Also in this playlist...
This transcript is automatically generated
And guess what another good -- US GD -- beating estimates for the third quarter growing at a rate of three point 1% of my next guest says.
Not -- -- the next quarter while not quite as promising joining me now to explain.
It's -- BC global asset management chief economist Eric LaSalle.
Eric thank you for joining every three point one bit of surprise they didn't have much impact on the markets but it -- -- doesn't feel like we're growing at three point 1%.
We're expecting for the next couple quotas.
Right well that three point 1% number to start -- it it is a pleasant surprise it's only the third time since the financial crisis ended that we've seen a number starting with three or greater and so.
It's welcome but the same time -- -- we need to acknowledge two things one is the numbers a little bit -- which is to say a lot of that comes from.
Inventory a lot of it comes from unsustainable.
Government spending and so the fourth quarter was never gonna look as good as the third quarter when you add in the fact that hurricane sandy struck and perhaps as much as half for even a full percentage point gets knocked off because of that.
When you out on the fiscal cliff related worries that seemed to be depressing consumer confidence depressing business spending as well.
We're probably talking about something closer to 1% as opposed to 3% and you add those two together and what do you know we're still tumbling along of that 2% -- pace that we've been running along it for quite some time so it looks like the fourth quarter should be a fair bit less.
All right blessed could move ahead to next year obviously a lot of this depends what happens in Washington assuming.
Something gets cobbled together -- -- the economy ready to really pick up a little -- steam.
My suspicion is yes I am looking for a little more growth next year and I'm not convinced we'll see.
Three or four handles -- regularity but I bet we'll see a lot of numbers between two and three when it comes to those quarterly figures that.
My view at least is premised on the idea there could be three very nice things happening next year.
One of them -- very simply the housing market continues to recover there's no question affordability is still very good.
No one wanted to catch that falling knife when prices were falling -- now they're rising there's a pretty nice momentum behind it and there's no reason to think that -- there could be stutter step if deductions start to be capped but ultimately I think that can be sustained.
He turned to the consumer sector and consumers are probably done deleveraging their household debt levels are looking pretty normal right burden of debt is actually looking quite light and -- you get a bit of a pop.
From the consumer as well then the big X-Factor is the business sector they've been an -- drag perfectly frank over the past while but.
If they do get past the fiscal cliff I think we're gonna see some more policy certainty and we could see some of that money that's been held in reserve start to be deployed and none of those things are game changes the role incremental benefits but you add those together and we could talk about a little bit more growth next.
Here you have -- Eric you know.
It's talking to someone earlier today and analysts -- send -- 25%.
Of homeowners are still underwater.
In their homes that was gonna take awhile for those prices to come up -- while there on the -- you can pretty much taken out of the equation.
They're not going to be spending and is still a high level of unemployment and so.
It's what comes first the chicken or the -- of consumers want to spend more than businesses are more likely to want to expand so again we're still stuck in this trap -- when.
I certainly agree with all -- the points -- made but I would equally argue the number of households that are underwater shrinking which means more.
Are incrementally becoming able to spend the credit market is finally starting to move a little bit -- But a lot of people were deleveraging not because they -- to -- because they couldn't get credit credit is starting to become more available so I think that's important factor to consider as well -- -- my suspicion is really just that the consumer has been spending if anything and and usually small fraction.
Of their paycheck they're able to start spending a little bit more -- -- and consequently there should be some boost to let's be perfectly frank there's.
An immediate pick up in the near term which is -- that payroll tax cut gets eliminated consumers' are gonna look too impressive in the early going to 2013 but I do think over the full span of the year.
We can expect a little more consumer activity and it's so important when the consumer -- -- the dominant share of GDP yes so much more than 70% Eric LaSalle thank you so much for joining us really appreciate it thank you.
Filter by section