Business

The Bad Economic Times Have Only Just Started for Canada

Published

1 year ago

2023-09-24

The Bad Economic Times Have Only Just Started for Canada

Canada’s economic woes have only just begun, despite recent signs of moderation in both GDP and job growth. The agony that Canadians are currently facing due to inflation is only going to intensify, thanks to Trudeau.

There will be a tough spell in the Canadian economy. The rate of expansion has slowed dramatically. Job creation has slowed down. The rate of inflation has not decreased. However, the suffering that families are experiencing now will only intensify.

In a note, Desjardins associate in macro strategy Tiago Figueiredo expressed pessimism about the future.

The economy held up better than predicted for a time there. The interest rate increases from the Bank of Canada accumulated. The economy and the number of available employment both improved even so.

The economy was bound to suffer, though. Rising loan rates and skyrocketing inflation have been devastating to families. Now, economists are seeing signs of instability in the data, and they anticipate this to worsen. the second quarter of this year saw a decline in GDP.

This week, economists will have a better idea of whether or not the economy shrank further in August after showing no growth in July. Reasons for this include natural disasters and labour disputes like the B.C. port strike.

Canada’s economy had already lost steam before that happened.

If that happens, Canada will officially be in a recession because the official definition requires two consecutive quarters of negative growth.

Manulife Investment Management’s global head economist and strategist Frances Donald has argued that we should stop discussing the name of this economic downturn and instead concentrate on how it will affect individuals.

“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 said to CBC News.

Several variables, according to experts, are hiding the true severity of the economic downturn. As a first point, it takes the economy around a year and a half to fully reflect the effects of changes in interest rates.

Seventeen months ago, the Bank of Canada started its cycle of rate increases. That implies we haven’t seen the full effect of Canada’s fastest, most aggressive interest rate increasing cycle yet.

Second, the pandemic altered consumption habits, which have yet to return to pre-pandemic levels of predictability. Canadians made significant purchases during lockdowns due to pandemic fears. We scooped up exercise tools, televisions and hoover cleaners. These same families are now investing mostly on activities rather than material goods.

New data on retail sales shows an increase in July and a decline in August. When so many external forces are tugging at and pushing on consumers, it can be difficult to tell how much of what’s happening is cyclical or seasonal.

Inflation and rising borrowing costs are dampening discretionary consumer spending. Another evidence of slow growth for the Canadian economy at a time when the Bank of Canada is dealing with inflation that’s higher than expected, BMO senior economist Robert Kavcic Said.

An extraordinary increase in immigration looms over all the data and shifts. In just the past year, Canada has seen an influx of over a million new residents. This has boosted consumption, but it has also hidden some structural flaws.

According to Donald, those things have helped make the economy look better than it is.

We are in the time just after the Titanic struck the iceberg, but before it sank. When we’ve had a shock, but it hasn’t been too bad,” Donald explained.

The Bank of Canada has temporarily stopped raising interest rates. The central bank, however, cautioned that this would be conditional on continued inflation reduction efforts.

Canada

Fortunately, the Titanic economy isn’t the only one we can save by cutting interest rates.

Since then, inflation has surged to unprecedented heights. The price of everything went up, not just petrol and mortgage rates this time. All of the so-called core measures of inflation, which exclude more erratic factors like the cost of petrol, increased or remained stable.

Scotiabank’s vice president and head of Capital Markets Economics, Derek Holt, calls the breadth of August’s pricing pressures “astounding.” He claims that 52 percent of the items in the consumer price index basket are increasing by four percent on an annualised basis from one month to the next. Almost two-thirds have seen gains of more than 3%.

According to him, the most recent numbers cast doubt on the foundational beliefs individuals have held about the economy.

As the saying goes, “inflation is cooling.” They attribute it entirely to increases in the price of petrol and mortgage interest rates. They say the government’s (fuzzy) “plan” is successful.

They claim that it’s clear the Bank of Canada will not raise rates again. In a note to customers, he called it all “complete, utter, rubbish.”

According to Holt, “definitely ups the odds of a rate hike” at the next FOMC meeting in October because of the recent acceleration in inflation readings.

Sharon Kozicki, the Bank of Canada’s deputy governor, spoke publicly this week and described the central bank’s predicament.
“Rate reductions are still a ways off.”

If we don’t take action now, we’ll have to take even more action later. She warned attendees at a Regina luncheon that excessive austerity could have unintended consequences for the economy.

Some inflationary swings, she added, were “not uncommon,” and that previous rate hikes “will continue to weigh” on economic growth.

Nothing of it is novel. The central bank has spent the better part of the last year and a half discussing the trade-offs involved in preventing inflation from becoming entrenched, while also avoiding doing too much and creating more pain than is required.

Economists like Donald, though, argue that things have changed as the central bank considers when and how it will have to look at bringing rates back down to lessen the burden on people.

“Rate reductions are still quite a ways off,” she said. However, the exit ramp was seen far off in the distance. And the Bank of Canada is working to broaden that exit ramp so they have some leeway if they ever need it.

In her opinion, rates will begin to drop again in the first half of 2019.

“But for a lot of Canadians, there’s… a lot of pain to get through,” Donald remarked.

Geoff Thomas

Geoffrey Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.

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Business

Subsidies for Electric Vehicles Cut as Consumer Interest Fades

Published

4 days ago

2024-11-04

Geoff Thomas

Electric vehicles (EVs) are still considerably more expensive than traditional alternatives.

Pressure is building on Canada’s electric vehicle manufacturers, and several are rethinking their stance on E.V.s in favor of plug-in hybrids. Automobile manufacturers are now bracing themselves for an even more challenging era in the Canadian market for electric vehicles (E.V.s).

President Kristian Aquilina of General Motors Canada claims that support and expectations are misaligned because the Canadian government is reducing subsidies for electric vehicles while trying to phase out gas-powered cars.

Manufacturers find pushing for an all-electric future in Canada increasingly difficult due to fewer consumer financial incentives and increasingly strict sales targets.

With subsidies totaling up to C$12,000 (about $8,500), Canadian consumers may save a tonne of money on electric automobiles. The federal government offers a rebate of up to $5,000 Canadian, and the provinces of Quebec and British Columbia provide further incentives of up to $7,000 and $4,000, respectively.

Ford lost about 2,000 US for every EV it sold in the first three months of the year.

Ford lost about $132,000 US for every E.V. it sold in the first three months of the year.

Ontario, which eliminated rebates in 2018, had the lowest market share for electric vehicles compared to Quebec and British Columbia, two regions that offered bigger incentives and thereby drove E.V. adoption in Canada.

Although this backing is dwindling, the province of Quebec has now declared that all subsidies will end in 2027. In June, the British Columbia government restricted incentives to a smaller subset of E.V. purchasers for “available funding” and higher-than-expected E.V. sales growth.

These reductions indicate a larger pattern: provincial governments reevaluate the sustainability of taxpayer-financed incentives for E.V.s as budget deficits widen.

With lofty goals to cut pollution from gas-powered cars and increase sales of electric vehicles, the Canadian government has reduced subsidies for these vehicles. Electric or plug-in hybrid vehicles will be mandatory for all new light-duty vehicle sales in Canada by 2035.

B.C. needs to step up with incentives for consumers to buy used EVs, some opposition critics say.

Some opposition critics say that B.C. needs to step up with incentives for consumers to buy used E.V.s.

To meet our intermediate goals, 20% of new sales must be electric vehicles (E.V.s) by 2026 and 60% by 2030. Car companies are already under a lot of pressure due to dwindling incentives and increasing demands, and the clock is ticking faster by the second.

In addition, these rules impose new forms of responsibility. Automakers that do not reach their provincial sales targets may be subject to financial fines imposed by provinces such as British Columbia.

Canadian manufacturers are already under financial pressure from federal compliance credit system standards, which they must meet or face deficits. This system gives them credit for electric vehicle sales and infrastructure improvements, but it’s not without its challenges.

“The timing is not necessarily lining up very well, in that the purchase incentive support comes off just as mandates and regulations start to bite,” GMC Canada President Kristian Aquilina told Bloomberg. “It must make a difference.

Therefore, we must consider that. Despite the cutbacks, Aquilina argued that the government’s investment in enhancing the charging infrastructure could benefit E.V. sales.

Tesla Sales Fall As More Electric Vehicles Crowd the Market

Tesla Sales Fall Again As More Automakers Crowd Electric Vehicle Market

Geoff Thomas

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Business

Chewy Slides After Filing Shows 3rd-Biggest Shareholder, ‘Roaring Kitty,’ Sold His Stake

Published

1 week ago

2024-10-30

Kiara Grace

Washington — Chewy shares fell about 2% overnight Wednesday after a regulatory filing showed that Roaring Kitty, a meme stock trader, sold his interest in the online pet retailer.

According to a beneficial ownership document filed with the Securities and Exchange Commission on Tuesday, Roaring Kitty, whose legal name is Keith Gill, sold all his Chewy shares, totaling 6.6% of the company.

Chewy Slides After Filing Shows Third-Biggest Shareholder, ‘Roaring Kitty,’ Sold His Stake

Plantation, Florida-based Chewy dropped 1.9% after hours to $26.19 per share.

Gill, an investor at the core of the meme stock craze, bought more than 9 million shares of Chewy in July, making him the company’s third-largest stakeholder.

Gill built a name for himself in 2021 by rallying ordinary investors around GameStop. At the time, the video game shop was fighting to stay in business, and major Wall Street hedge funds and investors were betting against it or shorting the stock. But Gill and those who agreed with him altered GameStop’s direction by purchasing thousands of shares despite practically all acknowledged criteria indicating that the firm was in deep peril.

Chewy Slides After Filing Shows Third-Biggest Shareholder, ‘Roaring Kitty,’ Sold His Stake

That triggered what is known as a “short squeeze,” in which large investors who had bet on GameStop were obliged to buy its swiftly increasing stock to offset significant losses.

Gill has expressed confidence in GameStop Chairman and CEO Ryan Cohen’s ability to revamp the company following his success at Chewy. Cohen cofounded Chewy in 2011 and stepped down as CEO in 2018.

SOURCE | AP

Kiara Grace

Kiara Grace is a staff writer at VORNews, a reputable online publication. Her writing focuses on technology trends, particularly in the realm of consumer electronics and software. With a keen eye for detail and a knack for breaking down complex topics. Kiara delivers insightful analyses that resonate with tech enthusiasts and casual readers alike. Her articles strike a balance between in-depth coverage and accessibility, making them a go-to resource for anyone seeking to stay informed about the latest innovations shaping our digital world.

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Business

Canada CBC News CEO Catherine Tait Recalled to Parliamentary Committee

Published

1 week ago

2024-10-30

Geoff Thomas

Catherine Tait won't rule out taking bonus once she leaves CBC/Radio-Canada

Canada CBC News reports that MPs have voted to recall CBC CEO Catherine Tait to a Commons committee for questioning, only a week after her last appearance, over the awarding of $18 million in bonuses to Canada CBC news executives.

The Conservatives, the Bloc Québécois, and the NDP joined forces to re-invite Ms. Tait, her successor Marie-Philippe Bouchard, and Heritage Minister Pascale St-Onge to appear before the Commons Heritage Committee.

Ms. Tait, who will relinquish her position as CEO and president of CBC/Radio Canada in January, addressed the committee last week. The House of Commons has passed a motion recalling her before the conclusion of her term, and she is now subject to an additional two hours of interrogation, which includes inquiries regarding bonuses.

MPs also resolved to summon Quebec broadcasting executive Marie-Philippe Bouchard, appointed as the new chief of CBC/Radio-Canada last week, to appear before she begins her new job following a House of Commons chamber debate.

Catherine Tait Exit Package

Catherine Tait rejected the Conservatives’ requests to deny an exit package, including bonuses, when she departed the position in January during last week’s committee hearing.

She also defended the award of $18.4 million in incentives to 1,194 staff members for the 2023-2024 fiscal year, which concluded in March, following the broadcaster’s achievement of performance indicators.

Kevin Waugh, a Conservative committee member who introduced the motion, stated that his party aimed to ensure Ms. Tait was “accountable to taxpayers” before her departure in January.

He informed The Globe and Mail that “Canadians are dissatisfied with the bonuses” and that Catherine Tait‘s exit package, which will not be disclosed, is a cause for concern.

“I am apprehensive that she has not received her bonuses in over two years, and that the Minister of Heritage or Privy Council will lavish her with bonuses when she departs in January,” he stated.

The Liberals opposed a portion of the motion that claimed that “the Liberal threat to cut funding” had resulted in the elimination of hundreds of jobs at CBC/Radio-Canada.

Defunding CBC News Canada

The Heritage Minister informed The Globe that the claim was “hypocritical,” as the Conservatives intended to completely defund CBC.

“The Conservatives’ actions today are a clear example of hypocrisy.” Ms. St-Onge stated that performance bonuses increased by 65% during the Harper Conservatives’ tenure, while CBC News Atlantic Canada experienced substantial budget cutbacks.

“As a government, we do not require any lessons from a party that has pledged to reduce the funding of CBC/Radio-Canada and the 8,000 jobs associated with it during its campaign.”

During the Tuesday debate, NDP MP Niki Ashton stated that her party endorses the “banning of executive bonuses” at CBC News Atlantic Canada but is opposed to “the Conservatives’ full frontal attack” on the broadcaster.

She stated, “We require a robust public broadcaster, but not one that distributes executive bonuses and eliminates positions.”

If the Conservatives establish the next government, they intend to deprive the CBC of public funding while maintaining French services.

Catherine Tait defended CBC and rebuffed MPs’ assaults during last week’s committee hearing. “It is evident that the members of this committee are making a concerted effort to discredit the organization and vilify me,” she stated.