Economists advance their forecast from the second quarter of 2023 to the first quarter. Read on
Housing markets have cooled significantly and although the labour market remains strong,, signs of weakness have appeared including a loss of 92,000 positions over the past four months.
However, interest rates will play the most “significant” role in the economy’s trajectory, the authors wrote. They forecast the Bank of Canada will raise its benchmark lending rate to four per cent fromThis advertisement has not loaded yet, but your article continues below.The United States, they said, will continue hiking through the rest of the year — to between 4.5 per cent and 4.75 per cent — before taking a breather early next year.
, off the four-decade high of 8.1 per cent in June, but still well above the Bank of Canada’s target of two per cent. “More stubborn inflation trends over the coming months could yet prompt additional hikes, and a potentially larger decline in household consumption and a deeper recession,” Fan and Janzen wrote.
The pair calculated that $3,000 in average purchasing power will be lost next year because of higher borrowing costs and the higher cost of living. That means households will have less cash on hand to drive growth.Article content
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