What’s happening with the Canadian economy? One minute we seem up, the next down. Is there a residential bubble or not? How’s the EU credit crisis going to affect us and is recovery really taking hold with our U.S. friends who account for over 80% of Canada’s exports?
Well, one thing we know is that Canada continues to be held up as the poster child for fiscal responsibility. No, our productivity rates in manufacturing are still not high enough to cope with a higher loonie, but our banks, standing on a solid bedrock of regulation, have remained firm, and our governments have done a decent job of keeping us on the fiscal straight and narrow.
Still, in our uncertain global economy, what will tomorrow bring? To gain insight, we turned to Peter Andersen of Andersen Economic Research Inc, who has extensive experience in advising clients in residential and commercial real estate in Canada and the United States and also has a Ph.D. in Economics from Harvard University.
Peter’s key message was, “It’s okay to be relatively optimistic.” He believes we’re out of the hot water and are in to a “growth profile” that will last until at least 2015. The expansion he says will be protracted and slow, but “it is in motion.” As Peter sees it: “We’re in a slow growth world,” with lots of twists and turns to come from Europe, but the United States is still on a recovery track and that’s good news for Canada. In such fragile conditions, the Bank of Canada and Federal Reserve Board will be walking on eggshells to keep the recovery going. That means, says Peter, we can expect interest rates to remain low until 2015, and then start rising very slowly.
The bottom line? We can expect relatively smooth sailing in a low interest rate, low inflation environment, where pent-up demand exists among consumers and record profitability in business. Oh, and one other thing, even though sales have slid in Toronto’s hot condo market, Peter was adamant that “housing is not going to crash.”
I hope you enjoy this issue of Street Smarts, especially my interview with Peter Menkes, whose firm, along with HOOPP, has embarked on an ambitious mixed-use LEED office-residential development in Toronto’s south market. It’s another vote of confidence in the future of our city and country.
Brian Kriter is Managing Director,
Office Leasing, Cushman & Wakefield.
brian.kriter@ca.cushwake.com
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