GDP grew 8.9% in the third quarter, following an 11.3% drop in the second quarter and a 1.9% decline in the first. Despite strong growth in the third quarter (which was the steepest since quarterly data were first recorded in 1961) real GDP was down 5.3% relative to the fourth quarter of 2019. That that means is that at the end of the third quarter, after the re-opening, but before the second wave closings, the economy had recovered to 95% of its pre-pandemic levels. The Canadian dollar did not react to the news because while the third quarter increase was below consensus expectations, the overall picture from today’s release is consistent with what we have been seeing for a while. The first phase of the recovery was stronger and quicker than what was though to be possible at the beginning of the pandemic. Consumers remain in good shape. Housing is stronger than before the pandemic. Businesses are recovering well. But the impact of the second wave closings and longer term structural impacts on the economy remain unknown. The Loonie remains at multi-year highs and continues to trade just through the 1.300 level for the third morning in a row.
