Slow pace of growth to continue for five years

“This is a normal trend that we see as deleveraging periods after a major financial crisis usually take a decade to recover,” said Shilling. “The current slow growth is present because the deleveraging is just so massive that it has overcome all the monetary and fiscal stimuli that has been generated in reaction to it.”

And Martin Barnes, Vancouver-based chief economist at BCA Research in Montreal, noted: “Economic activity is well below trend. You will feel better in a year’s time about the economic outlook but you still won’t feel great. It was a brutal recession and it has been a lousy recovery so we are well below where we should be in a more normal circumstance.”

Barnes predicted the pace of global growth will improve modestly with the U.S and Canadian economies growing by 3% in 2014, while Shilling said the U.S. economy will continue to see slow growth with real gross domestic product expansion at 2% for the duration of the deleveraging period.

Here are the economists’ views on other economic issues:

> Inflation
Despite the amount of stimulus being provided by governments, rates of inflation are not increasing, and wage increases continue to be low.

“Inflation will continue to stay muted for some time,” says Barnes. “I don’t see the inflation rate picking up without a stronger economy and if we get a stronger economy then the central banks won’t be too far behind in dealing with it.

In addition, the forecasters do not see interest rates rising for quite some time, saying the federal fund forecast of 2% in 2016 may be a bit too optimistic.

> Bonds
Although real yields are back in positive territory after dipping into negative numbers, Barnes says by historical standards they are still well below normal levels of around 2%.

“Directionally, we should expect bond yields to go up from here,” says Barnes. “But 10-year bond yields will still be less than 3.5% in a year’s time.”

> Canadian Dollar
The value of the Canadian dollar (C$) will start to rise and will be close to parity with the U.S. dollar within the next year on the back of strong commodity prices, said Barnes.

“The C$ is tied to commodity prices — so if you are bullish on the commodity prices then you can be bullish on the C$,” said Barnes. “If the economy is going to pick up then there is reason to be positive in commodity prices, at least for a while. “

> Housing
The U.S housing market has picked up slightly. However, it is the renters who are flocking the housing market in the U.S, said Shilling, not first time homebuyers.

“Those are the people who buy starter homes and can move up the housing ladder — but they are absent right now.”

There is also an increase in the percentage of 25-34 year olds who remain living in their parent’s household. Approximately 13.6% of this group is now living at their parent’s home, vs 10% in 2003. And home ownership among young adults is on the decline. About 36.7% of adults aged 35 and younger owned homes in 2012, vs. 42% in 2003.

“These individuals are now worried about their job security, have higher amount of student loans, [and] there are stricter credit standards today,” said Shilling.

> Equities
Total equity returns could be around 8% in the next 12 months, said Barnes.

“We’ve been desperate for a correction all year but the market hasn’t given us one,” he said. “The market is not cheap but also not so expensive that there is a constraint on prices moving up.”