Some negative impacts were felt by the retail and restaurant industries as Canadians spent more on loans and mortgage rates.
In other words, a positive economic performance in 2021 and 2022 has since gone down due to the higher interest rates, with negative growth in the third quarter of 2023, and predictions of a slightly positive trend in the fourth quarter, he says.
Deeming the strategy as successful, he states inflation is finally beginning to decrease to three per cent, close to target levels of two per cent. If interest rates imposed by Canada were to be removed, he says inflation is actually at 2.2 per cent.
“We need to rebalance the budget because what you should do, what we learn as economists, is you need to reduce your debt when times are good. So, when you have a recession, you are able to spend money to help people that need help,” he said.
Challenges remain in food and wage inflations, both still at five per cent.
As the economy is starting to slow and mortgage renewals are coming up, Cléroux believes that Canadians will begin to see the first decreases in interest rates within the next six months.
He says that some factors in the country are also going to help stimulate growth like the savings accumulated by Canadians during the pandemic, which will cause the economy to bounce back more quickly, low unemployment rates, and population growth, which has seen a 2.9 per cent increase in the past year in comparison to 0.5 per cent in the United States.
While some guests questioned the lack of housing for the population growth, Cléroux responded that there are not enough construction workers to build homes and anticipates immigrants will help solve that problem, along with filling positions from growing retirees. He added cities need to make it easier for developers to obtain building permits faster.
He says recessions are triggered when citizens begin to lose their houses, but Canadians have found a way to continue paying their mortgages.
Instead, the country will see slow growth of 0.9 per cent and back to a more normal economy in 2025, taking a total of five years to recover from the pandemic.
“Theres no doubt that [with] inflation, higher interest rates, people are more squeezed. People pay more for their mortgages, for their car loans, but the job market is good, salaries are increasing, so it’s [about] making different choices. The good news is interest rates will start to decline. So, people, when they renew their mortgages at the end of this year or next year, they won’t pay as much as now,” he said.
The province of Alberta, he says, has seen a consistent increase in their economy due to the oil and gas sector, with record high exports to the U.S., and green energy, with only one major but temporary decrease for one month due to this year’s forest fires.
He also said that Alberta’s population growth by over four per cent last year, the most in 40 years, has been beneficial to the economy.
While house prices decreased by 10 per cent in Alberta, in comparison to 19 per cent in the country, he said that people are still building housing in the province with the opposite trend taking place nationally.
The job market grew in Alberta by 17,000 jobs just in January 2024.
While some members of the audience questioned the oil and gas industry’s longevity due to the federal government’s goal of clean energy, particularly in the automotive industry, Cléroux said he claims there is not enough green energy to sustain everyone making the switch now and will take 40 years. Until then, and with the new Trans Mountain pipeline expansion, oil exports will remain high and in demand.
He also responded to a question regarding the carbon tax, acknowledging his position as an affiliate to the federal government, but stating that it isn’t significant enough to cause a major impact to the economy.
He believes Alberta’s growth this year will be 1.3 per cent, higher than the rest of the country but tied with Saskatchewan, whereas provinces like Quebec and Ontario have flat growth.
Finally, he added that businesses can achieve greater success by investing in technology to help with productivity.
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