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.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
