Housing in Calgary still going strong!

Multi-time buyers will be the biggest force in the market

The predicted slump in Canada’s housing market has failed to materialize. Apart from two areas of acute weakness – Toronto’s condo market and Vancouver in general – there has been an orderly retreat.

While the December 2012 figures in Toronto, for example, showed a 20% drop in sales compared to the year before, the January 2013 numbers show a modest 1.3% decline year-over-year. At the same time prices for a single family home rose 4.3% year-over-year. Elsewhere in the country, away from the Toronto and Vancouver volatility, Calgary saw sales climb 15% while Edmonton was up 3%.

Interestingly homes in the $1 million-dollar-plus range saw a 3.5% increase sales increase in January. This would back-up recent survey results from Re/Max Realty that indicate a shift in the buyers who are driving the market. The survey suggests that second-time and multi-time buyers will be the biggest force in the market with some 70% being serious about making a move in the next two years. First time buyers made-up about 30% of those who’d buy in the same time period.

Prospective homebuyers in Alberta confident in the market


22% are first-time purchasers in the next two years

CALGARY — A national survey of prospective homebuyers, who intend to buy within the next 24 months, indicates nearly one-in-five in Alberta are single people.

The RE/MAX Canadian Homebuying Trends Survey 2013-2014, released on Tuesday, said 42 per cent are couples and 38 per cent are families.

The report also indicated 22 per cent of them are first-time buyers, 32 per cent second-time buyers and 47 per cent multi-time buyers.

“Today’s real estate consumer is more experienced and financially prudent than in the past,” said Elton Ash, regional executive vice-president with RE/MAX of Western Canada. “Recent global events — in concert with new mortgage finance rules — have fuelled a more conservative mindset that will serve Canadians well moving forward. It seems the lessons of excess are being heeded.”

In Alberta, the survey found that prospective homebuyers fell in the following age categories — 18 per cent are 55 plus years old; 40 per cent are 18-34 years old; and 42 per cent are 35-54 years old.

The survey said 50 per cent of them are looking to buy in an urban area, 24 per cent suburban and 10 per cent rural.

The vast majority intend to buy in the $250,000 to $500,000 price category at 58 per cent, followed by 21 per cent in the under $250,000 range and 17 per cent in the $500,000 to $1 million range.

The survey also found that 32 per cent of Albertans intend to have a down payment of more than 30 per cent.

“Serious equity gains have bolstered the level of down payment homeowners can put forth,” said Ash. “As a result, they’re clearly in a stronger financial position.”

The survey also said that 50 per cent of Albertans believe housing values will rise in their area while 34 per cent believe they will remain the same. Seven per cent believe housing values will decline.

“Canadians remain confident in the future of housing — and this was demonstrated nationally across all demographics — regardless of income, gender, age, or location,” said Ash. “The level of enthusiasm bodes well, as a substantial barometer of market health. The outlook is positive.”


Twitter: MTone123

© Copyright (c) The Calgary Herald

Calgary house prices forecast to increase 2.5% this year!

Calgary house prices forecast to increase 2.5% this year: Royal LePage

Most of Canada expecting price appreciation to flatten

CALGARY — By the end of 2013, average house prices in Calgary are expected to increase 2.5 per cent, while most of Canada is expecting price appreciation to flatten, according to the Royal LePage House Price Survey and Markey Survey Forecast released Tuesday.

And while Calgary will see a nine per cent hike in sales activity this year over last year, nationally the resale housing market will experience a decline of five per cent.

Ted Zaharko, broker and owner of Royal LePage Foothills, said market activity in Calgary is completely dependent on whether sellers bring listings to market since the buyer demand is there to have strong sales in the spring.

“Market activity could increase significantly in 2013, however, the listings are not materializing,” he said. “A possible solution is that buyers who wanted to sell after 2007, when the market softened, may be holding on to their properties for better market conditions. If those units come online, it may provide some additional inventory for buyers.”

By the end of 2013, Royal LePage expects the average national home price to be 1.0 per cent higher compared to 2012.

In the fourth quarter of 2012, detached bungalows in Calgary posted the largest year-over-year price increases, rising 5.8 per cent to $440,600. Prices for standard two-storey homes rose 4.8 per cent year-over-year to $434,667, while prices for standard condominiums increased slightly by 0.6 per cent year-over-year to $250,078.

Nationally, the average price of a home increased year-over-year between 2.0 and 4.0 per cent in the fourth quarter of 2012. In the fourth quarter, standard two-storey homes rose 4.0 per cent year-over-year to $390,444, while detached bungalows increased 3.6 per cent to $356,790. National average prices for standard condominiums increased 2.0 per cent to $239,374.

“Employment created by the oilpatch continues to drive migration to Calgary and it’s difficult for this group to even find rental units let alone their dream home,” said Zaharko. “Detached bungalows performed the strongest because they are the preferred housing type for Baby Boomers who are typically looking to downsize the size of their home, but not necessarily the price.”

Compared with 2012, fewer homes are expected to trade hands in the first half of 2013 throughout Canada, which should slow the pace of home price growth.

Phil Soper, president and chief executive of Royal LePage, said the national housing market is well into a cyclical correction and that fears of a sharp or drawn out collapse are unwarranted. Home prices have risen faster than salaries and wages for three years and the market requires time to adjust, he said.

“A helpful comparison is to reflect on the beginning of 2009 when the country was in the grips of a very grim global recession,” said Soper. “It was a bleak time, with plunging consumer confidence driven by rapidly spreading unemployment. The meltdown of the American banking and finance sector had sent their housing market into a downward spiral and our own real estate market saw home sale transactions fall dramatically.

“Price appreciation in Canada ground to a halt, but home values dropped only slightly. With economic fundamentals such as employment levels improving, we expect this cyclical correction to be short-lived.”


Twitter: MTone123

© Copyright (c) The Calgary Herald


Tax Freedom Day was June 11th!

First posted: Tuesday, June 12, 2012 06:46 PM MDT | Updated: Tuesday, June 12, 2012 07:59 PM MDT

The federal government expects a deficit of $21 billion this year. (Chris Roussakis/QMI Agency)


If you’ve ever tried to calculate all the taxes you pay in a year to all levels of government, you’ve probably given up somewhere along the way.

While most of us can easily decipher how much income tax we pay — it’s right there on our tax returns — it’s a lot more difficult to gauge how much we pay in not-so-obvious taxes.

For Canadian families to reasonably estimate their total tax bill, they’d have to add up a dizzying array of taxes, including visible ones like income taxes, sales taxes, social security taxes and property taxes, as well as hidden ones like profit taxes, gas taxes, alcohol taxes … and the list goes on.

This is no easy task.

That’s why the Fraser Institute calculates Tax Freedom Day every year.

Tax Freedom Day is an easy-to-understand measure of the total tax burden imposed on Canadian families by federal, provincial and local governments.

If Canadians were required to pay all taxes up front, they would have to give governments each and every dollar they earned prior to Tax Freedom Day.

In 2012, we estimate the average Canadian family consisting of two or more people will earn $94,258 and pay a total tax bill of $41,627, or 44.2% of income.

Tax Freedom Day fell on Monday, June 11 this year.

From then on, Canadians start working for themselves and their families, rather than the government.

While that alone is reason to celebrate, you may want to keep the champagne on ice because the good news ends there.

Tax Freedom Day arrives one day later than last year. There are two main reasons.

First, several Canadian governments have raised taxes, from increased Employment Insurance premiums at the federal level, to a higher provincial sales tax in Quebec, to increased health taxes in B.C. and a new tax on high earners in Ontario.

Second, Canada’s economy is still recovering from the recession and as incomes continue to increase, a family’s tax burden increases to a greater extent because of Canada’s progressive tax system, which imposes higher taxes as Canadians earn more money.

For instance, the top fifth of income earners face an average total tax burden amounting to 54% of income, while the bottom fifth face an average burden of 18%.

There’s more bad news.

The federal and almost all provincial governments are running deficits this year. (Ottawa expects a deficit of $21 billion, while the provinces cumulatively expect deficits amounting to $20 billion).

According to our calculations, Tax Freedom Day would come 12 days later this year (June 23) if Canadian governments covered their current spending with even greater tax increases, instead of borrowing the shortfall as debt.

It’s important to remember budget deficits incurred by Ottawa and the provinces must one day be paid for by taxes.

With the recent significant growth in government debt across the country, Tax Freedom Day could come later in the future. By kicking today’s debt down the road, governments are passing on the burden of repayment to young Canadian families.

It is ultimately up to Canadians to decide whether June 11 is an acceptable Tax Freedom Day.

On that note, happy Tax Freedom Day, although maybe “happy” isn’t the right word.

Palacios and Lammam are economists with the Fraser Institute and co-authors of Canadians Celebrate Tax Freedom Day on June 11, 2012, available at www.fraserinstitute.org

Why We Know: Prime should stay the same for 2012 @ 3%

Below is a sample of a very boring statement about a prediction on why Prime should stay at 3% for the rest of 2012. Prime and fixed rates “tend” to move together but not always and fixed rates went up on March 27th due to other factors. 

All this really says is …. let us watch this “raw mortgage data” for you. This is all we do all day and why we are able to give you the best, unbiased advice on mortgages we can.

Canadian business sentiment brightens: BoC survey

Mon Apr 9, 2012 2:26pm EDT

By Louise Egan

OTTAWA (Reuters) – Canadian business sentiment on future sales rose to its highest level in two years in the first quarter, and companies also expect to increase investment and hire more staff, the Bank of Canada’s spring survey showed on Monday.

The survey also found that the percentage of companies that see the inflation rate at between 2 and 3 percent, the upper end of the central bank’s 1-3 percent target range, rose to 63 percent from 51 percent, the most since 2007.

However, other indicators showed little pressure on inflation. Businesses reported some easing of capacity pressures, contrary to analysts’ expectations, and slightly fewer had labor shortages.

The percentage reporting that they would have some, or significant, difficulty meeting an unexpected increase in demand fell to 39 percent from 46 percent in the bank’s winter survey.

“Some firms, notably those in the services sector, reported that they could accommodate higher demand because of earlier investments to expand capacity or because they have flexibility in adjusting the scale of their operations,” the bank said in its release.

Market players watch the survey data for clues about the Bank of Canada’s next interest rate move. The bank has sounded a bit more hawkish in recent statements, prompting talk of a rate hike this year rather than next, as most analysts have forecast.

“Overall, the firmer growth expectations fit well with other recent surveys, but the tame inflation readings should leave the Bank of Canada in no hurry to start tightening just yet,” said Avery Shenfeld, chief economist at CIBC World Markets.

While business sentiment on inflation and sales could add pressure on the bank to raise rates, the easing of capacity pressures suggests there is no rush to do so.

The upbeat view on sales was the most marked change in the survey, in which the bank conducted interviews with senior managers at 100 companies from February 21 to March 15.

Fifty-eight percent said they expected sales to grow at a faster pace in the next year than in the past year, versus 37 percent who expected that in the December-January period.

The balance of opinion – the percentage of companies expecting faster growth minus the percentage expecting slower growth – rose to 22 from -4 previously. That was the best showing since the first quarter of 2010.

The bank’s next rate announcement is April 17, followed by its quarterly economic projections the next day.

It has held its key rate unchanged since at 1.0 percent since September 2010, and primary securities dealers forecast, on average, no change until the third quarter of 2013.

Overnight index swaps, which trade based on expectations for the policy rate, show traders slightly lowered their bets of a possible rate hike this year following the release of the Bank of Canada’s surveys.

A separate survey of senior loan officers showed overall lending conditions eased for businesses in the first quarter.

(Reporting By Louise Egan; Editing by Peter Galloway and Janet Guttsman)

© Thomson Reuters 2012 All rights reserved.

Alberta job growth outpacing Canada: Statistics Canada

This is great news – but a bit old as everyone in Alberta is aware of their friends getting great jobs, without interviews, for more than they were expecting! And all those people are buying homes which will support the prices.

3.9% jump in employment in the past year

CALGARY — Alberta had the highest rate of employment growth in Canada in the past year.

Statistics Canada reported Friday that the province’s unemployment rate remained at 4.9 per cent in January, which was the lowest in the country, and Alberta’s pace of employment growth was 3.9 per cent from January 2011, creating 79,500 jobs.

“I’m finding the job search is taking less time than it would normally take. A lot of my clients are finding work much quicker,” said Eileen Dooley, career coach and team lead at Cam McRae Consulting, an outplacement and career coaching agency in Calgary. “Usually a job search can take anywhere from three to six, eight months. Averaging about two I’m seeing now. Definitely a good time.

“So many companies are hiring. And they’re hiring like hundreds and some thousands over the next couple of years in all different areas. It’s not just technical. It’s not just engineering. It’s administrative. It’s everywhere. So this is a really good time to look for work. It’s a really good time if you’re not happy with your job. If you’re thinking of moving to something else, now is a good time to do it.”

In the past year, the unemployment rate in the Calgary census metropolitan area has dipped from 5.9 per cent in January 2011 to 5.0 per cent in January 2012. Employment growth of 4.9 per cent in the region has created 34,400 more jobs than a year ago.

Nationally, the unemployment rate rose to 7.6 per cent in January from 7.5 per cent the month before. Employment was virtually unchanged in January across Canada rising by 129,000 or 0.7 per cent from the year before.

“While other regions are simply treading water, Alberta seems to be hanging on to its hiring momentum. We expect this trend to continue throughout 2012,” said TD Economics.

Nationally, employment was flat on a monthly basis with only 2,300 jobs created.

Douglas Porter, deputy chief economist with BMO Capital Markets, said that at a national level the employment report reinforces the point that Canada’s job creation engine is cooling markedly.

“There is no one single factor to explain the softening trend, although the sustained decline in finance, insurance and real estate is particularly notable. Previously strong sectors, such as construction and public administration, are also fading. With domestic drivers now gearing down, the job market needs the U.S. economy to gather some serious momentum to keep the recovery on track,” he said.


Unemployment rates in January by province:

Alberta 4.9%

Newfoundland and Labrador 13.5%

Prince Edward Island 12.2%

Nova Scotia 8.4%

New Brunswick 9.5%

Quebec 8.4%

Ontario 8.1%

Manitoba 5.4%

Saskatchewan 5.0%

British Columbia 6.9%

Canada 7.6%

Source: Statistics Canada

Canada’s East-West economic divide deepens

As the divide gets greater the West continually does better. Alberta is the best place to live and do business in North America right now. That creates home demand and supports home prices.

This is from the Globe and Mail:

Saskatoon will lead the country’s economic growth this year, along with the other resource-rich cities of Calgary, Edmonton and Regina.

The Conference Board of Canada’s annual metropolitan outlook of 27 cities also sees a deepening economic divide between the West and the rest. Growth in factory-heavy central Canada will be tepid and St. John’s, which had led the country’s growth in the prior two years, will tumble to the bottom of its economic growth ranking.

For this year, Saskatoon will tally the strongest expansion, pegged at 4 per cent. The country as a whole is seen growing a modest 2.4 per cent in the year.

Despite global economic turmoil, “high prices for agricultural products, minerals and oil are likely to continue,” said Mario Lefebvre, director of the board’s centre for municipal studies. “Canada’s prairie cities will reap the benefits of this global demand for commodities.”

Saskatoon’s growth this year, underpinned by a resource boom in the province, is actually a slowdown from an estimated 4.6-per-cent expansion last year. Still, the city’s jobless rate of 5.4 per cent is well below the national average, and the jobs boom has meant international migration to Saskatchewan in the third quarter of 2011 hit its highest level since 1971.

Calgary, meantime, is seen expanding 3.6 per cent this year. In 2013, the city is forecast to lead all Canadian cities with growth of 4.9 per cent.

In Edmonton, job growth of nearly 40,000 new positions last year alone is seen supporting domestic demand. A strong energy sector will drive growth of 3.4 per cent this year. Regina’s growth is pegged at 2.9 per cent.

It’s a different story elsewhere. “The outlook is not as promising for cities in central and eastern Canada,” Mr. Lefebvre said. “The uncertain global economy, a continued slow recovery in the manufacturing sector and the windup of fiscal stimulus introduced by governments in recent years will hamper overall economic growth.”

Ontario will be hobbled by a slow U.S. recovery, strong Canadian dollar and government austerity. Manufacturing, meantime, remains well below pre-recession levels.

Belt-tightening in Ottawa will weigh on that city’s economy. Public administration employment tumbled 2 per cent last year, and is forecast to slide another 3.6 per cent this year — a loss of 9,000 jobs over these two years. As result, real GDP growth is pegged at just 1.8 per cent this year.

Toronto’s economy is forecast to grow 2.6 per cent this year, while Hamilton, London, Kingston and Niagara will all see below-average growth.

In Quebec, Montreal’s economy will grow a modest 2 per cent this year as a third straight year of growth in the manufacturing sector helps offset an expected downturn in construction. Quebec City is forecast to expand 2.1 per cent.

Saguenay’s economy will expand by 1.5 per cent this year, its best performance since 2002. The manufacturing sector is expected to resume growth this, boosting employment in the sector.

“The brightest development in Saguenay has to be the return of positive population growth in both 2010 and 2011,” the report said. “As a result, domestic demand has been stronger and should continue to expand in 2012, leading to an almost 2-per-cent rise in overall services sector output.”

St. John’s is expected to see the country’s weakest growth, at just 0.7 per cent this year.

“After two spectacular years, the St. John’s economy has limited growth prospects this year,” the report said, amid a booming construction sector. Looking ahead, “waning offshore oil production wells, fewer housing starts, and the end of the infrastructure spending program will weaken economic growth.”

In B.C., Vancouver will grow 2.6 per cent amid a decline in residential construction and growth in the services sector. Victoria will grow a scant 1.9 per cent.

Variable mortgage rates are no longer as attractive

Garry Marr  Dec 17, 2011 –

The days of getting any sort of discount on a variable rate mortgage are over — again.

Those mortgages, tied to prime, have become a mainstay of the housing market. And, why not? While prime has stood at 3% at most major financial institutions, the discount has meant a rate as low as 2.1% at times this year.

However, in the last 10 days what was left of that discount — it had already been shrinking for weeks — has disappeared at all of the major banks.

You have to head back to the credit crisis of 2008 to find a similar period where the discount disappeared. At the time, consumers were paying a 100 basis point premium above prime for the privilege of a floating rate.

The new reality is expected to reshape the mortgage market in the coming months, reversing a strong trend that had seen consumers roll the dice on interest rates, confident in the belief they were not going up.

How confident were they? Well the Canadian Association of Accredited Mortgage Professionals says 37% of consumers opted for variable rate mortgages over the last year, bringing the total percentage of those with a floating rate to 31%.

To be clear, anybody with an existing mortgage is unaffected until they renew. Why would you want to renew early or lock in if your present rate is 2.1%?

“If you have three and half years left on that term you are not going to give it up,” said Vince Gaetano, of Monster Mortgage, adding you can borrow at 3.29% if you lock in for five years or 3.09% for four years. “The last decade I’ve been telling people to go variable but I’m saying go fixed [for new clients].”

The other key advantage for a term five years or longer is you get to use the rate on your contract to qualify for a mortgage as opposed to the current five-year posted rate of 5.39%. The difference means you’ll qualify for a larger loan by locking in.

“People are being heavily compelled to lock in,” says Doug Porter, deputy chief economist with the Bank of Montreal, in talking about the negligible spread between short and long-term money.

Will Dunning, an economist CAAMP, said his group was not surveying consumers the last time short-term rates climbed like this so he can’t be sure what the reaction will be this time around.

Meanwhile Farhaneh Haque, director of mortgage advice and real estate secured lending with TD Canada, says she’s already seeing the effects as people shy away from variable. Her financial institution is not offering any discount at all on prime these days, a move necessitated by rising borrowing costs for the bank.

“I think there is a whole different conversation that we are having now than we were a few years ago,” says Ms. Haque, adding at today’s rates fixed products have their own attraction. “The stability it offers with a low rate makes it more affordable.”

While Benjamin Tal, deputy chief economist with CIBC World Markets, doesn’t think variable rates premiums will rise above prime, the drop in the discount we’ve seen in the last few months could impact on the housing market.

In particular, the condominium market seems the most vulnerable as investors trying to stay cash flow positive — virtually impossible in Toronto’s current condo market based on rental rates and the costs of carrying a mortgage with a 25% down payment. Investors have opted for the cheaper variable rate products in an attempt to keep costs down as they waited for a payday based on capital appreciation.

“You know 80 basis points below didn’t make much sense either. I think variable at prime is the new normal. They won’t go higher unless we get a new crisis,” says Mr. Tal, adding banks were not making much money on variable with the steep discounts so they backed away from them.

Mr. Tal’s information points to the record high for variable rate products being driven by investors and he thinks the new rates will hit that segment of the market

“I think you will see an impact on the investor market in the next six months. The shift hasn’t happened yet,” says Mr. Tal.

ING now has the evil & dirty collateral mortgage – like TD and RBC

Also see the article from earlier this year about TD and RBC offering the collateral mortgage – which is an “IOU” for every single $ you have. (http://blog.markherman.ca/2011/05/09/why-you-do-not-want-a-collateral-mortgage-from-td-or-rbc/ ) Essentially YOU give them the right to sue YOU into bankruptcy if they need to repo your house. All other standard mortgages in Alberta only allow the bank to take the house back. Another reason to use a broker that knows what they are doing. Do you really want to put it all on the line for no reason?

ING Direct goes collateral charge

ING Direct will move this month to register all new mortgages as collateral charge, following on the heels of TD and other lenders.

The change is set to take effect on Dec. 10, 2011, with the bank to make a formal announcement to the broker channel later this week.

Canada’s economy surges ahead

There is good news out there for the Canadian economy and home buying. Here is some below.

Christine Dobby Nov 30, 2011 – 7:06 PM ET

The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.

Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.

Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.

The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.

Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.

But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.

Here’s what stood out from Wednesday’s report:


The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.

Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.

But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”

As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.


Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.

“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.

The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.

“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.

He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.


Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.

Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.

“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.


Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.

“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.

He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”


The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.

“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.