US retail sales grew at a healthy pace in March, increasing 0.8 per cent (0.7 per cent less car and vehicle sales) from February, nearly triple the consensus forecast. This is a welcome sign following a disappointing March payrolls report that the US recovery is still on track. Indeed, US GDP is on pace to grow a better than expected 2.5 to 3 per cent in the first quarter. That said, there are still a number of hurdles on the horizon that the US will need to clear, including dramatic fiscal tightening and a potential replay of last year's perilous debt-ceiling showdown, in order to keep the economy on track and it remains to be seen whether the political will exists to confront these challenges.

Of course, an uncertain US economy translates to an uncertain BC economy through trade, tourism, and financial channels. While US growth may be improved in 2012 from last year's anemic 1.7 per cent pace, it will remain well below potential and will therefore constrain economic growth in BC this year.