Revisiting my Top Ten Predictions for 2015

Revisiting my top ten predictions
Louis-Philippe Rochon
Associate Professor, Laurentian University
Co-Editor, Review of Keynesian Economics

 

In early January 2015, I published on CBC my ‘Top Ten Predictions’ for the year (see here). Here we are half-way through 2015 and I thought I would revisit these predictions to see how I fared.

Well, not bad actually.

My predictions were:

1. Growth in Canada will remain weak.

Well I was not far off. Actually, I revised that prediction a month later saying we were headed toward a recession, and well, here we are. We still need to wait to get official confirmation, but short of a miracle, we are indeed in a recession, despite what The Minister of Finance is claiming.

Yet, this recession could have been avoided. Sure, the oil crisis was part of the problem, but we cannot lay all the blame at its feet. The Harper government knew as well as all of us the problems ahead and opted to do nothing and to continue its policies of austerity. We are all living its consequences. Official confirmation is coming at the end of August, all gift-wrapped for the October elections. Fun stuff.

 

2. Oil will continue to slump

Oil has picked up somewhat, but certainly still in the middle of a slump. It will certainly not go back up that dramatically, and at best, will remain quite erratic through the end of the year.

 

3. The Canadian dollar will continue its slide

This is still true, and probably will continue its slide closer to the 70-cent level, according to some studies.

 

4. Possibility of a continued federal fiscal deficit

Though the Conservatives have officially announced a balanced budget, this was done through some fancy and not-so-fancy tricks. In reality, the Conservatives have failed miserably on economic issues, and now are trying to paint themselves as good fiscal managers. In reality, once the new government in October opens the books, we will realize we were in deficit all along.

 

5. Canada will slip further in world ranking

We still have 6 months to go. Time will tell.

 

6. Rise of interest rates in the US, but not in Canada

Although I believe a rise in US rates is not warranted on account of a weak US economy, forces that be may be convinced of apparent pending inflation to push such an increase through. Not good policy, but it’s not always about economics, but a misunderstanding of how markets work.

In Canada, I revised this prediction in February saying we were going to have two 25-point decreases. So far one came true, maybe next week the second one will come true as well.

 

7. Increased household debt levels

Household debt will likely still rise through the year, especially in light of a pending decrease in rates of interest. This will come back to bite us all in the a%* one rates begin to rise and Canadians unable to meet their obligations.

 

8. The real estate question

I predicted the federal government would favour tightening regulations, but nothing yet. Something must be done soon. If we are indeed in a bubble, the burst won’t be good.

 

9. A slowdown of the US economy.

On this one, I was right on. In fact, the first quarter saw the US slowdown. I won’t venture into making claims about Q2, but my guess it won’t be that strong.

 

     10. Europe will deteriorate even further

Well, this one was an easy one to predict. Less about economics and more about power and control, with the unfortunate victims being the people. Things will get worse, not better, through out 2015.