A mild to moderate recession is predicted in the future by economists as Canadians begin to plan for 2023.
A recession is a period of time in which there is very low economic activity.
Jason Childs, an economics professor at the University of Regina, says, “It’s felt everywhere. Very few people aren’t affected. It’s going to show up in terms of employment rates, there are going to be less jobs, fewer opportunities for advancement in most jobs.
“There is going to be less opportunity to ask for higher wages in those jobs. You are going to see incomes across the board generally shrink or not grow as quickly as they otherwise might.”
He explains that this will impact spending habits and lead to potential business closures and further job losses at an accelerating rate.
Small businesses in Saskatchewan were hopeful for an economic boom while recovering from the COVID-19 pandemic and restrictions that placed on business operations and profits.
This fall, businesses have been battling rising inflation and interest rates through their period of recovery.
Annie Dormuth with the Canadian Federation of Independent Business explains that some ‘half measures’ have been taken by the Saskatchewan government to ease the hit on small Saskatchewan businesses. Fortunately, the small business tax rate remains at zero per cent and PST is still removed for select types of businesses, not including the reeling entertainment industry.
“Going forward, the message to all governments federally, provincially, and municipally, is not going to be imposing additional cost increases at a time when small businesses can least afford it,” Dormuth said.
She encourages Saskatchewanians to continue shopping local and supporting the community through this time.
Canadians can also expect to see surcharges on credit card transactions as a result of an approved class action settlement by the Canadian courts.
The $17-million settlement with card networks will allow Canadian companies to surcharge their Canadian customers. Visa and Mastercard have amended their network rules for suppliers to surcharge.
A survey by the Canadian Federation of Independent Business (CFIB) confirms nearly one in five small businesses are considering it to offset their merchant fees to keep their doors open if another recession takes place in the new year.
Taking a look at how a recession can impact the housing market, Royal LePage, Canadian real estate franchiser and owner-operator, has adjusted its year-end forecast downward from the previous quarter.
“September did not bring the typical seasonal lift in the number of homes trading hands in this country, a clear indication that our housing market continues to adjust to higher borrowing costs,” said Phil Soper, president and CEO of Royal LePage.
Mike Duggleby, broker and owner of Royal LePage Regina Realty, says motivated buyers are having to make compromises on housing type and locations in order to meet the market and expects further activity in the market will be heavily impacted by the rate of inflation.
He expects more people to turn to renting as a temporary solution as opposed to buying a home, even as the costs of renting rises.
“Many potential buyers are taking a pause to examine their finances before determining if it is the right time to purchase a home,” Duggleby said. “As a result, we are seeing less demand at the lower end of the market, as first-time buyers are being priced out of the market due to rising interest rates.”
In response to the prediction of a recession, Duggleby explains, “We know we are going to need more housing supply and I think we are going to see, perhaps, trades from other provinces where they haven’t got the same issue and start building houses.”
Meanwhile, the average consumer should look to tighten their spending and businesses should prepare, once again, for a difficult time.
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