Canada faces something it hasn't experienced in 68 years: A recession without the United States in the same boat. This hypothetical scenario about a Canadian recession sends shocks waves across the country equal and in other ways greater in magnitude to the Financial Crisis that shook the U.S. in 2008. The recession has forced the Federal Reserve and Bank of Canada to explore Negative Interest Rates to try and save real productivity and output, but debt-laden Canadians are ill-equipped to handle any more debt. Housing prices have plummeted, with home prices declining to the lowest level since 2009. Boomers are moving from Toronto in droves, building homes in the Greater Toronto region and driving up prices of high-end homes in smaller, more rural communities, further widening the housing ownership gap between Boomers and Millienials. In reponse, Lincoln expands Affordable Housing plans to include rent-to-own, but the demand is so high rental prices begin to surpass mortgage payments. The new GO-train connecting the Niagara region to the GTA is delayed due to strain on municipal and provincial budgets.
Canada faces worst recession in 68 years, shocks ripple across the nation without U.S. support
The country’s retail sector will limp into 2024 after recording the first negative holiday retail sales season since the start of 2009.
The International Council of Shopping Centers expected December sales to slip at least 2 percent from the same period in 2023, a scary sign for retailers entering the new year. The fourth quarter is historically the strongest for merchants, but was dragged down this year by growing consumer anxiety.
The showing “does not bode well for 2024,” said Michael Rockwell, ICSC’s chief economist. “It suggests that the lingering problems will be the backdrop for the new year.”
Twitch Ratings, a global economic rating agency, expects the trend will continue as consumers curb discretionary spending and try to hold on to their cash. As the economy moves through this deflationary period, the Bank of Canada might be forced to push Negative Interest Rates in a last-ditch effort to kick-start economic growth.
Twitch projects personal consumption expenditures to decrease over 1.6 percent in 2021, driven by concerns over job security, a difficult lending environment and falling home prices.
“These negative pressures will far outweigh any benefits consumers get from a decline in energy and commodity prices,” the group said in a statement.
The residential housing market slowed several months before the recession began at the end of 2023. The greatest declines were in Toronto and the surrounding suburbs, while prices for high-end properties in Golden Horsehoe markets like Lincoln actually saw a small price increase as urban Baby Boomers flock to neighbouring communities with Go-Train access, to push their house savings further.
The dramatic fall in housing prices has forced many large-scale residential projects to be put on hold. Our very own Prudhommes Landing is looking precarious as pre-sale targets were missed by 45%. How will the municipality and builders respond?
As home prices continue to fall in the Toronto region and across the country, many buyers wait on the sidelines for them to sink even further in hopes of timing the market.
This economic slowdown means more pressure is put on the municipal budget. There is less money available for assessment, and that money has to go further to support residents during these difficult times.
To ensure that every dollar is wisely spent, the town is polling residents to prioritize municipal services through the use of market intelligence tools, and trimming services citizens view as less important.
Critics say the Mayors office should have been more prepared for this downturn. “This is what happens when we spend, spend, spend, and forget to save for the rainy days that eventually show up,” one resident told us.
For the most part, though, Lincoln is doing better than many. Cities continue to face those entrenched, longer-term trends that will make it much harder to weather future fiscal storms. In addition to unmet infrastructure needs, cities are bridled with an increasingly outdated tax system that doesn’t reflect the shift to a service economy.
“I had hoped the Great Recession would cause cities to really examine the adequacy of their fiscal architecture,” says dean of the College of Urban Planning and Public Affairs. “But for the most part, that hasn’t happened.”