In This Issue
- Message from the President
- Fall 2008 Economic Outlook
Upcoming Events
October 21, 2008
Look for our display at the Edmonton Apartment Association's annual trade show in Edmonton at the Northlands Agricom.
October 23, 2008
Join us at the Calgary Apartment Association's Suite Success trade show at the Big Four building at Stampede Park.
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Message from the President
Continuing fall-out from the subprime mortgage crisis
The subprime mortgage crisis has claimed significant victims on Wall Street, triggering consumer fear over the security of their financial institutions. The $700 billion package from the US government has triggered fierce debate, but has yet to make a positive impact.
Along with central banks around the world, the Bank of Canada dropped interest rates by 50 basis points or half a percent. The surprise intervention is another attempt by central banks to encourage lending in what is now officially being labeled a credit crunch.
Analysts expect the Bank of Canada to announce further interest rate cuts. As recently as this summer, there were concerns about rising inflation, but as the current US economic crisis worsens, Canada will see export volumes stagnate and commodity prices drop.
Consider waiting out the current economic volatility by putting your cash in higher interest savings accounts and GICs with CDIC insured financial institutions. Canadian banks are among the safest in the world and offer reliable rates of return and protection for your money.
Stephen A. Tomchishin, CMA
President
Fall 2008 Economic Outlook
Despite expectations that export volumes will drop as the US recession continues, the Canadian economy will maintain its current, albeit slow, but steady course.
Financial Market Crisis in the US
The US economy is in the midst of an all-out economic crisis. Triggered by a staggering number of defaults on subprime mortgages, the collapse of a number of key financial institutions has sent panic through stock markets around the world. Markets have sustained record losses, prompting concerns that a lack of credit will cause economies around the world to grind to a halt.
The economic crisis in the US is expected to continue and worsen in the coming months. Widespread job losses, a slumping housing market, falling house prices and record low consumer confidence levels only serve to increase economic pressures.
Canadian Economy
Despite a poor productivity performance, the Canadian economy is still showing moderate improvement, but growth has slowed. As the global recession continues, expect to see falling commodity prices and a further contraction of the Canadian economy. Interest rates cuts are likely to continue, but how long and how much will depend on the economic turmoil in the US.
Thankfully, the Canadian banking system is the safest in the world, benefiting from much lower capital ratios, and more stringent lending regulations. Canadian financial stalwarts, like CIBC and ManuLife, that have substantial interest in shaky US banking and insurance institutions will be able to weather the crisis thanks to their sheer size and diversified portfolios.
Employment is up and will continue to see moderate growth, with the unemployment rate remaining steady at 6.1%. Despite prices continuing to edge downwards, housing starts are up. Consumer spending is softening, with retail sales expected to continue its gradual slowdown toward the end of the year.
The Canadian economy will continue to be affected by a drop in global demand for its commodities. Inflation will fall and we will see a period of recovery through 2009 and 2010 as US regulations are assessed and restructured. Analysts say the global slowdown is long overdue and will lead to a healthy global economy in the long term.
Interest Rate Forecast
The Bank of Canada is expected to announce further rate cuts as central banks around the globe grapple with the economic crisis. The global slowdown will continue as long as banks are afraid to lend money, leaving business unable to access credit. Governments are considering guarantees for international and interbank lending to stave off a widespread global recession.
Because the economic turmoil is difficult to predict, we recommend focusing on safe, guaranteed investments. GICs and high-interest savings accounts from CDIC insured financial institutions offer the best option to weather the economic storm.
Contact William J. Rhind & Associates today to learn more simple strategies for maximizing your money.
Contact William J. Rhind & Associates today to learn more simple strategies for maximizing your money.
About William J. Rhind & Associates
Benefit from our experience helping over 400 other small businesses negotiate tailor-made services for their financial operations. We're here to offer practical advice, competitive interest rates, and convenient time-saving services.
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