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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.