TD Economics

North American Economic Forecast Update Webcast

Thursday June 25th, 2020

United States

High-Frequency Data Suggest Recovery Underway

3

-14

-12

-10

-8

-6

-4

-2

0

2

4

04-Jan 01-Feb 29-Feb 28-Mar 25-Apr 23-May 20-Jun

New York Fed Weekly Economic Index

Source: New York Fed, TD Economics.

Near-Term Outlook A Bit Brighter

4

-50

-40

-30

-20

-10

0

10

20

30

40

Q1 Q2F Q3F Q4F 21F 22F

2020 Annual Average

Apr-20 Jun-20

Source: TD Economics.

U.S. Real GDP Growth, Quarter/Quarter % Change

Rising Infections in Some Areas a Growing Risk

5

1

10

100

1 8 15 22 29 36 43 50 57 64 71 78 85 92

Days since cases exceeded 1 per 100,000 people

SC FL NC NY*

Source: Johns Hopkins University, TD Economics.

*New Jersey and Massachusetts have followed a similar path

New Covid-19 Cases per day per 100,000 People (7-day moving average), Logarithmic scale

Wide Uncertainty on Labor Market Outcomes

6

4.5

12

6.5

0

2

4

6

8

10

12

14

Low High Median

Source: FRB, TD Economics.

Unemployment Rate by End-2021, %

TDE Forecast Q4 2021

(6.3)

FOMC Unemployment Rate Forecast Range

Leisure & Hospitality Hardest Hit, But None Unscathed

7

-42

-18

-13 -11 -11 -10 -10 -10 -9 -8 -6-3

-1

-45

-30

-15

0

Jobs Losses February to May, %

Source: BLS, TD Economics.

Long Road to Normal to Leave Interest Rates Low

8

0.00

0.50

1.00

1.50

2.00

2.50

3.00

0

2

4

6

8

10

12

14

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Unemployment Rate (%) Fed Funds Rate

Unemployment Rate, %

Source: TD Economics

ForecastFed Funds Rate, %

Measures Have Helped to Ease Market Stress

9

-2

-1

0

1

2

3

4

5

6

Jan-18 Oct-18 Jul-19 Apr-20

Source: Wall Street Journal, TD Economics.

TD Financial Stress Index

More Assistance Required, Particularly For States

10

• Washington learned the lessons of the Global Financial Crisis. Fiscal response so

far has been substantial & swift

• Expanded unemployment benefits run out at the end of July → hit to spending

• States need more assistance

Balanced budget requirements + lower revenue + pandemic costs = spending cuts

• TD Economics estimates ~$200 bn required, at least

• Risk is a repeat of 2010-2012, when spending restraint at the state level cut 0.4%-

points from growth

Canada

Canada's COVID Cases Continue to Show Improvement

12

0

2

4

6

8

10

12

14

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94

Days since cases exceeded 1 per 100,000 people

Quebec Ontario Alberta

New Covid-19 Cases per day per 100,000 People (7-day moving average)

Source: Government of Canada, TD Economics.

Canadian Spending Moving In The Right Direction…

13

-50

-40

-30

-20

-10

0

10

3-Jan 17-Jan 31-Jan 14-Feb 28-Feb 13-Mar 27-Mar 10-Apr 24-Apr 8-May 22-May 5-Jun

TD Debit and Credit Data, Year/Year % Change

Source: TD Economics. Last data point June 12, 2020.

Data Distortion: Easter

One Week

Later In 2020

…But Needs More Breadth

14

-35

-30

-25

-20

-15

-10

-5

0

5

10

BC AB SK MB ON QC Atlantic

1-May

15-May

29-May

12-Jun

Source: TD Economics

Spending, 2020, Year/Year % Change, for Two Weeks Ending at

Indicated Date

0

20

40

60

80

100

120

January February March April May June

Share of MCCs with Growth > -10% Year-on-Year

Source: TD Economics. Notes: MCC = Merchant Category Code; Shares are

weighted by 2019 spending share

Quebec Saw Jobs Bounce Back the Strongest In May, While Ontario Faced Further Losses

15

-13.9 -14.3-15.3

-13.4 -11.9

-20

-15

-10

-5

0

5

10

British Columbia Alberta Ontario Quebec Rest of Canada

Mar-20 Apr-20 May-20 Total

Contribution to Percent Change in Jobs from February Through May 2020

Source: Statistics Canada, TD Economics

Stalled Population Growth is a Risk To Housing Demand

16

-20

0

20

40

60

80

100

120

140

Montréal Ottawa -Gatineau

Toronto Calgary Vancouver

International Migration*

Other Sources

Population Growth

Population Growth, 2016-2019 Average, Persons (Thsds)

Source: Statistics Canada, TD Economics

* International migration = net change in permanent residents + net

non-permanent residents

0

100

200

300

400

500

600

2011 2012 2013 2014 2015 2016 2017 2018 2019

International Migration

Other Sources

Source: Statistics Canada, TD Economics

* International Migration = Change in permanent residents + net non-

permanent residents

Population Growth, Canada, Persons (Thsds)

17

Modest Price Declines Likely Over the Next Year, But Relatively Tight Market Should Limit the Downside

-6

-4

-2

0

2

4

6

8

10

12

2010 2012 2014 2016 2018 2020 2022

Forecast

Average Sales Price, Q4/Q4 % Change

Source: CREA, Forecast by TD Economics

30

40

50

60

70

2010 2012 2014 2016 2018 2020

Sales-to-New Listings, Ratio

Source: CREA, TD Economics.

Seller's Market

Buyer's Market

Balanced Market

18

Canadian Dollar To Recover Gradually Alongside Oil

0.66

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0

10

20

30

40

50

60

70

2017 2018 2019 2020 2021

WTI USD per CAD

Source: Bank of Canada, Forecast by TD Economics as at June 2020.

WTI (USD Per Barrel)

Forecast

CAD per USD

Putting The Pieces Together: Near-term Improvement, Medium-term Still In Question

19

-50

-40

-30

-20

-10

0

10

20

30

40

Q1 Q2F Q3F Q4F 21F 22F

2020 Annual Average

Apr-20 Jun-20

Source: TD Economics

Canada, Real GDP Growth, Quarter/Quarter % Change

Website: economics.td.com

Twitter: @TD_Economics

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does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group

with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate

or complete. The report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain

assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its

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