I think the economy is probably performing a little bit better than people had anticipated as well.

The unemployment rate stood at 6.1 per cent in November – the lowest rate since mid-2001. The return to higher growth in 2006 should allow the annual unemployment rate to decline slightly in that year.

I think they would want to be very careful not to run a deficit. . ,it would look terrible.

Retail sales — a little disappointing when you look outside autos. All in all, it suggests moderate growth in consumer spending.

A very solid number, indicating that manufacturing is continuing to expand.

It (the GST cut) is their big initiative and it doesn’t leave them a lot of room to do other things.

The Fed has had a fairly sanguine view on inflation and this (CPI report) will certainly confirm that view. It continues to give the Fed lots of room to maneuver,

These numbers will not change the Fed’s thinking. The Fed is on hold for the time being.

We expect the overnight rate to reach 4 per cent by April, and 4.5 per cent by the fall of 2006.

The No. ‘ 1 threat for Canada going forward is the U.S. dollar.

It really depends on where we see commodity prices moving and if commodity prices remain high, we can easily see the Canadian dollar break 90 cents (U.S.) over the course of this year.

We are seeing the prices-paid component getting up there, a fairly strong number, which I think will likely heighten the Fed’s concern on the inflation front,

And that caused the U.S. dollar to weaken off against a range of currencies, including the Canadian dollar.

I think the pass-through has been much quicker than it has in the past.

When you take (the report) alongside all the other indicators, particularly the purchasing managers’ survey, it confirms the economy is indeed in recovery.

For consumer spending to be sustained at any meaningful pace you need a more substantial improvement in payrolls.

We expect further declines in 2006 and subsequent years as pent-up demand is fulfilled and as interest rates rise over the medium term.

Next year, the westward tilt is expected to continue, although Newfoundland and Labrador will be the exception to the rule as major developments in the mining and oil sectors ramp up to full production.