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CANADA ECONOMICS: CIBC's Avery Shenfeld Says 'Mind The Gap' Between Canada and U.S.

· 02/05/2021 10:29

03:15 PM EST, 02/05/2021 (MT Newswires) -- According to CIBC's Avery Shenfeld in his 'The Week Ahead' note of Friday entitled 'Mind The Gap' one of Canada's edges over the United States in 2020 was "a proportionally larger dose of fiscal stimulus, better targeted at those truly in need, and doled out at a greater speed than programs in the US." But, he noted, President Biden's US$1.9 trillion stimulus bill is more than twice what he had assumed, and seems to be edging towards Congressional approval. If it's enacted in full, Shenfeld said it adds some upside risk to CIBC's US 2021 growth forecast. Note, he added, CIBC had already included an estimate for the federal fiscal stimulus in its growth estimates for Canada.

Add it all up, Shenfeld said, and CIBC might be looking to raise its US growth projections for 2021. Its Canadian forecast still "looks intact" under the assumption that millions of vaccines start arriving in April, particularly since the bank had already included a negative first quarter for GDP on this side of the border.

Shenfeld concluded: "But the result will be that after a lighter recession in 2020, the US will end 2021 having made up significantly more of its economic slack. Mind that gap in thinking about your outlook for interest rates, exchange rates, and other cyclically sensitive indicators."

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