The Economy: A Tweet & The Conference Board Of Canada

A Statement from Bank Of America… recession is off the table (US)

Conference Board of Canada key notes from articles

(NOTE: they have begun to charge for papers with extensive subscription costs)

The Index of Consumer Confidence rose 5.5 points in July after dropping sharply the previous month.

  • During July, the Consumer Confidence Index rose to 73.6, showcasing a noteworthy upswing from the previous month.
  • Respondents demonstrated a more positive perception of their current financial situation in July. An increase of 0.8 percentage points resulted in 13.2 per cent of respondents believing their finances had improved. Conversely, the proportion of individuals perceiving their finances to be unchanged declined slightly by 0.1 percentage points, though it still constituted the majority at 51.4 per cent. Meanwhile, the number of respondents who considered their financial situation to have worsened also decreased by 0.3 percentage points, settling at 32.9 per cent.
  • Regarding future financial outlooks, there was a moderation in optimism. The percentage of respondents expecting an improvement in their finances fell by 0.4 points, while those anticipating a decline reduced by 2.4 percentage points. Consequently, the proportion of individuals who believed their finances would remain unchanged regained a majority, increasing from 48.4 per cent in the previous month to 50.2 per cent.
  • Future job prospects improved in July. The proportion of respondents who believed there would be more job opportunities increased by 1.4 percentage points to reach 12.6 per cent. Likewise, the proportion of those anticipating the same number of jobs rose by 1.8 percentage points, reaching 54.6 per cent. In contrast, the percentage of individuals expecting a decrease in job opportunities dropped to 20.3 per cent, reflecting a decline of 2.9 percentage points.
  • Outlooks on major purchases deteriorated further in July. There was an increase of 0.2 percentage points to bring the proportion of respondents who considered it a good time for major purchases to 10.4 per cent. However, this was overshadowed by a more substantial 1.3 percentage point rise in the proportion of individuals who believed it was a bad time for major purchases to 68.1 per cent.


Despite a promising moderation in inflation, the rising cost of living remains a concerning factor. The June Consumer Price Index (CPI) release, indicating an inflation rate of 2.8 per cent, showcased progress towards the Bank of Canada’s inflation goals and its efforts to control it. Nevertheless, consumers continue to be troubled by the cost of living, with a Q2 survey of consumer expectations by the Bank revealing that 48 per cent of respondents found it to be their primary concern. The increasing prices of essentials, particularly groceries, have contributed to this apprehension. Last quarter, every month had increases in grocery prices close to 10 per cent year-over-year. Additionally, the recent 25-point hike in interest rates adds further financial pressure on homeowners through increased mortgage costs. If the elevated cost of living persists, consumer confidence may experience a decline due to heightened financial burdens.

Consumers in British Columbia have responded positively to affordability measures implemented by the government. Initiatives such as enhancing and expanding the climate action tax credit and increasing BC Family Benefits have resonated with the public. During July, more than two million individuals and families received their first quarterly payment from the province’s enhanced climate action tax credit. Moreover, starting from July 20, families with children will benefit from an additional annual allowance of up to $750. These improvements align with the positive trends observed in current and future financial and job outlooks among British Columbians.While reflecting a variety of factors, the improvements in the financial outlooks of British Columbians are, to a degree, likely also demonstrating the publics’ recognition of these enhancements. As awareness of these benefits spreads, outlooks are likely to experience further improvements.

Real GDP Jumped Up in May, Expected to Contract in June

Canadian EconomicsJuly 28, 2023

By: Shane Brimacombe

  • Real gross domestic product increased by 0.3 per cent in May, an increase of 0.2 from April. According to Statistics Canada’s preliminary estimate, the economy will contract by 0.2 per cent in June.
  • The public sector has recovered from the PSAC strike that took up the better half of April. It increased by 0.6 per cent from April to May, reverting to the strong growth seen since the beginning of 2021.
  • Wildfires proved detrimental to some sectors in May, affecting the country from coast to coast. The energy sector has suffered, dropping 2.9 per cent month-over-month in May. This is expected to continue into June as wildfires continued to burn from coast to coast.
  • The manufacturing sector came in with strong month-over-month growth of 1.6 per cent, its strongest month dating back to October 2021. This will be expected to continue into the next few months as supply chains return to pre-pandemic norms.
Key Insights

Damage from extreme weather events is now more expensive and spreading to places where it was never an issue. While wildfires have been present in Western Canada for several years, the problem has emerged in Ontario, Quebec, and Nova Scotia. Tornadoes that were limited to southwestern Ontario and the southern Prairies have crept east toward the Capital Region and Montreal. More frequent and powerful storms like Hurricane Fiona place Eastern Canada at a greater risk of severe damage. This is seen most recently via the extreme rainfall and flooding in central Nova Scotia.

Real gross domestic product is growing but productivity is waning. Although strong immigration numbers have allowed the Canadian economy to expand, per capita gross domestic product has been on the downturn for some time now. Immigration does help address Canada’s aging population and labour shortages, but looking into the medium- to long-term, Canada’s standard of living will fall behind other developed countries if this trend continues. The lack of competition in Canada’s largest industries will continue to drive this downward.

The Canadian economy is nearing the 18-month mark since the beginning of interest rate hikes by the Bank of Canada. On average, monetary policy effects begin to take place approximately 18 months after a change in a central bank’s interest rate. The end of May marks 15 months since the first of many increases occurred. The interest rate hikes have already affected consumer price index (CPI) growth and unemployment. CPI growth came in at 2.8 per cent year-over-year in June, and unemployment jumped up 0.2 per cent month-over-month to 5.2 per cent in June. With a higher interest rate climate and Statistics Canada’s preliminary estimate of -0.2 per cent in June, a persistent economic slowdown is likely in the cards over the next couple of months.

Consumer Price Growth Fell to 2.8% in June—But Will It Get Stuck There?

Canadian EconomicsJuly 18, 2023

By: Kiefer Van Mulligen

  • In June, the Consumer Price Index (CPI) rose by 2.8 per cent (y/y). This was lower than May’s 3.4 per cent (y/y) increase.
  • Gasoline prices rose by 1.9 per cent (m/m) but were 21.6 per cent lower than a year ago. Year-over-year, food prices increased in stores (+9.1 per cent) and restaurants (+6.6 per cent).
  • Core CPI (excluding food and energy) grew by 3.5 per cent in June (y/y), lower than the 4.0 per cent increase (y/y) in May. Higher prices in several shelter and food subcategories were key to overall CPI growth.
  • On a seasonally adjusted monthly basis, the CPI grew by 0.1 per cent in June (compared to a 0.0 per cent increase in May).
  • The average of the Bank of Canada’s three core inflation measures fell to 4.2 per cent in June from 4.3 per cent in May. CPI-common fell to 5.1 per cent, CPI-median dropped to 3.9 per cent, and CPI-trim slid to 3.7 per cent.
Key Insights
  • After spending more than two years above the Bank of Canada’s 3 per cent upper target range, year-over-year growth of the consumer price index fell to 2.8 per cent in June. Lower gasoline prices compared to the same month last year contributed to dragging headline inflation down, though price growth deceleration was comparatively broad-based. Mortgage interest costs continued to accelerate in June and will add to inflationary pressures over the coming months. However, this is an anticipated effect of the Bank of Canada’s rate increases. Excluding mortgage interest costs, the consumer price index grew by 2.0 per cent (y/y).
  • But inflation remains elevated. Falling energy prices, base effects, and higher interest rates have brought consumer price growth within the Bank of Canada’s target range—but not fully back to its 2 per cent target. Consumers’ near-term inflation expectations continued to fall in the second quarter of 2023, but they remain far above pre-pandemic norms and the Bank’s target. Year-over-year price growth of food purchased in stores inched upward again in June. As one of the more salient prices for consumers, food price growth has a disproportionate impact on setting expectations for future inflation. And it will be several quarters before it decelerates to a more familiar rate. Russia recently declined to renew a deal that has guaranteed the safety of grain Ukrainian grain exports, which could trigger an increase in global food prices. Wage growth has tepidly moderated, which will ease some inflationary pressure if the labour market maintains its tepid slowdown. But some firms report that they aren’t finished raising prices in the wake of cost increases over the past three years. This will likely keep the scale and frequency of price changes elevated as the year unfolds.
  • The Bank of Canada was concerned enough about the current state of inflation to warrant another interest rate hike in July. The stubborn persistence of core inflation was a key justification for the latest hike—the second since the Bank cancelled the pause to its rate hiking cycle last month. In June, the Bank’s two primary measures of core inflation (CPI-trim and CPI-median) averaged 3.8 per cent. These measures averaged 4.5 per cent between January and May 2023. While core measures are falling, they are decelerating more gradually than headline inflation. The direction of core inflation over the coming months will be a key factor for determining the direction of monetary policy—and the financial fate of Canadians—from here. In this brave new world of stickier inflation, expectations that rates will begin to fall in early 2024 may be premature.
Patricia Dent

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