Niagara economic analyst warns ‘affordability going to be major issue’
The next few years could be challenging for people facing increasing costs with reduced income, as Niagara Region’s planning and economic development committee members stress the need to do more to keep businesses running in an “economic tsunami.”
While providing an economic update focusing on the months since the pandemic hit the region, Niagara Economic Development research and analysis manager Blake Landry told committee members Monday that in addition to seeing significant reductions in income, residents will face a spike in the consumer price index, meaning the cost of living will increase in the year to come.
“That’s going to be very challenging, especially during a time of recovery.”
Although inflation is expected to drop slightly in 2022, Landry said he remains concerned about affordability for residents.
He said the income of Niagara residents has been “really reduced significantly” as a result of the pandemic and will take a few years before it again exceeds inflation increases.
“This to me raises a red flag that affordability is going to be a major issue over the next couple of years, especially when you look at the rate of inflation verses what people are earning,” Landry added.
He called his report “the first true snapshot of the COVID effects on the Niagara economy,” adding much of the information he presented is contingent on containing the virus.
Prior to Landry’s presentation, several councillors expressed concerns about helping businesses that are struggling as the pandemic continues.
St. Catharines Mayor Walter Sendzik said he has an “uneasy feeling” after hearing from businesses caught “in the middle of an economic tsunami.”
Niagara’s acting economic development director, Valerie Kuhns, said the organization is “reacting to needs as they come up,” but developing plans for recovery.
“The way things are at the moment, I don’t believe we are going to be in a place to start that strategic planning and forward-going policy development until we get to the six-month period,” Khuns said.
“Until we have some benchmarks, some economic stability, I don’t think we’re in a position to move forward in that way.”
Sendzik said despite the need to develop strategies, for a business owner “that’s getting hammered right now, the last thing they want to hear about is a strategy that’s being put in place six months down the road.”
“Unfortunately, we might be seeing hundreds if not thousands of businesses in Niagara going under in the next six to nine months, Sendzik said.
“From what I’m hearing the economic development department is doing what it can. What more can we do, especially heading into the budget of 2021, to support local businesses?”
St. Catharines Coun. Tim Rigby echoed the concerns.
“People need to know that there’s some hope getting past this and were not hearing that,” Rigby said. “I think it’s important that we start working on this.”
Khuns said the “biggest move at the moment is to make sure our businesses can keep their doors open, and everything we’re doing whether it’s advocacy, grants or planning is to that end, it’s working with those businesses so we can get through what might be a tough few weeks as the (COVID-19 case) numbers rise and we can all come out of this on the other side with those businesses intact.”
Despite the grim outlook, Landry said investment in Niagara has continued to outperform the rest of the province throughout the pandemic.
“We hope this trend continues,” he said.
“When we get the year-end figures for 2020, it’s going to look again like a very strong year, despite the COVID.”