Econ­o­mist says Canada ‘in pe­riod of ad­just­ment’

High house­hold debt and ris­ing in­ter­est rates a con­cern, but jobs plen­ti­ful and op­por­tu­ni­ties abound, busi­ness break­fast crowd told

The Daily Courier - - KELOWNA - By STEVE MacNAULL

We’re mired in house­hold debt, our homes are worth less and in­ter­est rates are on the rise. Yet, we keep spend­ing be­cause our jobs are se­cure and the econ­omy is good. “This is def­i­nitely a pe­riod of ad­just­ment,” said Busi­ness De­vel­op­ment Bank of Canada chief econ­o­mist Pierre Cler­oux dur­ing a stop in Kelowna on Thurs­day.

“There are still con­cerns and risks, but there are also op­por­tu­ni­ties like never be­fore in Canada.”

Cler­oux’s pre­sen­ta­tion to a break­fast crowd of Kelowna Cham­ber of Com­merce mem­bers cov­ered a lot of ground and ex­plained a lot of com­plex­i­ties.

For ex­am­ple, how can con­sumers be in record debt, yet still have a smile on their face?

“Yes, the con­sumer debt ra­tio is higher than ever at 170 per cent, but most of that debt is tied to mort­gages,” said the Que­bec City-based econ­o­mist. “So, that debt is at least at­tached to an as­set rather than trips to gamble in Las Vegas. But it’s still a con­cern. There’s al­ways risk with debt.”

Plus, mort­gage in­ter­est rates, which have been at his­toric lows for years, are start­ing to inch up.

“The Bank of Canada doesn’t want to get peo­ple in trouble,” said Cler­oux. “That’s why in­creases are an­nounced well ahead of time and are be­ing in­creased grad­u­ally.”

Th­ese fac­tors don’t seem to a be ma­jor con­cern with Cana­di­ans be­cause jobs are plen­ti­ful and the econ­omy con­tin­ues to hum along.

The hous­ing boom of the past four years has started to wane and home prices are slip­ping.

How­ever, rather than putting the coun­try and home­own­ers in peril, the slow­down sim­ply marks a re­turn to a nor­mal, healthy, bal­anced hous­ing mar­ket.

Mean­while, there’s a labour short­age as more and more baby boomers re­tire and there aren’t enough younger work­ers to take their place.

This is both a good and bad prob­lem to have. It’s good be­cause it means ex­ports are boom­ing, the econ­omy is good, em­ploy­ers are op­ti­mistic and peo­ple can more eas­ily find good-pay­ing jobs.

It’s bad be­cause it could be a drag on the econ­omy if com­pa­nies can’t find work­ers and take full ad­van­tage of op­por­tu­ni­ties.

“Busi­nesses will have to mar­ket them­selves as good em­ploy­ers and of­fer more flex­i­bil­ity and pay to work­ers,” said Cler­oux. “They will have to in­vest in tech­nol­ogy and re­cruit young work­ers as well as con­vince some re­tirees to stay on part time.”

Baby-boomer en­trepreneurs re­tir­ing is an un­prece­dented op­por­tu­nity for ex­ist­ing busi­nesses, ac­cord­ing to Cler­oux.

“More com­pa­nies than ever be­fore are for sale and chang­ing hands in Canada,” he said. “Busi­nesses that want to ex­pand can buy an­other com­pany and in­crease mar­ket share and rev­enues.” Kelowna is well po­si­tioned for the new econ­omy. “The city has a de­sir­able lo­ca­tion and life­style,” said Cler­oux.

“That at­tracts re­tirees as well as youth to work in the bur­geon­ing tech in­dus­try, which is here be­cause en­trepreneurs want to be here. Kelowna is the right­sized city to at­tract work­ers and in­vest­ment be­cause it’s big enough to have every­thing but small enough to be cheaper than Van­cou­ver and Toronto.”

Cler­oux

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.