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Expert says Canadian economy will improve in 2021, though 'not spectacularly' – CTV News

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TORONTO —
After a tumultuous 2020, those with their eyes on the Canadian and global economies can expect improvements in 2021, according to one expert.

“I actually think the economy is going to do very well in 2021,” Ian Lee, an associate professor at Carleton University’s Sprott School of Business, told CTV News Channel on Friday. “Not spectacularly, but much better than in 2020.”

Lee attributes this in part to Canadians’ saving rate in 2020, which he said has “gone through the roof.”

Lockdown measures to prevent the spread of COVID-19 meant that those with disposable income had less to spend it on. Statistics Canada reports that after the first quarter of 2020, Canadians saved an average of 7.6 per cent of disposable income, up from 2.3 per cent in the first quarter of 2019.

But by the second quarter of 2020, Canadians were saving 28.2 per cent, a dramatic increase from the 3.1 per cent they were saving in 2019’s second quarter.

“I cannot remember it being this high,” Lee said.

With vaccines being rolled out in 2021, Lee said there is renewed hope that Canadians will soon be able to leave their homes and make the kinds of purchases that will stimulate the economy.

“I think we’re going to see a very significant increase in spending because people are going to be so grateful and so happy it’s behind us,” he said. “We can get out of our houses, go to restaurants, go out flying and travelling and so forth. So I think we’ll see that pent-up demand express itself in 2021.”

 

WILL SMALL BUSINESSES BOUNCE BACK?

Even with this expected spending ahead, small businesses in Canada are barely holding on, with some already forced to shutter.

“Small businesses always had much smaller profit margins than big business,” Lee said. “I think it’s inevitable we’re going to see a significant increase in failures – small business bankruptcies – over the winter months.”

Lee said he believes this “inevitable” outcome may be why many provinces have not gone into universal lockdowns, instead trying to focus restrictive measures where they were most needed to try to help those whose livelihoods are at stake.

“I don’t think it’s going to be as bad on small businesses,” Lee said of the year ahead. “But it’s still going to be negative, no question about it.”

But he adds if governments continue to make these lockdown considerations in the new year, it could allow small businesses to generate some cash flow.

“Between that and the backstops provided by the government, I think they’re hoping it’ll be enough to carry them through the winter into the spring when the vaccine starts rolling out,” he noted.

 

REAL ESTATE MAY NOT BE NOT AS GOOD AS IT SEEMS

One of the key backstops provided by central banks, including the Bank of Canada, is record low interest rates, which has led some to seek approval for a home mortgage.

And while low rates may be good for those seeking a loan, it’s also led to rising home prices, making the buyer’s market more competitive and pricey.

“I don’t think we’re going to see in 2021 the average increases in real estate prices that we saw in this last year,” Lee said. “It’s not sustainable.”

Lee points to a collapse in immigration levels in Canada due to the pandemic as a contributing factor.

“People don’t realize […] the impact of immigration – the positive impact of immigration,” Lee said.

Immigrants need homes in Canada, Lee said, but can also bring wealth with them to spend in the Canadian economy.

All this, he said, will yield lower real estate prices in 2021: “I think it will be much more modest this year.”

 

U.S. POLITICS COULD IMPACT STOCK MARKET

With several uncertainties still ahead in 2021, a rise in the stock market is anything but a sure thing despite low interest rates, reopening economies and more liquidity.

“I don’t think it’s going to explode,” Lee said, pointing to the changing administrations in the U.S. as a possible “wildcard.”

U.S. President-elect Joe Biden has announced plans for a stimulus for Americans, as well as plans for improving infrastructure, which Lee said could “rev up” the U.S. economy, but Biden’s plans may be constrained by the Republican-controlled Senate.

Democrats have an opportunity to take hold of the Senate Jan. 5, but only if they can win both of the Georgia runoff elections.

“It’s unpredictable, but I don’t think we’re going to see huge increases in the stock market averages for 2021,” Lee said.

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Business

A timeline of events in the bread price-fixing scandal

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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.

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Economy

S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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