Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Bank of Canada Squandering Its Ability To Respond To Trade War: Scotiabank
One of Canada’s Big Six banks is warning the central bank is blowing its ability to respond to a trade war. Scotiabank economists wrote to investors warning the BoC’s recent rate cuts have undermined its ability to effectively respond to the trade war. The BoC slashed rates as inflation was accelerating, even acknowledging the last cut was not in relation to its mandate. Consequently, providing trade war stimulus now will reduce its ability to stimulate borrowing when the real effects of the trade war begin to appear. The bad decisions amplify the odds of stagflation, a deadly combination of falling demand, rising unemployment, and accelerating inflation.
Canadian Study Permit Applications Plummet More Than Planned
Canada’s international student boom is going to bust much faster than policymakers had hoped. Government of Canada (GoC) immigration data shows new applications processed for study permits in January were 46% lower than last year. It was the fewest applications seen since 2021, when physical restrictions throttled growth. Policymakers are trying to throttle applications, but the decline was nearly 5x the stated goal.
Canadian Job Vacancy Rate Hits The Lowest Level In Over 7 Years
Canadians looking for a job are facing one of the toughest markets in over 7 years. The job vacancy rate fell to 2.9% in January, down 0.8 points from last year. This means there’s just 1 job available for two unemployed workers in Canada. It’s a very different climate from just a few years ago, when the country was scrambling to expand immigration because it couldn’t fill roles fast enough. The market is now said to be oversupplied for labor, which tends to apply downward pressure on wages, lead to higher unemployment, and reduce worker mobility. A trend that began before the trade war heated up, is likely to intensify in the short term.
Canadian Unemployment To Rise 190k People Within Months: NBF
Canada’s economy has been churning out better-than-expected data, but consumers aren’t feeling it. National Bank of Canada (NBF) warns that declining consumer sentiment will help to push the unemployment rate higher. The most recent rate (6.6%) is forecast to rise to 7.0%-7.5% within the next few months. That means the unemployed population can rise by 190k people within a few months.
Canadian Consumer Confidence Plunges To A Record Low
Canadian economic data might be outpacing expectations, but consumers aren’t buying into it. Heck, they’re not buying much—apparently. A new report from BMO Capital Markets warns consumer confidence plunged to a new record low in March. Fears over the cost of living and the impact of a trade war has households more worried than the recent pandemic. The decline in confidence is expected to deliver a hit to the economy, since worried consumers spend and invest less, amplifying a slowdown.
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