These days, it’s hard to decipher economic data.
That’s because “investors and economies share something in common these days: both are suffering from split personalities,” says Avery Shenfeld, chief economist at CIBC World Markets in a recent report.
“Bonds have rallied as if the global economy is coming apart,” he adds, while “stocks have climbed as if all is well.”
As such, Shenfeld doesn’t predict economic outperformance for 2015. “More likely,” he says, “2015 [to] 2016 will see global growth still stuck in a middling 3.5% range, with the U.S. and Canada each a bit under 3% in 2015.”
Nonetheless, “the U.S. should crank out…decent quarters [and] make further headway on its output gap, [as well as] bring an earlier-than-expected turn in monetary policy. We don’t need full employment to justify a move off a zero rate policy designed for emergency use.”
In Canada, he adds, “neither housing nor consumption…can be the permanent drivers of growth, so all eyes will be on capital spending and exports. The market’s response will be less about getting 2.5% growth to close the output gap [and more] about the policy backdrop needed to [achieve that].”
For more on Shenfeld’s forecast for Canada and the U.S., click here.