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Jennifer Lee joins us. She's a senior Congress She's a managing director at BEMO Capital Markets. Jennifer, as we think about twenty twenty five, I'm not even sure where to start, I mean, let's just start. We've got a new administration coming in in the United States, We've got a new Congress about to be seated in the new year.
What do you.
Expect from again the new sheriff in town. From an economic perspective, I don't know if it's you know, tax policy, if it's if it's you know, tariffs, if it's you know, changes in immigration policy. There's a lot of moving parts. How does that impact your outlook for this US economy?
Well, good morning, Happy holidays to both, and thank you very much for having me on. You know, this is a it's that key word uncertainty. You know, expect the unexpected. There is so much unknowns as we're heading into the new year with the new Trump administration. He's already talked about what he plans to do with everything that he wants to do on is to do list, whether or not he's going to be checking them all off on
day one. That would be very interesting to see. But certainly tariffs are the key or is the key measure that he's planning to play out to roll out. He's already talking about the ten twenty percent blanket tariff on all three trillion dollars worth of goods coming into the US, and that will be already significant compared to what he did back in twenty seventeen, which was you know, targeted tariffs on about three hundred billion dollars worth of goods.
So this is a bigger impact. And of course twenty five percent tariffs on Canada and Mexico, an extra ten percent on China. Maybe this is on top of the sixty percent, So I'm not sure what the figure is going to be. So there's a lot of uncertainy I think heading into into this new year. But terrorists is
certainly or certainly the key factor. Taxes, corporate tax, targeted tax cuts, I think, which would be great for corporate America, and of course different tax relief measures for those who are you know, are reading overtime, social security, and of course all those other other issues like the biggest de quotation effort ever in the US, cleaning out all the extra stuff that you know doesn't need to be spent. That's where doage comes in. So a lot of things
on his to do list. But how that is going to play out remains to be seen, and I think this is why we're expecting a lot of uncertainty as we start the new year.
The latest estimate for the Atlanta Fed's GDP NOW model for the current fourth quarter actually above three percent Paul, And of course we were talking about earlier the economic growth projections. If you look at the ECFC function and the terminal that can pull it up for you on
a quarterly as well as an annual basis. So Jennifer, I'm curious because year after year, especially coming out of COVID, there's so much doom and gloom even for the expectations in twenty twenty three, twenty twenty four that a lot of economists ended up being on the wrong side of that and getting it wrong. So what are people getting
wrong about next year? Because I feel like once we wrap up a year and look ahead, we always have these kind of anticipations that never quite come to fruition when you look at year out.
That is true, and we have been I think on too low on our growth expectations. We were never in the recession camp, thankfully, but we're you know, I think everyone was always too low on their growth expectations. We've got about about two and a quarter percent, just under two and a half percent pencils in for next year. Where I think where the myths has been is certainly from the US consumer. The US consumer continues to be the big driving force of the the broader US economy.
That and of course over the past few years was all the business investment and government spending as well. Helped with the Chips Act in the IRA that's certainly helped boost the economy of the US consumer continues to surprise, and we should always say, never ever underestimate the US consumer. Just the last November data for personal income and spending showed continuing spending. It wasn't exactly super strong, but it
was still spent. They were still spending. And also in those areas that if things are really tough and be spending on like regret, recreational goods and services, recreational vehicles, that area, there's a bit of a pullback on dining out, hotel stays, but overall still decent consumer spending still decent. Consumer wages savings raat just over four percent is still pretty decent as well. So I think that's where the
mistake has been. So we'll have to see how things go in the coming year, just given that we are expecting inflation to take higher.
So the dollar just in this last three months is up, you know, nearly seven percent. And for the tom Kings of the world that like the you know, vacation over in Rome or Parish or London, it's a good thing. What do you make of this strong dollar, Jennifer, So the strong.
Dollar has been at the beginning, it was a function I think of the stronger US e climbing like throughout twenty twenty four. The mistake has I mean, I think everyone has already underestimated the global growth as well. I don't think there was one G seven country that had back to back negative GDP reading, so nobody was in an official recession. Things got revised a lot, which I felt was very interesting. It's just on the data front.
But everyone ended up stronger I think than expected, especially in the US, So a lot of that US dollar strength was reflection of much stronger US strength relative to everyone else, and now over the last few months, it's been a reflection of I guess at FED expectations, at least over the last few weeks, in particular, just given how everyone's expecting the FED to not cut as quickly as originally had anticipation, just given again incoming Tearo's potential
income impact on inflation, and now with the last dot plot showing only fifty bases points of great cuts penciled in, which by the way, I think m's sort of have to take with a grain of salt. That certainly put a little little new fire underneath the green back, and that's been very, very difficult to make calls good calls
on the currency market, just given all this volatility. So the FED not cutting as quickly or as much, everyone else seeming to face lower growth as we're entering the new year, and more rate cuts coming like from the ECB, from the Bank of England, maybe not the Bake of Japan. The RBA is probably going to start cutting rates in February. That is going to also lower their weekend their currencies and put more strengths underneath the US dollar.
I'm curious as the calendar flips to twenty twenty five, the Fed of COURUS will have new voters. Who are you keeping a close eye on for as we get closer to what people are arguing debatably that neutral rate. Who do you think is more of a close callumn to cents here?
Well, you know what I think. I think I'm going to go back to just to see what i think. Fedhair pal is going to be the key FED policy maker of course, that makes the key decisions, and he's whatever he says sort of reflects I think the broader consensus. So I think it's just I'm going to keep listening to what the FED chair says. I mean, everyone else has their own opinion, everyone has their own dots. But I think ultimately it's going to be up to the
FED chair to make that deciding factor. So I'm just going to go straight to the box and say it's going to be feed schair Pal.
Jennifer, you're up there in Toronto. How are our good friends in Canada thinking about this new administration? Maybe some terroriffs because last I checked, we do a lot of trading with you guys up there.
Yes, the US is our biggest trading partner. Seventy five percent of our experts head down to the US. So obviously the you know, we are we were already pretty nervous because the US MCA is upFrom renegotiation in May of twenty twenty six, so we already knew that there
is something going on on that front. And now with the new threats of a twenty five percent tariff on both of the US's trading partners from that deal, from both Mexico and Canada obviously makes us very nervous and we're going to have to see if we are going to be able to do some you know, decent negotiations that will hopefully, you know, soften the blow and hopefully we won't see this play out even if it's you know, it's also going to depend on how long if he
does do what he threatens, which is the twenty five percent tariff on Canadian imports, how long that's going to stick around for and you know, hopefully it's not going to come to fruition, but they will be very bad news for a Canadian economy. But we've got a two percent penciled in for Canadian GDP growth this year or for next year at least. Ray kusers still have had a good impact, but all that could be erased if we do see a blanket twenty five percent tear up on all Canadian imports.
All right, we'll stay on top of that for everyone. Jenniferly, Senior e comress Managing director at Bimal Capital Markets. You appreciate getting some of your time