5 economic trends to watch in 2018

BMO economists confidently offer the following five trends to watch in 2018—”confidently” because the economists scored eight out of 10 on their forecasts and stretch calls for 2017. The five trends are listed below, as itemized by BMO chief economist Douglas Porter in an economics report. 1. Alberta bonds will outperform. The province had the […]

By Staff | December 18, 2017 | Last updated on December 18, 2017

2 min read

BMO economists confidently offer the following five trends to watch in 2018—”confidently” because the economists scored eight out of 10 on their forecasts and stretch calls for 2017.

The five trends are listed below, as itemized by BMO chief economist Douglas Porter in an economics report.

1. Alberta bonds will outperform. The province had the strongest growth in Canada in 2017, and should continue to stay close to the top amid a slow recovery in oil prices.

Read: Investing in volatile energy stocks

2. Unemployment will hit a modern-day low in OECD countries. “With hiring plans remaining robust in many regions, the OECD harmonized unemployment rate will hit the lowest level in almost 50 years,” says Porter. And workers might find themselves with better wages, or be more confident that it’s time to hit the boss up for a raise: Porter’s stretch call is that “the combination of a low jobless rate, rising minimum wages in some jurisdictions and strong hiring intentions will finally fire up wages more broadly.”

3. The Fed will do what it says: hike three times in 2018. The rate call has upside risk, says Porter, since the four new Fed governors provide a potentially more hawish tone for Fed voting. Accordingly, the stretch call is that the Fed tops this forecast, as fiscal stimulus weighs in and wages finally perk up.

4. NAFTA results won’t be positive. At this point, negotiations are “deeply troubled,” says Porter. The stretch call: the Bank of Canada lags the rate hikes of the Fed, putting downward pressure on the loonie.

Read: Big banks forecast next BoC rate hike

5. The U.S. trade deficit will widen. A strong dollar, combined with fiscal stimulus and higher oil prices, will override any protectionist measures, says Porter.

For a bonus forecast on the Canadian housing market, and to see last year’s calls, read the full report.

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