Economy 52,906 Posted April 30, 2022 Share Posted April 30, 2022 https://financialpost.com/pmn/business-pmn/canadas-economy-likely-grew-by-5-6-in-first-quarter Bets for a second rate hike in a row of 50 basis points grew as new data puts estimates that the Canadian economy grew 5.6% annualized rate in Q1 of 2022 although the data will still be subject to further confirmation before being finalized Unemployment remains near a 50 year low and the economy continues to benefit from high Commodity prices especially Oil, Gas, Lumber and Metals in addition to strong construction and service sector. A high savings rate during pandemic is also providing a windfall for consumer spending... Trade surpluses are the highest since before 2008 crisis and the budget deficit has shrunk more than anticipated On the downside inflate inflation like in the US remains at a multi-decade high with gas, housing costs and food prices rising much faster than wages as supply cannot meet demand Link to post Share on other sites More sharing options...
Economy 52,906 Posted May 1, 2022 Author Share Posted May 1, 2022 @LaLa @OBEY @JustinTrudeau @GagaSine economy is clearly overheating. I wonder if the rate hikes will crash it tho. The Canadian economy is so leveraged it's super sensitive to even the tiniest of rate hikes. If they miscalculate how much the economy can handle by even half a percent It could potentially derail the whole thing Link to post Share on other sites More sharing options...
Bling 31,683 Posted May 1, 2022 Share Posted May 1, 2022 Just in time for me to move there to start anew Link to post Share on other sites More sharing options...
Enigma 7,182 Posted May 1, 2022 Share Posted May 1, 2022 I'm probably stupid but wouldn't an economic crash be a good thing like idk paying less for everything sounds great to me Link to post Share on other sites More sharing options...
Economy 52,906 Posted May 1, 2022 Author Share Posted May 1, 2022 13 hours ago, Enigma said: I'm probably stupid but wouldn't an economic crash be a good thing like idk paying less for everything sounds great to me The interesting thing about different economy phases (booms, busts/recession, recovery phase, expansion etc) is that what it seems to make the bigger difference in is more just the unemployment rate. During a "bad economy" a slightly higher percentage of people are out of work and there's less options to choose from in most sectors while in a "good economy" it's easier to find work But for the majority of people who stay employed either way not much changes... You may be more likely to get higher raises or at least more bargaining power to try to get higher pay but inflationary pressures also tend to be higher when the economy is hot anyway so incomes relative to cost of living doesn't change that significantly either way The best economic booms are the ones driven by productivity gains. It means wages can rise without inflation necessarily having to rise too much with it since output per worker can offset any increase in labor costs and during expansions or booms driven by productivity gains wages to in fact tend to go up a lot faster than cost of living Unfortunately that is not the case right now. Besides the obvious issues of income inequality that aren't being dealt with properly and the supply chain disruptions caused by pandemic... The economic gains are being fueled by high increases in demand not output gains. When that's the case real incomes adjusted for inflation never really rise much in fact they can fall even in the midst of a boom A surge in economic growth that is mainly fueled by demand but not productivity or output to back it up is unsustainable growth that is also refered to as "overheating". That's whats happening right now. It tends to lead to high inflation and Central Banks always rise rates at this stage to cool economic demand since that demand cannot be met with productive capacity of the economy and just leads to imbalances. Again tho, the war and the pandemic adds dynamics and factors to inflation that are seperate to just the economic cycle, nevertheless the strong demand side of it that the economy does not have the capacity to keep up with is a real factor too. I think one that is getting dismissed a lot by politicians because it's easier to blame the pandemic disruptions alone. But truth is, other than some recent shutdowns in China most Countries haven't been shutting down anything in a while. You can only keep blaming pandemic for so long, factories and stuff aren't closing anymore for the most part. But the economy is still failing to meet the unsustainable demand Link to post Share on other sites More sharing options...
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