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It’s true that Washington would re-emerge as a barrier to TC Energy Corp.’s Keystone XL pipeline. Still, the Canadian economy grows when the U.S. economy grows, and both economies could use a boost to push through the current spike in COVID-19 infections: Canada’s gross domestic product surged to an annual rate of almost 50 per cent in the third quarter, but will slow to a rate of one per cent this quarter, according to the Bank of Canada.
More demand from the U.S., whatever the source, would make a big difference. Canadian merchandise exports were worth about $46 billion in September, compared with about $49 billion a year earlier, Statistics Canadareported on Nov. 4. However, lumber shipments were worth $1.6 billion, the highest in 14 years. That’s almost entirely the result of earlier U.S. stimulus efforts, which sparked a boom in home construction and renovations this summer.
But Washington’s rescue budget has been spent and few economists think the recovery will continue without another push from a group of policy-makers that was struggling to find common ground ahead of the election.
Congress and the White House will agree on something, but it probably won’t be as generous as it would have been if the Democratic candidates had been as successful as the polls on Nov. 3 suggested they were going to be.
“With the Democrats looking increasingly likely to fall short of a majority in the Senate, hopes for a repeat of this spring’s cross-aisle coronavirus rescue package are fading,” Karl Schamotta, chief market strategist at Cambridge Global Payments, said in a note to clients. “Without substantial fiscal stimulus, bankruptcies and layoffs are likely to continue rising in the United States, forcing household savings rates back up — and consumer spending back down.”
