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Maybe Canada’s economy can pull off that soft landing after all

Canada’s economy faced a lot of headwinds in 2022, from nearly double-digit inflation that pushed up the prices of gas and food to aggressive interest rate hikes from the Bank of Canada.

Somehow, so far there has been no recession, and the economy has chugged through, even adding 150,000 jobs in January, about 10 times as many as expected.

The question now is whether those headwinds blow the economy off course in 2023, or if the storm passes?

James Orlando, a director and senior economist at TD Economics, earlier this month co-authored a report suggesting that there are already signs that inflation will cool down to a comfortable two to three per cent range by the end of the year.

This week, on Down to Business, he said that many of the early causes of inflation such as supply chain snarls and uncertainty in consumer demand have started to resolve. Consumer spending on services, such as dining out or a haircut, has resumed, he said.

But he acknowledges that there are still a lot of risks that inflation won’t cool, in which case, interest rates may need to go higher still. Osborne talks about what kind of impact this might have given Canada’s high levels of household debt and other changes that are reshaping the economy. As always the interview is edited for clarity and brevity.

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Harry Miller is a writer and editor based in Toronto who has Ten years of experience in the journalism industry. Before coming to Canada News Media as a National Online Journalist, Miller worked as a senior writer and a reporter-editor with the Canadian Press and a breaking news reporter with the Toronto Star. Miller currently holds two bachelor’s degrees, one in journalism from Ryerson University and another in communications and film studies from Carleton University.

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