Recession ‘almost inevitable’ Winnipeg economist says

As she walks through the aisles at the supermarket, Susan Meged says the price of produce and other groceries is hard not to notice.

“(It’s) ridiculously high,” said Meged. “One week something is $1.99, then you go back and it’s $3.99 the next week.”

As a result, she has had to change her habits by cutting back on the extras like eating out and travel.

“Didn’t go on holidays this year, nothing, nothing, couldn’t do what I usually do,” she said.

To curb soaring inflation, the Bank of Canada has been raising interest rates over the spring and summer to slow demand. Because of that, there are predictions a recession is coming, where the economy shrinks in back-to-back quarters.

University of Winnipeg Economist Phil Cyrenne says that could lead to job losses in some industries.

“I think a recession is almost inevitable,” said Cyrenne.

The economist said a recession could impact sectors like home construction and auto sales, because higher interest rates will push some away from borrowing money for large purchases.

“Which then reduces the amount of sales and the amount of expected business for these companies and that’s why as we go into a recession you might also see layoffs,” said Cyrenne.

In Winnipeg, there has been a slow down in housing sales in August and into September. Peter Squire from the Winnipeg Regional Real Estate Board said things could be returning to pre-pandemic sales levels.

“Clearly, we may see some unsettled times in 2023,” said Squire, adding the housing market is an economic driver. “So if you slow down our resale activity through our MLS and our home builders and what they can build and sell, then you’re hurting the economy.”

Caught between inflation and a potential recession, Meged said she is locked into her mortgage rate. But she worries about people she knows who are struggling to keep up with their home payments.

“They work overtime whenever they can get it, lots of overtime, but I feel bad for them because they have to be with their families,” said Meged. 

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