Economic recovery to slow in 2011: Conference Board

High consumer debt, slow job growth and sluggish U.S. economy contribute to slower recovery
|hrreporter.com|Last Updated: 02/01/2011

Canada's economic growth will remain sluggish this year until more vigorous private sector investment and household spending resumes in the United States, according to a new report from the Conference Board of Canada.

Job creation will also be modest in the first few months of the year, resulting in less than one-per-cent growth in real after-tax income in 2011. In addition, the public sector is expected to contribute very little to economic growth over the foreseeable future, found the Canadian Outlook - Winter 2011.

"U.S. consumer spending and business investment are improving, due in part to on-going policy stimulus. But they are so far below normal levels that this growth has not been able to spur the U.S. recovery into a gallop. Moreover, a resolution to the European debt crisis remains critical to keeping the U.S. and global economy on a path of recovery," said Pedro Antunes with the Conference Board.

In Canada, economic growth has lost much of its vigour as households and governments have become overextended. After advancing by 2.8 per cent in 2010, real gross domestic product (GDP) will grow by only two per cent in 2011. This is down 0.5 percentage points from the Autumn 2010 outlook.

Household spending lifted Canada's economy out of recession, but the exuberant spending in late 2009 and early 2010 faded by the end of the year. Mounting consumer debt is forcing Canadians to trim spending, and sizable federal and provincial deficits will result in a more austere period of public spending. Household spending is expected to rise by 2.6 per cent this year.

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