Friday, March 23, 2012

Phew… Canadian economy back to normal

The latest headlines tell us that the inflation rate rose up a notch in February due to higher gas and food prices. Core inflation – the underlying pressure on consumer goods, excluding volatile items such as energy and fresh foods – rose two notches to 2.3 per cent, above the Bank of Canada’s 2-per-cent target line. 

 The Canadian dollar is down 0.39 of a cent to 100.7 cents US. because prices for commodities are down.
Payroll is only slightly outpacing the inflation rate but employment rates are improving.

 The spring housing market is heating up; house prices are balancing out except in sweltering hot cities like Toronto and Vancouver.  

And the Bank of Canada may raise the prime lending rate later this year.

 What does it all mean?  The economy is getting back to normal.

Since the U.S. housing downturn in 2007 most economic news worldwide has been negative, as one economist said recently, punctuated with terms such as “economic crisis”, “ roller-coaster markets”,  “financial panic,” and “heightened level of uncertainty”.

If we take a snapshot of the world today we find that equity markets have calmed down – the stock exchanges are up and down but the volatility has eased.

The European crisis is still a mess but pressure has eased a down a bit.

The U.S. economy is improving and the Federal Reserve is much more upbeat with its reports.

In Canada, the economic waters have calmed considerably. We probably won’t see a housing bubble burst; the West is booming again and interest rates are going to rise later this year or in early 2013.

The big news coming out of Ottawa is not about staving off financial ruin but the same old stuff like fighting deficits, battles over health care transfers, trade issues and some controversies like robocalls. 

Pretty much back to normal!

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