Cold and Then Hot

As we head into the New Year we have a sobering report on the economic outlook from Peter Andersen, a former senior economist with the Bank of Canada who is now working in the US. Writing his monthly report for TEC Canada, the country’s largest CEO organization, he expects something of a slowdown in the next few months.

This is largely the result of COVID which is pushing back improvements to supply chain interruptions due to low vaccination rates in many supplier-countries around the globe. And that will, in turn, lead to tighter labor markets – particularly if parents have to deal with schools reverting to learn-from-home rules – which will push inflation higher.

The upshot, in his mind, is that we could mortgage rates as high as 6.5% in the coming year as inflationary pressures push rate higher and faster than most forecasters have been suggesting. And he says they could even higher in 2023 but, the good news in his report, is that after a showdown in the first of quarter of the new year, North America will re-enter an expansionary phase.