E Point Perfect

How to prepare for a 2023 recession


Initially, the BoC refused to acknowledge that inflation was here to stay. It insisted inflation was transitory and promised to keep rates low for several more years. As recently as March 2021, the BoC’s former deputy governor Lawrence Schembri estimated inflation would be moderate and top out at 3%. Instead, inflation hit a 30-year high in June 2022, peaking at 8.1%.

The main job of the BoC is to keep inflation near a target of 2% annually. Once it was clear that inflation was far exceeding that target, the BoC quickly reversed course and started raising rates—quickly and dramatically. In six consecutive announcements since March 2022, it jacked the overnight policy rate to 3.75%—one of the steepest and fastest rate escalations ever seen.

High interest rates tend to slow spending, borrowing, investing and the demand for labour.

The effects of the rate hikes can already be seen. Families and businesses have already started spending less, housing prices have stalled, and the stock market has pulled back.

The BoC stated its goal is to control prices, even if it comes at the expense of wage growth, and a recession.

Recessions aren’t all bad

A recession isn’t the end of the world—it’s simply a natural part of our economic cycle. Fear of a recession can easily affect you more than an actual recession. 

In December 2018, for example, the North American stock market was getting hammered, with NASDAQ, S&P 500 and the DOW sinking to 15-month lows. But in fact, the stock market returned around 20% just a month or two later. 

“It was a very volatile, risky year and the economic conditions weakened,” says Craig Alexander, chief economist at Deloitte Canada. “If you sold [assets] in 2018 and didn’t invest in 2019 because you were scared a recession was going to happen, then you missed one of the best years in the stock market.”


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