Winnipeg Free Press - PRINT EDITION

Economists mixed on Obama's re-election

  • Print

TORONTO -- Canada's economists are casting a cautious eye toward the re-election of U.S. President Barack Obama as his adminstration mulls a contentious pipeline and U.S. lawmakers face a potential fiscal crisis that could stall Canadian growth.

The election results Tuesday night generated another round of questions about whether the U.S. is a step closer to putting its fiscal house in order.

The country is heading toward a critical precipice, the so-called fiscal cliff, which would be reached if gridlock in Washington prevents a deal to extend about $600 billion in tax cuts and spending beyond Dec. 31.

Some, including Canada's Finance Minister Jim Flaherty, say if those measures are not extended, the U.S. economy could sink back into recession, which would ultimately hurt Canada as the U.S. is the country's biggest trading partner.

Also still uncertain is the future of TransCanada's contentious Keystone XL pipeline that would connect oilsands crude to U.S. markets, and whether the shaky U.S. economy could weigh further on exports of Canadian goods.

"There will be a period of unease as we now turn from the politicking to the heavy lifting," said Paul Taylor, chief investment officer of BMO Asset Management Inc. in a conference call.

"I think the real question is the extent to which the president will be able to reach across the aisle to, in a bipartisan way, deal with the very heavy lifting related to the fiscal cliff."

Many businesses have been sitting on piles of cash and reluctant to make capital investments or hire new employees as they await the outcome of the fiscal cliff scenario and for some economic certainty.

Concerns include whether Obama can draft, and gain support, for an alternative budget plan before hitting the cliff at the end of the year.

"The Republicans' retention of the House, the Democrats the Senate, means Obama will face the same fractured landscape that impeded the legislative progress during the last two years of his term," said CIBC World Markets senior economist Peter Buchanan.

"That leaves markets with significant policy uncertainty leading into the fiscal cliff and debt ceiling discussions."

While a Romney win would have almost certainly ensured the startup of Calgary-based TransCanada's (TSX:TRP) Keystone pipeline, some observers have suggested that Obama will be more critical of the project.

The president has already delayed a final decision on the pipeline after Republicans sought to force an ultimatum on the State Department, prompting the Obama administration to reject the US$7.6-billion Alberta-to-Texas pipeline in its entirety in February.

The State Department stressed the rejection was due to the fact that it would not have had enough time to properly weigh the new Nebraska route, not because of the merits of the pipeline itself. It left the door open for TransCanada to apply for a new permit, which it did in May.

Leaders in the oil and gas industry said Wednesday they are confident Obama won't hold the project down.

TransCanada issued a statement saying it still believes it will be approved.

"The facts that support the approval of Keystone XL remain the same -- and the need for this pipeline grows even stronger the longer its approval is delayed," the company said.

And Enbridge (TSX:ENB) CEO Al Monaco told investors on a conference call that he doesn't see much of an impact on the oil and gas industry from the outcome of the leadership race.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition November 8, 2012 B9

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Inside peek at Real Pirates, new Manitoba Museum exhibit

View more like this

Photo Store Gallery

  • MIKE DEAL / WINNIPEG FREE PRESS 060711 Chris Pedersen breeds Monarch butterflies in his back yard in East Selkirk watching as it transforms from the Larva or caterpillar through the Chrysalis stage to an adult Monarch. Here an adult Monarch within an hour of it emerging from the Chrysalis which can be seen underneath it.
  • Marc Gallant/Winnipeg Free Press. Gardening Column- Assiniboine Park English Garden. July 19, 2002.

View More Gallery Photos

Poll

Has the attack on Parliament hill shaken your faith in Canada's ability to protect its citizens from terrorist threats?

View Results

View Related Story

Ads by Google