What is the economic outlook for North America?

Wadsworth Sykes combines Reuters Polling data and Refinitiv Datastream charts to analyse the economic outlook for North America, presenting a series of insights that focus on the prospects for GDP, inflation, interest rates, house prices and forex.

1. Reuters Polling data provides insight into many of the preeminent predictions of forecasters in the financial market. Here, we use it to explore the economic outlook for North America.
2. Combining the data with Datastream’s charting capabilities reveals regional trends: the average GDP forecast gathered by Reuters Polling shows year-over-year growth for North America.
3. Consensus forecasts indicate an expectation that inflation has peaked in North America, whereas forecasters see inflation staying higher for longer in Mexico, with an expected annual increase of 4.4 percent by the end of 2023. Most major U.S. banks see a return to target inflation by 2024.

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North America

The average GDP forecast gathered by Reuters Polling shows positive year-over-year growth for North America. Notably, the United States is predicted to expand at a significantly slower rate than its continental neighbours.

Consensus forecasts indicate an expectation that inflation has peaked in North America.

On a country-level basis, the U.S. and Canada are expected to see inflation numbers near 2 percent by the end of 2023.  Forecasters see inflation staying higher for longer in Mexico with an expected annual increase of 4.4 percent by the end of 2023.

View Reuters Polls to understand the views of top forecasters in financial markets, and gain polling history of detailed forecasts and consensus estimates

Canada

The average predication points to a mean reversion trend for the Loonie over the next 12 months, with the consensus estimate just above the 10-year average rate of 1.2 CAD/USD.

A snapshot of Canadian rate expectations as of 1 September 2022, using Datastream’s fan chart functionality in addition to premium forecasting data allows for unique insights/output.

The chart below takes the headline inflation forecasts from six major banks in Canada and compares them to the consensus.

The consensus forecast indicates that inflation won’t return to target levels until 2024. However, most financial institutions are expecting headline inflation to be more than halved in 2023.

House prices in both Toronto and Vancouver are expected to decrease on an annual basis in 2023, followed by a slight rebound in 2024

Mexico

Leveraging Datastream’s content provides insight into the expectations of FX forecasters who expect a slight depreciation of the peso against the dollar over the next 12 months.

Mexico’s policy rate has already surpassed consensus-level forecasts. Will Mexico start to cut or continue to raise rates, following their neighbours to the north?

United States

It was an eventful summer in the United States. Between June and August, the U.S. saw persistent 8 percent annual price growth.

Notably, most major U.S. banks see a return to target inflation by 2024. Deloitte is an outlier, predicting 2024 inflation to be well above 8 percent on average.

The chart below shows the mean and median Fed Funds forecast before the 22 September meeting, where the benchmark interest rate was raised three-quarters of a percentage point in an effort to dampen inflation.

Economists are expecting a slowdown in home sales in 2023 as mortgage rates continue to reach near-term highs in the United States.

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