US real GDP grew at an annualized rate of 3.2% in the fourth quarter of 2010, and 2.9% for the entire 2010. This was in contrast to a decrease of 2.6% in 2009, mainly driven by strong consumer spending. In its January 2011 statement, the US Fed stated that “the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.” US Unemployment was 9.0% in the beginning of February 2011, far higher than the FED’s “full employment” target. As a result the FED has continued to expand its holdings of securities in a purchase program defined in November 2010, by purchasing an additional $600 billion of longer term Treasury securities by the end of the second quarter of 2011, while maintaining the federal funds rate at 0-0.25%.

The Canadian economy had a strong first quarter, posting an annualized growth rate of real GDP of 5.6%, but dropped to 2.3% in the second quarter and 1% in the third. Expectations are that GDP will grow by 2.3% in the fourth quarter. Although these growth rates would suggest a tightening in monetary policy, economists are saying that it is unlikely to prompt the Bank of Canada to raise interest rates before the summer of 2011, which currently stand at 1%.

China’s GDP has continued to grow at an impressive rate, although it has been decreasing throughout 2010. In the third quarter of 2010, it grew at an annualized rate of 9.6%, down from 11.9% at the beginning of the year. This growth is the main source of China’s huge consumption of raw materials including energy and the components of steel. Despite this aggressive growth, China has recently begun to tighten its monetary policy to protect itself from inflation, mainly by raising reserve requirements at its banks.