We’re highlighting some of the guest posts featured in our 2015 Outlook here on the blog. The following is an economic outlook sidebar by Avista Corp. Chief Economist, Dr. Grant Forsyth. To access the full Outlook study please click here.
GDP growth in the U.S. and Canada over the last several years can be called many things, but nothing that can be printed in a family friendly economic outlook.
Looking across forecasters, 2015 is still predicted to be the high water mark for U.S. GDP growth, which is expected to be around 3%. The sharp drop in oil and natural gas prices is expected to have a net negative impact on Canada’s GDP growth—in recent months average GDP forecasts for 2015 have fallen from around 2.5% to 2%. Inflation forecasts for 2015 are averaging below the 2% central target of the Federal Reserve (the Fed) and the Bank of Canada (BOC).
After 2015, a majority of forecasters expect U.S. GDP growth to slowly decelerate, largely reflecting a reversal of the Fed’s low short-term interest policy. At the time of this writing, futures contracts for the Federal Funds interest rate predict a policy change in the mid- to latter-half of 2015. Given the expected timing of the Fed’s move, which is predicted to come before any BOC tightening, a growing number of forecasters (including U.S. futures markets as of April 2015) expect a continued depreciation of the loonie against the dollar in 2015. Given an improving U.S. economy, this should boost Canada’s non-oil export growth.
In the Pacific Northwest (PNW), Idaho, Oregon, Washington, and British Columbia (B.C.) will largely follow the fortunes of the U.S. and Canadian economies in 2015. On the U.S. side, although the majority of growth will occur in the Puget Sound, Portland, and Boise metro areas, employment growth is expected to pick-up in smaller MSAs. In 2015, U.S. PNW employment growth will likely exceed U.S. growth, which forecasters expected to be in the low 2% range. Similarly, Canadian forecasters see B.C.’s employment growth in same range as Canada’s growth, which is expected to be 1% or less.
The primary external risks to North American growth include slowing growth in China, recessionary growth in Japan, and near-recessionary growth in Europe. Ongoing political instability in Greece, the Ukraine, and the Middle East also offer potential drags to growth. Risks internal to North America include larger than expected declines in U.S. consumer and business spending caused by Fed interest rate increases and Canada’s historically high household debt levels.
Sources: Bank of Canada, Bank of Montreal, B.C. Stats, Bloomberg.com, CIBC, Canada Department of Finance, Canada Mortgage and Housing Corporation, Scotiabank, Statistics Canada, RBC, T.D. Economics, The Economist, U.S. Bureau of Labor Statistics, U.S. Federal Reserve.
Released annually, the Gas Outlook provides a detailed 10-year overview of expected natural gas demand, supply availability, infrastructure development and prices in the Northwest. The Outlook represents a consensus view of the regional natural gas market developed by industry participants that directly serve natural gas consumers in Washington, Oregon, Idaho and British Columbia.
To access the full 2015 Outlook study along with a recording of our recent webinar with NWGA Executive Director, Dan Kirschner, please click here.
