National Economy

[Innsertnamehere]

Yea, I expect rate cuts to be pretty rapid and people are already more confident now that the rate cut cycle has been confirmed.

If we get another cut in July (I suspect we will), things will speed up even more as actual borrowing costs will actually start to be noticeably cheaper and it's a sign the BoC is going to cut quickly.

I'm a lot less stressed about my mortgage renewal next summer than I was before. Shouldn't be too bad of an increase, I don't think.

[shreddog]

Originally Posted by Innsertnamehere

Yea, I expect rate cuts to be pretty rapid and people are already more confident now that the rate cut cycle has been confirmed.

Given that the US Fed intend only 1 cut this year and no (current) intention to accelerate that in 2025, if Canada does start dropping rates, it may be a good time to invest in USD assets.

[WarrenC12]

I'm not sure Canada will be in a rush to cut. Maybe 1 more this year.

[Innsertnamehere]

Originally Posted by shreddog

Given that the US Fed intend only 1 cut this year and no (current) intention to accelerate that in 2025, if Canada does start dropping rates, it may be a good time to invest in USD assets.

The BoC has indicated that they aren’t too worried about diverging from the US fed on rates, to a certain extent.

CAD is likely going to be very low for a bit until the US catches up on lower rates.

BoC rarely makes one cut and leaves it. I suspect we’ll see 0.25 cuts quite frequently, if not every month, for the next little while. A 0.25 cut is ultimately quite small and not overly consequential. The BoC knows this.

[1overcosc]

Originally Posted by Innsertnamehere

The BoC has indicated that they aren’t too worried about diverging from the US fed on rates, to a certain extent.

CAD is likely going to be very low for a bit until the US catches up on lower rates.

BoC rarely makes one cut and leaves it. I suspect we’ll see 0.25 cuts quite frequently, if not every month, for the next little while. A 0.25 cut is ultimately quite small and not overly consequential. The BoC knows this.

A low CAD will drive inflation higher due to import costs, so there's a hard limit on how much we can diverge from the US on interest rates.

If we make another 3-4 0.25% cuts and the US does nothing, the resulting drop in CAD will drive inflation higher to the point where can't make cuts anymore or possibly even a rate hike is justified.

IMO, we shouldn't be cutting rates at all. Inflation is still too high. IMO, we should actually lower the inflation target from 2% to 1% for the next few years to cancel out the above-target inflation in the early 2020s.

Besides, higher rates are a good thing. It pushes people & companies to reduce debt (which is unsustainably high), encourages saving, and reduces asset inflation.

[P'tit Renard]

Originally Posted by Innsertnamehere

The BoC has indicated that they aren’t too worried about diverging from the US fed on rates, to a certain extent.

CAD is likely going to be very low for a bit until the US catches up on lower rates.

BoC rarely makes one cut and leaves it. I suspect we’ll see 0.25 cuts quite frequently, if not every month, for the next little while. A 0.25 cut is ultimately quite small and not overly consequential. The BoC knows this.

I'd be mindful of the fact that the BOC can only diverge so much from Fed rates if there's no CAD uplift from oil and resources. An improving economy also serves as a headwind to cutting rates, since theoretically it will spark inflation if the currency is depreciating at the same time.

[LeftCoaster]

Originally Posted by ssiguy

Bad new for Musk and Greenies everywhere. A new global report released just a couple days ago and reported in Automotive News found that of current EV owners, 29% globally want to go back to an ICE vehicle and that number soared to 46% in the US.

Now that the novelty of 100% EVs for the more well healed has subsided, reality is kicking in. From high prices, to impracticality, unreliability, limited range, battery drainage in both very hot and very cold climates, poor recharging infrastructure {both availability and maintenance} to plunging value as soon as they leave the lot, EVs are not the panacea they thought they were going to be.

That said, EVs do have good long-term prospects but right now, the technology simply isn't good enough to makes them affordable, practical, and reliability for the vast majority of buyers.

Bad news for greenies?

A "global report"??

You sound like my 78 year old uncle telling me what he read on facebook last week.

[Innsertnamehere]

Originally Posted by 1overcosc

A low CAD will drive inflation higher due to import costs, so there's a hard limit on how much we can diverge from the US on interest rates.

If we make another 3-4 0.25% cuts and the US does nothing, the resulting drop in CAD will drive inflation higher to the point where can't make cuts anymore or possibly even a rate hike is justified.

IMO, we shouldn't be cutting rates at all. Inflation is still too high. IMO, we should actually lower the inflation target from 2% to 1% for the next few years to cancel out the above-target inflation in the early 2020s.

Besides, higher rates are a good thing. It pushes people & companies to reduce debt (which is unsustainably high), encourages saving, and reduces asset inflation.

Thus “to a certain extent”. We aren’t going to see the BoC cut 200 basis points without the Fed starting cuts as well. 75-100 though? Definitely possible. It’ll put pressure on inflation, but elevated rates themselves do that through mortgage rates driving up housing costs.

[Build.It]

A weak Canadian dollar is generally good for Canadian manufacturers - both in the Canadian and US export markets.

[ssiguy]

Originally Posted by Build.It

A weak Canadian dollar is generally good for Canadian manufacturers - both in the Canadian and US export markets.

Yes, a cheap Loonie is good for exports but only over the short-term. Our businesses begin to rely on it as a economic crutch much like they do now with cheap imported labour. We are not competing because our productivity is high but rather because our expenses are low..............a true race to the bottom.

A cheap Loonie also inhibits businesses from investing in new technology and the workers they already have because, once again, they use the cheap dollar as their only way to compete on the international export market. As noted above, a cheap dollar also stocks inflation as it increases the prices of all imports.

[Loco101]

Can someone copy and paste the economic charts from this: https://www.atlanticcouncil.org/blog...the-g7-summit/

Interesting data.

[Build.It]

2 people I know personally recently became homeless and are currently living in tents. They made stupid choices in life, but were still able to keep a roof over their head in the past. They are working class I'd say.

I remain convinced that this decade of Canadian history be will viewed as our generation's version of the Great Depression when the history books get written.

Most people during the GD kept their jobs and their homes and didn't really feel it. However homelessness skyrocketed and unemployment was mich higher than normal.

Today is a bit different ... we simply don't have enough working age adults for unemployment rates to skyrocket like that IIMO, but homelessness, and the general decline in standard of living for most Canadians, resembles the GD.

Most friends and family members I know that don't work for themself are stressed about money at the moment. It's very different from the 2008 recession where people were worried about their job security but could otherwise still afford everything.

Today people aren't worried about their job, but they are worried about being able to pay all the bills, and in many cases are ending up living in tents despite being employed.

Strange times. They say every generation lives through something like this once. I have no idea when it will peak but it is interesting to live through.

I thinkone of the lessons we're getting out of this is that all of the government recession indicators are wrong. If their indicators haven't flashed red the last year or so it obviously means that they are using the wrong methods. A simple eye test and talking to everyday Canadians tells a very different story than what the government's official data is saying.

[GeneralLeeTPHLS]

Originally Posted by Build.It

I think one of the lessons we're getting out of this is that all of the government recession indicators are wrong. If their indicators haven't flashed red the last year or so it obviously means that they are using the wrong methods. A simple eye test and talking to everyday Canadians tells a very different story than what the government's official data is saying.

Agreed in full. I know a few people, between my closest friends to co-workers who've struggled to find work. Heck, I'm in that camp now, and only because post-covid my line of work is no where the same it was five years ago. Anyways, it's always interesting to see how media and the 'official message' of the state claims economically, we're doing pretty well, with job growth and minimal GDP loss, but in actuality we're seeing a huge problem with people working multiple part time positions to afford a roof over their head, less full time positions from industries like banking, finances, mining and manufacturing, and a greater push to the gig economy, with its perils in being less regulated and more prone to systemic abuses (esp toward newcomers)

The big influx in students will be seen as one of the biggest blunders of the post-covid period I imagine. And probably one of the hardest to deal with since the "taps" are still running high with people coming in, to use a poor expression.

[Acajack]

Originally Posted by Build.It

I remain convinced that this decade of Canadian history be will viewed as our generation's version of the Great Depression when the history books get written.

This raises an interesting question. Did most people who lived though the Great Depression actually realize they were going through this historically significant (albeit negative) moment? Or was it for them simply just a period that sucked more than the others?

Maybe the official label for it as something extraordinary only came a lot later?

[Acajack]

Originally Posted by GeneralLeeTPHLS

The big influx in students will be seen as one of the biggest blunders of the post-covid period I imagine. And probably one of the hardest to deal with since the "taps" are still running high with people coming in, to use a poor expression.

I will reiterate again the fact that a very significant number of them are here to stay. For good.

[MonctonRad]

Originally Posted by Acajack

This raises an interesting question. Did most people who lived though the Great Depression actually realize they were going through this historically significant (albeit negative) moment? Or was it for them simply just a period that sucked more than the others?

Maybe the official label for it as something extraordinary only came a lot later?

Nah, the Great Depression was heralded by a very significant event (the stock market crash of 1929). People knew a depression was coming just because so much wealth simply evaporated overnight.

It should be noted however that the economy had a "dead cat bounce" after the crash, and the height of the depression did not occur until 1931-33.

The economy was beginning to recover well before the onset of WW2, but, I am uncertain how noticeable this improvement was to Joe Q Public. The situation was complicated by other concurrent events such as the great dustbowl (climate change) and rampant crime (gangsterism) and the rise of fascism.

Come to think of it, there really are a lot a parallels between the 2020s and the 1930s..........

Let's hope a world war is not next.

[GeneralLeeTPHLS]

Originally Posted by Acajack

I will reiterate again the fact that a very significant number of them are here to stay. For good.

Sorry, I forgot to put asterisks. I'm aware of this, it's very concerning for a number of reasons as we all know.

[Acajack]

Originally Posted by MonctonRad

Nah, the Great Depression was heralded by a very significant event (the stock market crash of 1929). People knew a depression was coming just because so much wealth simply evaporated overnight.

It should be noted however that the economy had a "dead cat bounce" after the crash, and the height of the depression did not occur until 1931-33.

The economy was beginning to recover well before the onset of WW2, but, I am uncertain how noticeable this improvement was to Joe Q Public. The situation was complicated by other concurrent events such as the great dustbowl (climate change) and rampant crime (gangsterism) and the rise of fascism.

Come to think of it, there really are a lot a parallels between the 2020s and the 1930s..........

Let's hope a world war is not next.

Even though many things do suck at the moment, I don't think there are any real signs that we are on the verge of a multi-country economic collapse.

While nothing is 100% effective and infallible, I also think that global economies have been somewhat shock-proofed over the decades, precisely to prevent too big a collapse from occuring.

[ssiguy]

Originally Posted by MonctonRad

Nah, the Great Depression was heralded by a very significant event (the stock market crash of 1929). People knew a depression was coming just because so much wealth simply evaporated overnight.

It should be noted however that the economy had a "dead cat bounce" after the crash, and the height of the depression did not occur until 1931-33.

The economy was beginning to recover well before the onset of WW2, but, I am uncertain how noticeable this improvement was to Joe Q Public. The situation was complicated by other concurrent events such as the great dustbowl (climate change) and rampant crime (gangsterism) and the rise of fascism.

Come to think of it, there really are a lot a parallels between the 2020s and the 1930s..........

Let's hope a world war is not next.

Yes, Dirty Thirties were definitely heralded by the Stock Market crash of 1929. Everybody and his brother were investing in the stock market from poor to rich and when it all crashed nearly everyone lost their shirt.

The 1920s was a true stand-out in societal change. From a booming economy, soaring middle class, rights of women, a radical rethink of societal norms, the rise of fascism, the Red Scare and rise of communism, rise of mass consumerism, technological and medical advancements, prohibition and the resulting gangsterism, impact of mass media and entertainment, to the rise of the US as the world's superpower...............the 1920s threw everything upside down. Despite the devastation and change from 2 world wars, the 1920s will go down as the most significant decade of the century and, considering it only lasted 10 years, probably in the history of the planet.

Politically, socially, culturally, economically, and financially, our planet would be a vastly different place without that metamorphic decade. Sorry Boomers, but the changes you brought about in the 1960s is only a foot note compared to the Roaring Twenties.

[Build.It]

Our equivalent to the 1929 stock market crash is the housing collapse. Everyone invested in real estate throughout the 2010s and early 2020s, and now people are losing their shirts.