This country has already slipped into a recession, say Oxford Economics
Some economists think so.
“Whereas the [Bank of Canada] BoC has underplayed the Q3 GDP contraction and still anticipates a soft landing, we believe the economy has already slipped into a recession,” said the team at Oxford Economics led by Tony Stillo.
“Four key themes will shape the economy’s performance in 2024, which we expect will be well below the consensus view and worse than other advanced economies.”
The first theme is a moderate recession followed by a muted recovery.
Oxford believes the recession started in Canada in the third quarter of 2023 and will continue until the second quarter of 2024, resulting in a 1.1 per cent peak to trough decline in gross domestic product.
Economic activity will continue to contract through the mid-year as mounting mortgage renewals push up debt service costs, forcing consumers to pull back on spending.
The housing correction, now in its fifth quarter in a row, will continue as highly indebted households are forced to deleverage. Oxford predicts another 5 to 10 per cent drop in home prices by mid 2024, bringing the overall correction to a 22 per cent decline from the peak in February 2022.
Businesses will struggle during the first half of the year as profits are hit by reduced demand and tighter credit conditions depress capital investment and hiring plans. At the same time a slowdown in the United States will hurt Canadian exports which are not expected to return to pre-recession levels until 2025, they said.
The second theme that Oxford identifies is population growth. With another 1.5 million new arrivals expected over the next two years, the labour supply will grow but the boost to actual economic activity will be gradual. Thus supply will continue to outpace job growth, driving the unemployment rate up to 7.5 per cent by the third quarter of 2024.
The third theme, and this is a big one, is the Bank of Canada. Oxford expects inflation to fall back to the 2 per cent target by the end of this year, a year earlier than the Bank’s forecast. By mid-year policy makers should see that inflation is clearly on track and will begin gradually cutting its benchmark interest rate, ending the year at 4.25 per cent, they said.
“That said, we expect the BoC will ease only gradually back to a 2.25 per cent neutral stance over several years given its concerns that inflation and inflationary expectations could get stuck well above the 2 per cent target, and its strong preference to avoid a course reversal and resume hiking rates,” Oxford said.
Lastly is fiscal policy. Unless the recession is severe, Oxford believes governments in Canada will hold back on major new spending. However, that won’t prevent budget shortfalls from growing.
Oxford expects total government revenue to decline by 1.2 per cent in 2024 amid the economic downturn. Government spending, meanwhile, is expected to rise 4.4 per cent just from higher unemployment and social assistance and debt costs.
2024 could also include some wildcards, Oxford cautions. Wildfires, extreme weather, labour strikes and supply disruptions are all possibilities.
Globally, slowing growth in the United States and the world and a rise in tensions and conflicts all add risk and uncertainty, said the economists.
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Canada’s population growth is high among its peer countries in the Organisation for Economic Co-operation and Development.
According to today’s chart from National Bank of Canada economists, Canada’s growth in 2023 was 3.2 per cent, five times the OECD average. All 10 provinces grew at least twice as fast as that average, from 1.3 per cent in Newfoundland to 4.3 per cent in Alberta.
Though immigration strengthens Canada’s prospects in the long run, National economists say recent growth may be a lot for the economy to absorb as the workforce is not aging faster than the OECD average.
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TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:GOOS)
The Canadian Press. All rights reserved.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
The Canadian Press. All rights reserved.
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:TD)
The Canadian Press. All rights reserved.
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