %  
  2013Q1 2.7 %  
  - -  
  2017Q3 end of cycle

TRI downgrades 2011Q3 GDP to 3.1% as $91,ooo Canadian Housing Bubble takes its toll

Sept 21 2011 delayed FreeVenue public release of June 21st MemberVenue guidance ~ The TRENDLines Recession Indicator reveals the growth rate of economic activity fell in late Spring with inferred Real GDP of 5.2% in May & a 3.1% pace in June (Q2). In late May, StatCan announced data implying March's (Q1) GDP growth rate was 3.9% (TRI = 5.3%). Our leading indicators are projecting a 2.0% Q3 & 2.6% Q4. The model's fuzzy horizon forecasts 2.7% GDP in 2013Q1 on its journey to a business cycle high near 5% followed by an ultimate end-of-cycle low in 2017Q3.

Canada's economic recovery commenced Sept/2009. Business cycle expansion began afresh upon Real GDP surpassing its 2008 peak in Aug/2010. At 7.4% in May, the Unemployment Rate has completed one-third of the trip back to its pre-Recession 2007 low of 5.3% after rocketing to an 8.7% peak in Aug/2009.

Factors contributing to perceived weakness in our outlook continue to be: (a) waning Fed/Prov fiscal stimulus cheques; (b) an assault on exports by a "par-plus" Loonie; (c) the consequences of deteriorating "wealth effect" associated with an imminent correction of the record $93,000 Canadian Housing Bubble - including a probable assault on consumer/business confidence; (d) failure of the rebound in New Vehicle Sales in North America due to sustained breach of the $90/barrel threshold for crude oil (see our Gas Pump & Barrel Meter analysis). Cumulative high petroleum prices thru 2010/2011 trimmed potential GDP growth by 2.1% in May, tying the record dampening factor back in October 2008; & (e) similar consequences to general manufacturing if the crude oil price faces a sustained breach of $115/barrel ... a threshold which would signal a new round of G-20 Recessions.

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