QUARTERLY ECONOMIC FORECAST

TD Economics
March 19, 2013

CANADA - JUST WAITING ON A FRIEND
Highlights • After grinding nearly to a halt in the second half of 2012, Canada’s economic growth looks set to pick up over the course of this year and next. Although real GDP growth in 2013 will advance by only 1.6%, this masks an acceleration to roughly 2% growth on a Q4/Q4 basis. Stronger growth in the U.S. should help lift Canadian economic growth further to an average of 2.6% next year. • Canada’s housing sector is slowing, and ripple effects will be felt throughout Canada’s economy; from residential construction to purchases of housing-related goods. Still, low interest rates and decent employment growth suggest a cooling not a crash, and the weight of a housing slowdown won’t be enough to sink the economy. • That leaves exports as the giant missing piece in Canada’s economic growth. Fortunately a tide of positive indicators from the U.S. economy is rising and should help lift many economic boats in Canada later this year, and more notably in 2014. • But, the recent slowdown in economic growth has meant increased excess capacity in Canada’s economy, which has cooled inflation significantly. The Bank of Canada’s tone has consequently become more dovish, and we have pushed back the first rate hikes to the final quarter of 2014. Interest rates remaining lower for longer should help support the domestic economy until external sources of growth gain momentum.

Canada’s economic engines sputtered in the second half of 2012, as the pace of economic growth was cut in half between the end of 2011 an 2012. This country is not unique in this predicament, as global growth slowed broadly and fiscal uncertainty in the U.S. weighed on business confidence and investment south of the border. But, that is yesterday’s news. Looking ahead at this year’s performance, we expect Canada’s economy to gradually shift into a higher gear. Unfortunately, it won’t feel like the economy is roaring ahead, as CHART 1. ECONOMIC GROWTH TO SHIFT domestic sources of growth – most notably the housing sector – GEARS GRADUALLY are set to slow (see Chart 1). 4 Contribution to Real GDP Growth, % Forecast Overall, we expect the Canadian economy to grow at a sub-par 3 1.6% pace on an annual average basis this year, before accelerating 2 to 2.6% in 2014. Due to the weak hand off from 2012, the 2013 1 growth tally belies a stronger average quarterly pace of roughly 0 2%. The theme of slowing final domestic demand in 2013 remains intact, as the housing sector moderates, consumers keep spending -1 Consumers, Govt. & Housing restrained in the face of high debt levels and governments wrestle -2 with deficits. In the wake of softer commodity prices, particularly Bus. Investment & Net Exports -3 lower oil prices, and a poor year for corporate profits, business Real GDP growth -4 investment is also expected to be weak in the near term. 2006 2007 2008 2009 2010 2011 2012 2013 2014 At the moment, Canada continues to wait for stronger exports Source: Statistics Canada; Forecast by TD Economics as at March 2013 and business investment to take over from consumers and govCraig Alexander, SVP & Chief Economist, 416-982-8064 Derek Burleton, VP & Deputy Chief Economist, 416-982-2514 Leslie Preston, Economist, 416-983-7053

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ernments to drive growth. Patience should be rewarded as private sector demand in the U.S. gathers speed later in 2013, providing a lift to exports, and eventually business investment.
Canada needs a little help from its friends

CHART 3. CANADIAN REAL EXPORTS & U.S. ACTIVITY INDEX
15 10 5 0 -5 -10 -15 -20 2002
U.S. Activity Index Canadian Exports

Year-over-year % change

Canada’s economic fortunes have long been tied to our neighbour to the south, and the sluggish U.S. recovery has left an indelible mark on Canada’s export performance. Exports account for about one-third of Canada’s GDP and roughly three quarters of exports are bound for the U.S. That share was greater than 80% at times prior to the recession. This has left Canadian exports below their pre-recession levels (see Chart 2) and they represent the missing piece in Canada’s economic recovery thus far. Therefore, the most encouraging data for Canada’s economic outlook since our last forecast comes from south of the border. The U.S. housing sector is on the mend. Prices are in positive territory on a year-on-year basis and housing starts are starting to show upward momentum. Manufacturers are becoming more optimistic after being hit by fiscal uncertainty in the U.S. last year, which should help lift investment. Auto sales are also expected to grow at a healthy pace over the forecast horizon. All of these factors are very positive for Canadian exporters who send a great deal of lumber, autos and parts and machinery south of the border. Looking at the aspects of the U.S. economy that are the most important to Canada, as measured by the U.S. Activity index, suggests that Canada’s exports should notably improve, particularly in 2014 (see Chart 3). In fact, net exports should make a positive, albeit small, contribution to growth this year, after having been a drag on the economy
CHART 2. EXPORTS STILL BELOW PRERECESSION LEVELS
120 110 100 90 80 70 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Statistics Canada; Forecast by TD Economics as at March 2013

Forecast

2004

2006

2008

2010

2012

2014

Source: Bureau of Economic Analysis, Statistics Canada, Federal Reserve, Bank of Canada. Forecast by TD Economics as of March 2013

in 9 of the last 10 years. However, the U.S. does still have considerable fiscal drag to deal with in the near term. We don’t expect exports to really strengthen until the second half of 2013, as the U.S. economy gains momentum.
Until then, challenges weigh on businesses

Until U.S. economic growth strengthens, Canada’s businesses will continue to face various headwinds constraining growth in corporate profits and business investment. Much hay was made last year about “dead money” on corporate balance sheets in Canada; that businesses were not investing enough as they sat on piles of cash. However, with perfect hindsight businesses had good reason to be cautious. Corporate profits were down 9% year-on-year in the fourth quarter of 2012 (see Chart 4), and that backdrop bodes ill for business investment this year.
CHART 4. FLAGGING COMMODITY PRICES HIT CORPORATE PROFITS
60 40 20 0 -20 -40 -60 04:Q1 Year/Year % Chg. TD Commodity Price Index Corporate Profits Forecast

Indexed, Q1:2006=100 Forecast

06:Q1

08:Q1

10:Q1

12:Q1

14:Q1F

Source: Statistics Canada; Forecast by TD Economics as at March 2013

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According to Statistics Canada’s survey of investment intentions, capital spending is only expected to advance by 1.7% nominally in 2013. That marks a dramatic pullback from the 8.5% average annual pace posted between 2010 and 2012. Notably, the resource sector (mining and oil & gas extraction) expects to decrease capital spending by 2.7% this year. Despite all the worries about pipeline constraints and continued price discounting for oil produced in Western Canada, investment intentions in Canada’s unconventional oil sector (primarily oil sands) actually held up fairly well. Resource sector investment weakness is concentrated in mining, particularly metals. On the plus side, investment intentions showed strength in other sectors of the economy, like utilities, transportation and warehousing and wholesale and retail trade. Still, we expect business investment to grow at a very modest 2.4% pace in 2013, reducing its contribution to economic growth compared to earlier in the recovery. Commodity prices aren’t expected to accelerate much this year, holding back revenues in the resource sector, and Canadian manufacturers continue to face competitive pressures like a strong Canadian dollar. These developments, combined with Canada’s relatively poor productivity performance, mean that unit labour costs are rising faster here than in the U.S. (see Chart 5) – a negative for the sector’s competitiveness. A relatively strong loonie does lower the cost of investing in productivity-enhancing equipment, and plans for capital spending on machinery and equipment actually held up relatively well for 2013, which is a good sign for business productivity.

Consumers and governments have already scaled back, now housing cooling

Consumer and government spending were key pillars of strength earlier in the recovery, but their contributions to growth have already faded considerably. Consumers did finish 2012 on a relatively strong note, but there are signs that the pace of spending will soften. Growth in consumer credit has slowed to roughly match income growth, auto sales are already at lofty levels and aren’t expected to have too much more upward momentum, employment gains are expected to moderate, and a cooler housing market will weigh on purchases of housing-related durables. Add it all up, and consumer spending is expected to continue its recent lacklustre trend pace of roughly 2%. Delving deeper into Canada’s real estate market, housing starts have already slowed significantly, and we expect residential investment to be a drag on growth in 2013. Lower residential investment and a cooling housing market have ripple effects throughout the economy. Over the past ten years, a booming housing market made a substantial contribution to Canada’s economy through various channels: direct and indirect impacts of residential construction, purchases of housing-related consumer goods, and the “wealth effect” of higher home prices on spending. The wealth effect refers to the notion that as households see the value of their homes rise, they feel wealthier and choose to spend more and save less. TD Economics estimates that the total lift to the economy from the combination of these effects added 0.8 percentage points to annual GDP growth on average over the past ten years (see Chart 6). Looking ahead, it is likely to take away about 0.1 percentage points per year on
CHART 6. HOUSING SET TO WEIGH ON ECONOMY
3.0

CHART 5. MANUFACTURING UNIT LABOUR COSTS (U.S. DOLLAR TERMS)
120
Index, 2007=100

Contribution* to Real GDP Growth, %-points Forecast

2.0

110
1.0

100
Canada U.S.
0.0
-0.02

90
-1.0 2001 2003 2005 2007 2009 2011 2013

80 2007 2008 2009 2010 2011 2012
Source: Statistics Canada

*Includes direct & indirect impact of residential construction, housing-related durables spending and the wealth effect Source: Statistics Canada, Forecast by TD Economics as at March 2013

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average over the next three years, representing a massive swing in the economic fortunes tied to the housing sector. Canadian average home prices are expected to provide only a 2% nominal return over the next decade, a marked slowing from an average annual pace of 5.4% over the past thirty years. That greatly reduced “wealth effect” will make home-equity fuelled spending much less of a factor going forward. That said, we are not calling for a housing market crash, and while a slower housing sector will be a weight on Canada’s economy going forward, it will not sink it. We are currently in the middle of government budget season, and the slowdown in economic growth has hit nominal government revenues. As the federal government and most provinces struggle to get back in the black, expenditure restraint continues to be the theme. While public sector investment intentions looked strong, they are only intentions, and as budgets are drawn up, plans may not come to fruition. Overall much like consumers, governments do not have the capacity to be a major economic growth contributor over our forecast horizon.
With inflation cool, rate hikes on ice

Looking ahead, our modest economic growth forecast will keep core inflation well shy of 2% over the next year. That will give the new Bank of Canada Governor, who will arrive in June, plenty of time to learn the ropes before needing to take interest rates higher. We now anticipate only a half percentage point rise in the overnight rate in the final quarter of 2014, and a further half percentage point in 2015. The Bank has also become a lot more dovish in its latest interest rate statement, citing that the current considerable monetary stimulus will remain in place for a period of time. With rate hikes farther out on the horizon and little upward momentum in commodity prices, the Canadian dollar has recently lost steam alongside many other currencies versus the U.S. dollar. We have lowered our outlook for the Canadian dollar this year (see table page 6), which should help ease competitive pressures somewhat in the short-term. But, the relief is likely only temporary; the loonie is expected to return above par once again as Bank of Canada rate hikes become more imminent in 2014 (see Chart 7).
Bottom Line

Inflation has cooled right along with Canada’s economy over the past year, and the core measure (total CPI excluding the most volatile items) is running at a mere 1% yearon-year as of January. While it is no surprise that sub-par growth has produced a greater degree of economic slack in the economy, the extent of softness in inflation has been unexpected. Rock-bottom interest rates have keep mortgage interest costs subdued, and the Bank of Canada has cited heightened competitive pressures among retailers as a source of softness in core inflation.
CHART 7. OVERNIGHT RATE AND THE CANADIAN DOLLAR
5.0
% CAD/USD Forecast

1.2

4.0

CAD$ (rhs)

1.1

Canada’s economy has always been dependent on the fortunes of the U.S., and this is particularly evident now that domestic engines have downshifted. The missing piece in Canada’s economic recovery has been exports, which have not regained their pre-recession levels, due to the sluggish recovery south of the border. Fortunately, it looks like the dark cloud that has been hanging over Canada’s outlook finally appears to have a silver lining. Private demand in the U.S. is gaining momentum, particularly as the housing sector strengthens. This should eventually be an unambiguous positive for Canada’s export sector. In the meantime, however, the U.S. economy still has considerable fiscal drag to contend with, leaving Canada’s growth sub-par in the near term as a slowing housing sector and fatigued consumers leave domestic growth subdued. But, we continue to expect stronger growth south of the border to push Canada out of its economic doldrums come 2014. Craig Alexander SVP and Chief Economist 416-982-8064 Derek Burleton, Vice President and Deputy Chief Economist 416-982-2514 Leslie Preston, Economist 416-983-7053
4

3.0

1.0

2.0
BoC Overnight Rate (lhs)

0.9

1.0

0.8

0.0 2005 2007 2009 2011 2013

0.7

Source: Bank of Canada. Forecasted by TD Economics as at March 2013.

March 19, 2013

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CANADIAN ECONOMIC OUTLOOK
Period-Over-Period Annualized Per Cent Change Unless Otherwise Indicated 2012 Q1 Real GDP Consumer Expenditure Durable Goods Business Investment Non-Res. Structures Machinery & Equipment Residential Investment Government Expenditures Final Domestic Demand Exports Imports Change in Non-Farm Inventories ($2007 Bn) Final Sales International Current Account Balance ($Bn) % of GDP Pre-tax Corp. Profits % of GDP GDP Deflator (Y/Y) Nominal GDP Labour Force Employment Employment ('000s) Unemployment Rate (%) Personal Disp. Income Pers. Savings Rate (%) Cons. Price Index (Y/Y) Core CPI (Y/Y) Housing Starts ('000s) Productivity: Real GDP / worker (Y/Y) 1.2 2.2 5.3 8.1 9.2 6.5 14.4 -1.1 2.3 -3.3 5.1 Q2 1.9 0.5 -3.8 8.3 14.5 0.1 0.6 2.2 1.8 1.1 2.3 Q3 0.7 2.8 3.1 -0.4 -2.1 2.1 -2.4 -1.6 0.9 -7.3 2.1 Q4 0.6 2.7 3.8 4.4 6.5 1.2 0.8 2.4 2.6 1.2 -1.0 1.6 1.5 0.1 1.0 4.2 -4.0 2013 2.0 1.7 0.6 1.5 3.5 -1.5 2.3 1.8 1.0 2.8 3.0 2.5 -2.6 1.0 1.4 5.1 2.2 2.6 1.9 1.2 4.8 4.0 6.0 0.8 0.9 1.9 5.3 2.8 2.6 1.9 1.0 8.2 8.0 8.5 -0.5 0.6 2.2 5.5 4.3 2014 2.7 1.8 -0.2 9.1 9.2 9.0 -0.2 0.6 2.3 6.0 4.3 2.8 1.8 -0.3 8.8 8.5 9.2 0.0 0.6 2.3 6.4 4.9 2.7 1.9 0.1 8.2 8.0 8.5 0.1 0.6 2.2 6.4 4.7 Annual Average 12F 1.8 1.9 2.8 6.2 8.0 3.7 5.8 -0.6 1.9 1.6 2.9 13F 1.6 1.9 1.2 2.4 4.1 -0.1 -4.1 1.0 1.3 2.7 1.6 14F 2.6 1.8 0.6 6.7 6.6 6.8 -0.4 0.7 2.0 5.5 3.7 4th Qtr/4th Qtr 12F 1.1 2.0 2.0 5.0 6.9 2.4 3.2 0.3 1.9 -2.1 2.1 13F 2.1 1.7 0.7 2.5 3.7 0.7 -4.3 0.7 1.2 5.2 2.3 14F 2.7 1.8 0.1 8.6 8.4 8.8 -0.2 0.5 2.3 6.1 4.5 Q1F Q2F Q3F Q4F Q1F Q2F Q3F Q4F

-13.0 -1.7 1.2 1.0 0.4 7.5 2.5 1.3 2.9 1.8

5.3 -0.2

4.1 1.2

13.5 -2.0

5.7 3.4

1.0 1.8

5.5 1.6

6.0 2.3

6.2 2.7

7.0 2.6

5.5 2.8

6.5 2.7

6.2 2.8

7.2 1.5

4.7 1.7

6.3 2.6

--0.6

--2.1

--2.7

-54.9 -71.7 -72.2 -69.0 -58.0 -56.2 -51.7 -48.6 -49.3 -47.1 -45.0 -42.2 -66.9 -53.6 -45.9 -3.0 -4.0 -4.0 2.9 -3.8 -4.1 -3.1 3.4 -3.0 3.5 -2.7 3.9 -2.6 4.1 -2.6 4.5 -2.4 5.0 -2.3 5.7 -2.1 6.0 -3.7 -2.7 -2.9 0.6 -2.3 4.6 13.9 1.9 4.5 1.3 1.4 252 7.0 4.1 4.1 1.8 1.8 169 1.1 -16.3 -17.1

-----9.1 --0.8 1.9 1.4 1.6 278 --2.8 --0.9 1.2 ---0.5

----3.7 --1.7 3.8 1.1 1.1 202 --3.2 --1.3 1.3 --1.0

----5.3 --1.9 4.7 1.2 1.6 285 --4.3 --1.9 1.9 --1.1

14.9 14.2 14.1 13.9 14.0 13.9 13.9 13.9 13.9 13.9 14.0 14.0 14.3 13.9 2.0 1.1 0.6 0.8 36 7.4 2.9 3.7 2.3 2.1 205 1.2 0.8 0.9 2.1 2.6 113 7.3 4.8 4.5 1.6 2.0 231 1.5 1.5 3.6 0.8 0.6 26 7.3 2.2 4.2 1.2 1.5 222 0.5 0.8 1.9 2.1 2.4 103 7.2 1.3 3.8 0.9 1.2 202 -0.5 1.0 2.4 0.3 1.3 55 7.0 2.2 3.7 0.9 1.0 172 -0.5 1.7 4.2 1.7 1.0 44 7.2 3.0 3.7 1.2 0.8 180 -0.1 1.6 4.1 1.2 0.9 42 7.2 3.5 3.7 1.2 1.0 175 0.2 1.7 4.6 1.2 1.4 62 7.2 4.1 3.7 1.3 1.3 172 1.0 1.5 4.6 1.5 1.6 71 7.2 4.5 3.9 1.6 1.6 171 1.1 2.0 4.5 1.2 1.5 67 7.1 4.3 4.0 1.8 1.8 170 1.2 1.9 4.8 1.0 1.4 63 7.0 4.2 4.1 1.9 1.9 168 1.2 1.9 4.7 1.0 1.9 85 6.8 4.0 4.2 1.9 1.9 165 1.1 1.3 3.1 1.0 1.2 201 7.3 3.4 4.0 1.5 1.7 215 0.7 1.5 3.1 1.2 1.4 242 7.1 2.6 3.7 1.1 1.0 175 0.2

F: Forecast by TD Economics as at March 2013 Source: Statistics Canada, Bank of Canada, Canada Mortgage and Housing Corporation, Haver Analytics

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INTEREST RATE OUTLOOK
2012 Q1 CANADA Overnight Target Rate 3-mth T-Bill Rate 2-yr Govt. Bond Yield 5-yr Govt. Bond Yield 10-yr Govt. Bond Yield 30-yr Govt. Bond Yield 10-yr-2-yr Govt Spread U.S. Fed Funds Target Rate 3-mth T-Bill Rate 2-yr Govt. Bond Yield 5-yr Govt. Bond Yield 10-yr Govt. Bond Yield 30-yr Govt. Bond Yield 10-yr-2-yr Govt Spread CANADA - U.S SPREADS Can - U.S. T-Bill Spread Can - U.S. 10-Year Bond Spread 0.84 -0.12 0.78 0.07 0.87 0.08 0.87 0.02 0.85 -0.05 0.80 -0.10 0.75 -0.10 0.75 -0.10 0.75 -0.10 0.65 -0.20 0.65 -0.20 1.00 -0.30 0.25 0.07 0.33 1.04 2.23 3.35 1.90 0.25 0.09 0.33 0.72 1.67 2.76 1.34 0.25 0.10 0.23 0.62 1.65 2.82 1.42 0.25 0.05 0.25 0.72 1.78 2.95 1.53 0.25 0.10 0.25 0.75 1.90 3.05 1.65 0.25 0.15 0.28 0.90 2.05 3.15 1.77 0.25 0.20 0.30 1.00 2.20 3.40 1.90 0.25 0.20 0.35 1.10 2.30 3.50 1.95 0.25 0.20 0.40 1.25 2.50 3.75 2.10 0.25 0.30 0.50 1.40 2.70 3.95 2.20 0.25 0.40 0.60 1.55 2.80 4.05 2.20 0.25 0.40 0.80 1.75 3.00 4.10 2.20 1.00 0.91 1.20 1.57 2.11 2.66 0.91 1.00 0.87 1.03 1.25 1.74 2.33 0.71 1.00 0.97 1.07 1.30 1.73 2.32 0.66 1.00 0.92 1.14 1.38 1.80 2.36 0.66 1.00 0.95 1.00 1.35 1.85 2.50 0.85 1.00 0.95 1.10 1.45 1.95 2.55 0.85 1.00 0.95 1.15 1.55 2.10 2.70 0.95 1.00 0.95 1.20 1.60 2.20 2.75 1.00 1.00 0.95 1.25 1.70 2.40 2.95 1.15 1.00 0.95 1.35 1.80 2.50 3.10 1.15 1.00 1.05 1.50 1.95 2.60 3.15 1.10 1.50 1.40 1.70 2.05 2.70 3.25 1.00 Q2 Q3 Q4 Q1F 2013 Q2F Q3F Q4F Q1F 2014 Q2F Q3F Q4F

F: Forecast by TD Bank Group as at March 2013; All forecasts are end-of-period; Source: Bloomberg, Bank of Canada, Federal Reserve.

FOREIGN EXCHANGE OUTLOOK
Currency Exchange rate 2012 Q1 82 1.33 1.60 1.00 79.2 1.31 1.57 Q2 80 1.27 1.57 0.98 79.3 1.30 1.60 Q3 78 1.29 1.61 1.02 79.0 1.25 1.57 Q4 87 1.32 1.63 1.00 82.0 1.29 1.59 Q1F 88 1.30 1.51 0.97 85.4 1.34 1.56 2013 Q2F 88 1.35 1.59 0.94 82.7 1.44 1.69 Q3F 90 1.38 1.62 0.98 88.2 1.41 1.66 Q4F 92 1.35 1.61 0.98 90.2 1.38 1.64 Q1F 93 1.35 1.61 1.01 93.9 1.34 1.59 2014 Q2F 97 1.35 1.61 1.02 98.9 1.32 1.58 Q3F 100 1.32 1.61 1.03 103.0 1.28 1.56 Q4F 100 1.32 1.61 1.03 103.0 1.28 1.56

Exchange rate to U.S. dollar Japanese yen Euro U.K. pound U.S. dollar Japanese yen Euro U.K. pound JPY per USD USD per EUR USD per GBP USD per CAD JPY per CAD CAD per EUR CAD per GBP

Exchange rate to Canadian dollar

f: Forecast by TD Bank Group as at March 2013; All forecasts are end-of-period: Source: Federal Reserve, Bloomberg, TDBG

COMMODITY PRICE FORECASTS
Q1 103 2.45 1690 32.6 376 8.91 99 9.54 2012 Q2 Q3 Q4 Q1F 93 92 88 94 2.28 2.88 3.40 3.35 1612 1655 1717 1630 29.5 30.0 32.6 30.2 357 350 359 360 7.77 7.42 7.70 7.85 90 87 91 92 9.36 9.90 10.05 9.35 2013F Q2F Q3F 90 92 3.65 3.25 1625 1650 31.8 32.0 355 375 8.50 8.25 95 100 9.50 9.65 Q4F 95 3.75 1550 27.5 350 8.00 98 9.50 Q1F 97 3.90 1525 27.0 345 8.01 93 9.35 2014F Q2F Q3F 95 95 4.00 3.90 1490 1475 26.0 25.5 335 330 8.68 8.42 96 101 9.25 9.00 Q4F 93 4.25 1425 24.3 325 8.17 99 8.75 Annual Average 2012 2013F 2014F 94 93 95 2.75 3.50 4.01 1668 1614 1479 31.17 30.35 25.69 361 360 334 7.95 8.15 8.32 92 96 97 9.71 9.50 9.09

Crude Oil (WTI, $US/bbl) Natural Gas ($US/MMBtu) Gold ($US/troy oz.) Silver (US$/troy oz.) Copper (cents/lb) Nickel (US$/lb) Aluminum (Cents/lb) Wheat ($US/bu)

F: Forecast by TD Bank Group as at March 2013; All forecasts are period averages; Source: Bloomberg, USDA (Haver).

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CONTACTS AT TD ECONOMICS
Craig Alexander Senior Vice President and Chief Economist mailto:craig.alexander@td.com CANADIAN ECONOMIC ANALYSIS Derek Burleton, Vice President and Deputy Chief Economist derek.burleton@td.com Sonya Gulati Senior Economist, Government Finance and Public Policy sonya.gulati@td.com Diana Petramala Economist, Real Estate diana.petramala@td.com Francis Fong Economist, Financial francis.fong@td.com  Dina Ignjatovic Economist, Autos, Commodities and Other Industries dina.ignjatovic@td.com Leslie Preston Economist, Macro leslie.preston@td.com Jonathan Bendiner Economist, Regional jonathan.bendiner@td.com U.S. & INTERNATIONAL ECONOMIC ANALYSIS Beata Caranci, Vice President and Deputy Chief Economist beata.caranci@td.com   James Marple Senior Economist james.marple@td.com Martin Schwerdtfeger Senior Economist, International martin.schwerdtfeger@td.com Michael Dolega Economist michael.dolega@td.com Thomas Feltmate Economist thomas.feltmate@td.com Ksenia Bushmeneva Economist ksenia.bushmeneva@td.com

TO REACH US Mailing Address 55 King Street West 21st Floor, TD Tower Toronto, Ontario M5K 1A2 Fax: (416) 944-5536 mailto:td.economics@td.com

This report is provided by TD Economics. It is for information purposes only and may not be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.

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