The Canadian economy is headed for a rough patch. Growth has already slowed considerably. Job growth has moderated. Inflation remains stubbornly high. But the pain households are feeling today is only going to get worse.
“The path forward looks bleak,” Tiago Figueiredo, a macro strategy associate with Desjardins, said in a note.
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Frances Donald, the global chief economist and strategist at Manulife Investment Management, says we should spend less time debating what to call this downturn and focus more on how it will impact people.
“Even if there are technical factors that avert two quarters of negative GDP, this economy will feel like a recession to most Canadians, for the next year,” she told CBC News.
Second, consumption patterns changed during the pandemic and haven’t fully reverted to normal, predictable ways that make economic modelling easier.
Another sign of sluggish growth for the Canadian economy while the Bank of Canada, at the same time, grapples with above-target inflation," Robert Kavcic, senior economist at BMO, wrote in a note to clients.
Derek Holt, vice-president and head of Capital Markets Economics at Scotiabank, says the breadth of the price pressures in August is “astounding”.
Holt says the re-acceleration in last month’s inflation data “definitely ups the odds of a rate hike” when the central bank meets again in October.
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