U.S. economy exceeds forecast: TD Economics

Tax cuts, along with sustained job creation and higher incomes, led to the fourth quarter gains, the largest since the first quarter of last year, TD Economics said in a report released Jan. 28.

TD Economics forecasts Canada’s economy will come in at 2.5% growth for the fourth quarter, 0.7% below U.S. growth.

The most positive outcome in the final quarter of 2010 was increased consumer spending, which rose to highest levels since 2006.

Consumer spending, accounting for inflation, grew at an annualized rate 4.4% during, led by durable goods spending at 21.6%.

“Pent-up demand in combination with an improvement in credit conditions and near-record-low financing costs should continue to drive strong durable goods sales growth,” the report stated.

Still, even with gains in the automotive sector during December, per capita car sales remained more than 30% below their long-run average.

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