Canada's central bank boss has made much lately of missed opportunities by the country's corporate leaders. Just how those translate into lost economic growth will become clearer this week.
But as telling as those details may be, Friday's second quarter report on gross domestic product could be overshadowed by events south of the border, in particular a speech — also Friday — by the chairman of the U.S. Federal Reserve and speculation that he could deliver the strongest hint yet of more economic stimulus to come.
Canada and the United States have produced frustratingly uneven data in recent months, as both limp along to the drum of a European-driven crisis — as well as signs of weaker growth in powerhouses, such as China — and declining domestic demand.
Most economists are pegging second-quarter growth in this country at around 1.5%, "which is a little softer than what the Bank of Canada was forecasting for the quarter," said Craig Alexander, chief economist at TD Economics.
"Just as the U.S. experienced growth well below 2% in the second quarter, so will Canada," Alexander said. The weaker April-to-June forecast is down from 1.9% growth in both of the previous two quarters.
Bank of Canada Governor Mark Carney had strong words last week about the slumping export market and what he said was too little spending by businesses.
In a speech in Toronto, Mr. Carney said consumers are no longer expected to provide the bulk of economic growth and Canadian companies need to "retool and re-orient to the new global economy."
"We all need to recognize that the durable, high-paying manufacturing jobs of the future will be located in companies that invest to equip and train their workers and which are fully engaged in the global economy," he told members of the Canadian Auto Workers union.
Carney criticized corporate Canada for sitting on mountains of cash when companies should be using that "dead money" to open up new export markets.
The U.S., as well, has been floundering after a promising start this year, because of weak employment growth — and, hence, tepid demand - in addition to concerns over the European debt crisis and a slowdown that has spread to emerging markets.
U.S. GDP growth in the second quarter dropped dramatically to 1.5% from 2.5% during the previous three-month period.
So the job has again fallen to the U.S. Fed to do whatever it can to get the economy back on track.
Chairman Ben Bernanke could drop a broad hint of what that may be during a speech, also Friday, in Jackson Hole, Wyo.
Most analysts expect the Fed will opt for some form of stimulus at the end of its Sept.12-13 meeting. Among the options is a third round of quantitative easing, in the form a more asset purchases to pump money back into the economy.
Scotia Capital economist Derek Holt said it was at a Jackson Hole address in 2010 "that Bernanke tipped off QE2, and it has become an event rivalling or surpassing the chairman's semi-annual testimony on monetary policy before the politically charged Senate and House of Representatives."
Related Stories
