RBC Economics: Average Canadian Household To Lose $3,000 Of Purchasing Power In 2023

“Cracks are forming in Canada’s economy,” says report.

As the Liberal government and their defenders attempt to give the impression that Canada’s economy is strong, the actual reality facing Canadians is far different.

Day after day, week after week, and month after month, Canadians feel our purchasing power slipping away.

Liberal policies that drive up prices and disincentivize production such as the carbon tax, are making things worse and worse.

And now, RBC Economics is predicting Canada will enter a recession in the first Quarter of 2023:

“Cracks are forming in Canada’s economy. Housing markets have cooled sharply. Central banks are in the midst of one of the most aggressive rate-hiking cycles in history. And while labour markets remain strong, employment is down by 92,000 over the last four months.

And the pressure is still building. While the Bank of Canada is expected to lift the overnight rate to 4%, the U.S. Federal Reserve will likely hike to between 4.5% and 4.75% by early 2023. These factors will hasten the arrival of a recession in Canada—which we now expect to start in the first quarter of 2023 (one quarter earlier than our previous projection).

What happens next will depend on a range of factors, with interest rate increases the most significant among them. Central banks will be reluctant to throw in the towel on rate hikes before they are confident that inflation will slow sustainably. We expect the Bank of Canada to pause its rate-hiking cycle in late 2022 followed by the Fed in early 2023. But that’s contingent on inflation pressures easing. 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.”

This will have a serious negative impact on the purchasing power of Canadians:

“More outright layoffs will follow, and we expect the weakening in the economy will push the jobless rate close to 7% by the end of 2023—up almost 2 percentage points from lows of 4.9% in June and July. This is slightly higher than our previous forecast but still low relative to previous downturns.

That said, households are already feeling the squeeze of economic headwinds. Rising inflation and higher borrowing and debt servicing costs are expected to shave almost $3,000 from average purchasing power in 2023. And while drum-tight job markets have pushed wages higher, it hasn’t been enough to offset these losses. This will weigh most heavily on Canadians at the lower end of the wealth spectrum, particularly those whose disposable income has faded alongside pandemic support.”

As I’ve often said, the government finds a lot of ways to distract from the fact that Canadians are becoming poorer and poorer in real terms.

By focusing on wages going up – but not keeping up with inflation – or overall GDP – which is boosted by population increases and doesn’t mean individual Canadians are doing better – the government can make it appear Canada’s economy is succeeding.

But when Canadians are losing such massive amounts of purchasing power, it demonstrates the overwhelming failure of Liberal policies, and why the Bank of Canada made such a huge mistake by enabling those policies.

In a country with as many resources as ours, with as high a technological level as ours, and with such a close relationship with an economic and military superpower next door, it is absolutely absurd that Canadians continue to fall behind financially. Combined with the fact that the world is literally desperate to buy the products we have to sell, and our ongoing economic malaise demonstrates why a change in government is so badly needed.

Spencer Fernando


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