“Canada: On Course for a Soft Landing in 2023/24?”, Ben Rabidoux, North Cove Advisors

David Osman of IRF is joined by Ben Rabidoux, the Founder of North Cove Advisors.

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They discuss the importance of the housing sector as a driver of consumer spending and broader economic growth in Canada. The Canadian government is trying to achieve a soft-landing with the central bank providing an appropriate degree of monetary tightening to curb inflation without creating a recession. According to the Bank of Canada, higher interest rates are working their way through an overheated economy.

Canadians are feeling the pinch of high inflation and concern about an economic slowdown. Ben points out the risks associated with a tightening monetary policy stance and a sharp slowdown in discretionary consumer spending. He identifies the early signs of cracks in consumer credit, including rising insolvencies and deteriorating credit card trends.

In the housing sector, affordability concerns are continuing to weigh on demand and put downward pressure on house prices. Ben compares the highly-leveraged state of Canadian consumers with their US peers. Given the prospect of higher US interest rates this year, Ben highlights the risks that this poses for the conduct of monetary policy in Canada and the implications for the Canadian dollar.

North Cove Advisors is a boutique research firm that is exclusively focused on Canadian macroeconomic coverage with a strong focus on housing, household credit and consumer spending trends.