Economic and Financial Outlook

2022 May Have Ended on a Good Note, but Trouble Still Lies Ahead

January 19, 2023

Many of the factors driving inflation in recent years continue to improve.
The US labour market remains resilient. Yet in another sign pointing towards recession, both ISM indexes have dipped below 50.
Economic data continues to show surprising resiliency in Canada. A higher rate environment will pose additional challenges for Canadian homeowners and businesses.
Quebec’s real GDP contracted an annualized 1.9% in the third quarter, likely marking the start of the recession there. September’s 0.5% drop in real GDP bodes poorly for the fourth quarter.
As one of Canada’s most housing-exposed provinces, Ontario is expected to be among the hardest-hit during the coming housing-led recession.

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