Key Takeaways:
- Canada’s economic situation is similar to the United States.
- The latest CPI report shows a strained economy but with slight improvements.
- If the housing market can turn around next year, citizens may get some needed financial relief.
WISCONSIN (CoinChapter.com) — The US Federal Reserve is in the news making daily headlines due to aggressive interest rate hikes. But what’s going on with its neighbor, Canada?
Canada released the latest Consumer Price Index (CPI) report last week. Unfortunately, the economy is not so rosy, although the release did show a third consecutive monthly decline. The CPI fell to 6.9% from August data of 7%.
In addition to the inflation rate, the Bank of Canada (BOC) released a Core CPI reading of 6%, higher than the 5.8% print from August. A key number noted within the Core is an 11.4% rise in food prices; that was the fastest year-over-year gain since August of 1981.
Moderate Recession Projected for 2023
A moderate recession is expected as soon as the first quarter of next year. Like the US, high prices and interest rates will weigh the average household’s purchasing power. A 5.2% unemployment rate is higher than the Canadian government would like, but the good news is that analysts expect the number to drop.
Canada has a surplus of job openings which should protect against a big spike in a higher unemployment rate – that is the good news. The bad news is a shortage of workers; employment is down 92,000 over the last four months.
In light of these labor market challenges, it’s crucial for businesses to adapt by exploring efficient employment strategies. A key aspect of this adaptation is understanding the legal and financial intricacies of engaging with independent contractors. For an in-depth guide on this topic, particularly in the Canadian context, check out this resource on hiring and paying contractors in Canada.
Canada’s Housing Market
The housing market has cooled off due to the BOC raising interest rates at a record pace. As a result, home sales have fallen seven straight months, putting the housing correction at a measly — 39% since February.
Home prices have fallen sharply.
Interest rate increases, likely more to come, will make the BOC move its policy rate even deeper, holding back homebuyers. However, if buyers are willing to hold out and keep patient, a floor will be reached; resales in the spring of 2023 will allow people to get some good deals.
Remember – economists are expecting a moderate recession, not a crash.
More Challenges Ahead, Then Maybe a Respite in 2023
Deputy Prime Minister of Canada, Chrystia Freeland, affirmed the situation and the need for Canadian citizens to be prepared for a little more struggle. Ms. Freeland said:
“Our economy will slow down as the Central Bank has to tackle inflation.” She added, “I’m not going to sugar-coat it, and I’m not going to claim that we don’t have some challenges ahead.”
