Is Canada in a major recession?

Discussion in 'Politics, Religion, Social Issues' started by Bubble99, Mar 28, 2017.

  1. Bubble99 macrumors 6502

    Mar 15, 2015
    Retail is not doing well in Canada at all. Many stores are closing and more stores could well be on way to closing soon.

    People buying stuff is going down and stores not doing well at all.

    Interest rates are at a all time low, to get a housing mortgage for people that have very little money to buy a house because housing is well going up so high in Canada!!! Yes is not far from being like San Francisco. Where a million dollar home will get you a very very very small starter home.

    The Canadian dollar is at all time low.

    And well the Canadian dollar is at all time low, it means when you buy American goods it cost more.

    Example US

    iPad Mimi 4 128GB cost $399 US

    iPad 9.7 inch 128GB cost $429 US
    iPad 9.7 inch 32GB cost $329 US

    Example CA

    iPad Mimi 4 128GB cost $549 CA

    iPad 9.7 inch 128GB cost $579 CA
    iPad 9.7 inch 32GB cost $449 CA

    If so what is going on? Why is every thing getting worse every year?
  2. gnasher729 macrumors P6


    Nov 25, 2005
    What does this have to do with Apple? You can take your $549 CA and your bank will exchange them for about $399 US. That has nothing to do with Apple.

    It also has nothing to do with American products, because with your exchange rate, the same will happen with any product that is imported to the USA and Canada as well.

    Here in the UK the government assures us that a low UK£ is good for the industry and for exports.
  3. Plutonius macrumors 604


    Feb 22, 2003
    New Hampshire, USA
    He was just using Apple as an example of the purchase power of the Canadian dollar. I don't think he's suggesting that Apple has anything to do with it.
  4. cfedu Suspended


    Mar 8, 2009
    I would not call that a recession but purchasing power has been reduced because of the Canadian dollar. I'm guessing you are in your 20's and don't remember, but besides a few years back when we hit parity, the Canadian dollars has been around this exchange rate for almost 40 years.

    As for the housing market, only a few places are super hot, if you want to live in Toronto, you will have to pay big bucks. I just flipped a house in Toronto and have to agree that the prices there are insane. 1.5 million for a house that will be knocked down!!!
  5. Bubble99 thread starter macrumors 6502

    Mar 15, 2015
    I don't know how it was before 90's and before but I do remember the time the Canadian dollar was almost at par with US. People in the US love it when the Canadian dollar is low, because things are cheap for them to buy in Canada and this helps the Candida economy. But people in Canada have to pay more to buy US goods and buyers hat that. When the Canadian dollar was almost at par with US, there was fear US $20 book you can give CA $20 book in money.

    To buy things in Canada are more expansive not because it cost more!!! But because the Canadian dollar is not worth that much. That means clothing, food, TV's, computers and books so on cost more.

    Normally they don't want the Canadian dollar to be at par with US or higher than the US because that hurts the Canadian economy. The US will be buying less Canadian goods, less movies made in Canada and less experts and lower economic grow. But the way it is now is really low.

    It was not low like that 6 years ago.
  6. cfedu Suspended


    Mar 8, 2009

    You are getting caught up on currency, they are both the American and Canadian currencies are called dollars but are based on different factors. 1 Canadian dollar buys 83 yen, that does not mean the Canada dollar is stronger than the Japanese yen. People in Canada generally earn more Canadian dollars than Americans earn in American dollars.

    You are mixing up all your numbers, the high Canadian dollar was not hurting the Canadian economy, it was the strong economy that made the Canadian dollar high. Since the can$ has almost become a Petrol dollar, our dollar is most sensitive to oil prices. Certain products have gone up in price, but other products and services have also gone down because of the dollar.

    As for a recession, look up the definition of a recession, we are not even close to the definition let alone a major one.
  7. LizKat macrumors 601


    Aug 5, 2004
    Catskill Mountains
    I don't know about Canada but in the US we're getting a lot of mixed messages right now with data sets not always in jibe with each in normal ways. Our consumer confidence is supposedly up but confidence in the economy itself has been sinking during March. The financial markets are recently up since the AHCA demise at least gives some certainty to the health care sector even if it's not at least supposedly what they wanted to hear-- but there is weakness in bricks and mortar retail and related sectors as well.

    And as Steve Jobs liked to say, one more thing... there's been a wave of interest in securitization of "deep subprime" auto loans. The percentage now considered deep subprime has now hit 32.5% rising from just 5.1% in 2010, according to Morgan Stanley. Source Bloomberg

    Payment behavior among subprime borrowers after the crisis and up until around 2015 is different because those lenders were considered risky credits in an extreme situation following the recession, according to S&P. As the economy improved, so did the credit scores of such consumers. By 2015, that left subprime lenders with the dredges -- the people who never paid, and who will likely never pay.

    “Many of the subprime customers from 2015 to the present have a sustained history of late payments or charge-offs," S&P wrote. “Stated slightly different, today’s subprime customer appears to be a weaker cohort than that of several years ago."
    This has apparently not dampened appetite for these decidedly not AAA investments.

    As Wall Street banks have found it tougher to profit under new regulatory regimes born out of the last subprime crisis, they’ve become more willing to underwrite riskier auto-loan asset-backed security sales. Investors, starved for returns with about $8 trillion of debt globally carrying negative yields, have in turn proven to be insatiable, further facilitating higher levels of risk in the market for the securities.
    But I'm sure we all learned something the last time around, right?
  8. Bubble99 thread starter macrumors 6502

    Mar 15, 2015

    Here's how the declining Canadian dollar will affect you...

    The price of food will increase.

    Expect to pay more for fruits and vegetables as the dollar weakens.

    “When we look at the overall effect of exchange rates on consumer prices, the items that are mostly of concern are essentially what you buy in the grocery stores,” Werner told Vancity Buzz.
    Many of our fruits and vegetables are imported directly from the United States, so we can expect the most significant impact on the price of California crops, and Werner said this will primarily affect lower income families.

    Canadian exports will gain momentum.

    Despite the rising price of imports, the low dollar will boost international demand for exports from Canada. Having a lower loonie means Canada has a competitive edge over other countries.
    “Whenever the Canadian dollar is depreciating, it makes Canadian produced goods more competitive in international markets and in particular, of course, the United States,” said Werner.

    The film industry is taking off again.

    Vancouver has once again become a destination for American filmmakers thanks to the low dollar, bringing in tax revenue and helping to drive the local economy.
    “You should expect a lot more film trucks on Vancouver streets,” said Werner.
    And the numbers are there to back up Werner’s theory. Around 24 productions are currently filming in Vancouver, including T.V. shows like The Flash, Motive, and Once Upon A Time and movies like the Bruce Lee biopic titled Birth of the Dragon.

    Tourism will also benefit from a weak dollar, with Americans flocking to places like Whistler for ski vacations this winter.

    More here

    The U.S. dollar is stronger than it's been in 13 years.

    You may have heard that the U.S. dollar is quite strong again. That sounds good, right? "Strong" is generally a positive adjective, after all.

    Well, not so fast. Because if the dollar is strong, something else must be weak. So whether a "strong" dollar is a good thing or not depends on some context.

    A "strong" versus "weak" dollar is all about how much the dollar is worth compared to other currencies, as measured on international currency exchange markets.

    So why is the dollar doing so well?

    The main reason is the U.S. economy is doing better — not necessarily better compared to its own historical performance, but better compared to everyone else these days. And when the economy is doing (at least relatively) well, that makes it an attractive investment opportunity: Putting money into U.S. ventures and business is more likely to earn you a better return. But to invest in the U.S. economy you need U.S. dollars. So demand for U.S. dollars goes up relative to other currencies, and the U.S. dollar gets stronger.

    A strong U.S. dollar means Americans can buy more stuff from other countries. That stuff is denominated in other currencies, and you can get more of those currencies for every U.S. dollar. So America's imports go up. The flipside of that same development is it becomes more expensive for people in other countries using other currencies to buy American-made stuff denominated in U.S. dollars. So America's exports drop.

    Rising imports and falling exports equals a bigger trade deficit.

    Read more

    Here's how the declining Canadian dollar.

    1. Tourism will be booming

    It will take time for the benefits of the lower loonie to trickle down to the manufacturing sector, but one area where it could have almost an immediate impact is on tourism. “Americans would almost certainly find Canada attractive for tourism and shopping,” says Cooper. The timing is certainly good since Canada’s starting to look cool again to foreign markets. The New York Times recently released its list of 52 places to visit in 2016 and Toronto comes in at No. 7. It’s also a great time to be a tourist in your own country, since it’ll be a lot cheaper to vacation in Banff than take a trip across the border.

    2. Deals galore—at least for now
    Given the volume of imported goods we consume in Canada, Canadians should brace themselves for higher prices at the register—but just not yet. According to Cooper the full effect of the decline in the dollar hasn’t appeared on store shelves for imported goods. This will change as inventory turn over, but as stores clear out merchandise, especially in the post-holiday shopping period, Canadians are getting unprecedented deals on imported goods. For example, the CBC reports that a Honda Accord is currently $5,700 cheaper in Canada than it is in the States. And if you’re in the market for a flat-screen TV, it’ll probably be a lot less pricey here than in the U.S.

    3. U.S. investments are winning
    Canadians who have been wise enough to shrug off the home-country bias and invest in U.S. equities in recent years have reason to celebrate. Not only have U.S. equities vastly outperformed Canadian stocks, the falling loonie has been giving investors an added boost if they convert their U.S. holdings back into Canadian dollars. The effect has been pronounced. In 2015, S&P 500 lost 5.7% over the past 12-months, but the fact the Canadian dollar has slid 15% relative to the greenback means Canadians who bought the index enjoyed a 12.6% gain. Unfortunately, as Cooper notes, more Canadians tend to invest domestically.

    4. Good news for real estate investors
    Canada has already seen more than its fair share of foreign interest in our real estate market, but the cheap dollar could help fuel that interest even more, says Cooper. Some of this increased demand will be from Americans buying vacation homes, while others will look to Canada as a place to invest. “Canada is seen as a safe haven for foreign capital so this helps to further encourage it,” she says. This isn’t good news if you’re in the market for a new home, but it is good news if you have already invested in real estate and are able to capitalize on higher sales prices. Enjoy.

    Here's how the declining Canadian dollar

    Grocery woes: A cheaper Canadian dollar means higher grocery prices as the loonie buys less of the food we import, especially from the United States. Eating Canadian won't just bolster local farmers — it could help you save money.

    Travel and tourism: Canadians now have an economic incentive to plan a staycation in the Great White North, with foreign exchange rates making it far more pricey to vacation in the U.S. and elsewhere. Canada, however, may get an influx of foreign visitors taking advantage the lower loonie.

    Foreign investment: Aside from tourism, the low loonie is expected to increase some forms of foreign investment in the Canadian economy. And expect to see a lot more of Toronto and Vancouver on the big screen as Canadian productions of Hollywood films is expected to tick up.
  9. Zombie Acorn macrumors 65816

    Zombie Acorn

    Feb 2, 2009
    Toronto, Ontario
    Canada isn't in recession but it's government has sold the real estate market out to speculators and foreigners. I make 6 figures and can't justify buying in this market.
  10. citizenzen macrumors 65816

    Mar 22, 2010
    According to Canada's government site ...

    Retail trade
    (in millions)
    January 2016 — 43,978
    December 2016 — 44,944
    January 2017 — 45,952
    December 2016 to January 2017 +2.2%
    January 2016 to January 2017 +4.5%

    Looks like things are going up to me.
  11. cfedu Suspended


    Mar 8, 2009
    None of this has to do with recession.

    1. 1.
      a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

    Lets go back to the OP

    This has nothing to do with a recession but rather a change in consumer habits, people are shopping online more and more, as a result retailers that can't adjust are closing.

    Blockbuster did not go bankrupt because of a recession, it's out of business because consumers changed their habits.

    This applies to 2 or 3 Markets in Canada and has nothing to do with a recession.


    From 1994 to 2003 the $Can was lower than it is now


    What you are talking about is purchasing power, If the $can declines to a point where people start to lose jobs and the economy contracts, we will be in a recession. The problem with currency fluctuation is that it can be disruptive if it happens too fast, a gradual shift can be absorbed by the economy as it adjusts.
  12. Stella macrumors G3


    Apr 21, 2003
    Canadian dollar largely follows the price of oil?
  13. Ulenspiegel macrumors 68040


    Nov 8, 2014
    Land of Flanders and Elsewhere

    It has nothing to do with Apple. Like the crisis of Swiss watch industry has nothing to do with AW, suggested in this old thread.
  14. martint235 macrumors 6502


    Apr 13, 2016
    You also need to factor in those interest rates. If interest rates are low relative to another economies interest rates then currency will move to higher rate: in this $Can will be sold to purchase $US pushing the value of $Can down and $US up. Again it is not really to do with whether or not you're in recession (although sometimes low interest rates can be used to pull out of recession). It sounds from all the above like Canada is in a similar place to the UK. We also have low interest rates and so a low £ to $ and £ to Euro rate. Our economy is actually growing though but the B of E can't afford to risk that recovery by raising interest rates as it will cut spending and thereby growth.

    It does mean our export books are looking good though.
  15. s2mikey macrumors 68020


    Sep 23, 2013
    Upstate, NY
    Doesnt Canada basically take(tax) your entire paycheck to fund "everything"? That would explain a lack of buying power for consumers. Right? Or not?
  16. cfedu Suspended


    Mar 8, 2009
    Exactly, with high oil prices the Canadian economy was doing great in the west but the eastern manufacturing base was hit hard.

    The tax rates are high but not that much higher than the USA. Once you factor in Health premiums, I would say Camadians are slightly ahead.

    I would rather pay slightly more for Apple products and have full employment in the economy (less money to give for social assistance). IMO the OP is just upset that the brief period of extra purchasing power from a few years ago is over. It was nice to save 200$ on my MacBook are in 2012 but it is also nice saving 120$ a month on fuel.
  17. AsherN macrumors 6502

    May 11, 2016
    My income tax rate last year, on a high 5 figure income was 19%. Property tax was about 3% of my income. HST stands at 13% of most purchases. So, off the top, I'd say I pay about 35% of my income in taxes.
  18. Raid, Mar 29, 2017
    Last edited: Mar 29, 2017

    Raid macrumors 68020


    Feb 18, 2003
    @cfedu has been doing a good job explaining current market conditions so I'm not going to rehash what he's said. However I will say that the current environment we are in with low interest rates is quite an issue. Many governments have used interest rates and other money supply tools to boost the economy, however the effective impact (say Real GDP vs interest rate reduction) has probably declined (<- I haven't run these numbers or seen any other analysis so it's an hypothesis currently).

    Bottom line:
    1. We are not even in a minor recession, much less a major one.
    2. It's not getting worse every year, but it hasn't been getting better as fast as it used to. (Probably, maybe)
    3. Dollar comparisons to another currency (especially just one other) don't necessarily reflect the state of the economy.
    4. What's going on... well it's complicated. Limited room to use money supply tools to energize the economy, Oil prices kept at a low value to discourage oil sands operations, and uncertain trade environments are a few key factors.
    Your friendly neighbourhood economist.
    Raid :)
    --- Post Merged, Mar 29, 2017 ---
    Oh another example of this is HMV, I went to the Yonge Street location and even with all the great close-out deals I didn't buy a damn thing. I just don't want what they have, in the media that they have it in.

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17 March 28, 2017