Economic Action Plan on Track:  Why Does It Still Feel Bad?

On September 27, the federal government released its sixth report on the progress made in its Economic Action to combat the 2008 global financial crisis and the numbers look really good. Unfortunately, it doesn't seem to feel that way to the majority in the fray: in a month long poll of tax and financial advisors across the country, Knowledge Bureau found that 74% answered "no" when asked if they felt that the economy had stabilized since the start of 2010.

According to the document:

• Canadian incomes have risen faster than any other G7 country in terms of gross disposable income
• Total credit growth in Canada continued to outpace that of the United States through the first half of 2010 and improved financial market conditions resulted in a rebound in net corporate bond and equity issuances. In addition, the difference between corporate and government bond rates narrowed considerably.
• All the tax relief scheduled in the Action Plan has now been implemented for both personal and business taxes. An excellent analysis of tax reductions introduced since 2006ótwo years before the financial crisis--on both federal and provincial fronts accompanies the paper

Meanwhile the average of private sector forecasts for the economy, released in June anticipate GDP growth at 3.5% this year, hovering just under 3% over the next several years, an unemployment rate that will drop from its high of 8% this year back to around 6.5 by 2015 and inflation numbers (CPI, Core and GDP) all coming in around 2%.

We can expect, based on the same projections that three month treasury bill rates will rise from this year's low of 0.7% to close to 4% in 2013, and we can expect to see rates on 10 year bonds back up around the 5% mark around the end of 2013.

The exchange rate on the Canadian dollar will continue to rise to near par in 2011 and stay above 95 cents now until 2015. That's good news for retirees who wish to spend time south of the border in the next little while.

And those private sector forecasters anticipate a significant rise in the price of a barrel of oil over the next several years.

How does that all translate into Canadian communities? Be sure to voice your opinion in the Knowledge Bureau Poll now, then tune in next week for a summary of all the results.