External forces dampening Canadian economy in 2007: TD Economics

External forces dampening Canadian economy in 2007: TD Economics

" TORONTO, Dec. 19 /CNW/ - Canada's economic slowdown in 2007 will stemfrom external demand rather than domestic spending according to TD Economics.Its Chief Economist and Senior Vice President, Don Drummond, stated: "Theproblem will be with the American not Canadian consumer.""

"This is not to say that the Canadian economy is free of housing risks.For instance, residents in Vancouver dedicate an inordinate amount of pre-taxincome (+50%) to housing costs, while Alberta's double-digit price growthwon't be sustained. However, a boom-bust cycle can be avoided if price growthcools in the near-term, which seems quite possible given ongoing supportivefundamentals. Some hopeful signs for a potential soft landing have alreadyemerged. New listings are up substantially in Calgary (51% y/y), Edmonton(27% y/y) and Vancouver (19% y/y), which should help alleviate price pressuresin time."

"If a hard landing were to befall the western provinces, it wouldlikely be due to the ripple effect of an unexpected collapse in the U.S.economy, rather than a sharp reversal of domestic fundamentals."