BDO seminar brought in Benjamin Tal, chief economist of CIBC (  While I find the bank economists to be biased towards their employer, he was quite frank and informative.

Very interesting information from Benjamin Tal:

  • there will be a 3rd Covid wave – based in history and on countries ahead of is in COVID (Australia, S Korea) and consistent with Spanish flu history;
  • fear is a huge factor affecting our economy – in US, states that stayed shut down vs opened early had NO difference in consumer spending – indicating that “fear” was a the major factor keeping people from consuming/buying/shopping
  • the third wave will bring back the fear factor
  • most of the decline in consumer spending has been in high income individuals – very unusual  – every other historical recession, high income individuals showed no appreciable drop. They are either buying real estate of saving their money.
  • small business revenues in high income zip codes in US has dropped a lot more than low income zip codes – if your business has relies on higher income individuals or a luxury product or service/you may take a hit
  • Govt of Canada is second highest spender as % of GDP in the world (Japan #1, US #3)
  • the spread between poor and rich (disposable income) has grown the most ever in history – problem – people who did not need help got help as well as those who needed help
  • it appears that the federal gov’t will be raising tax rates at the higher levels to get this money from the wealthy – an easier target than ever
  • a significant amount of money has gone to young people who may or may not have needed the money – the system has not differentiated between an 18 year old and a 40 year old
  • low interest rates have kept gov’t afloat – interest payments in Cdn gov’t actually dropped by $4B (!) even though our debt went from 30% of GDP to 50% GDP
  • this means that our gov’t is likely to raise taxes
  • Inflation – you need two things – rising money supply (which is what is happening); money volume ie everyone spending more money (this is NOT happening) – so inflation is likely to remain low and the Bank of Canada likely won’t raise interest rates (to manage inflation) until mid-2023
  • Housing market – mother of all friendly recessions when it comes to housing market – and sales per unit currently to long term is still below volume.  This is NOT a regional situation – this has happend right across the country.  
  • Housing – The average MLS benchmark is about 10% below the average sale price –  a reversal from 2019.  Why – 50% to 60% is because people are moving up to more expensive homes. 
  • Housing – the vast majority of job losses in COVID were low paying jobs.  The higher income people did NOT get a hit to their paycheque.  As a result, they took advantage and moved “up” ie out of condos into homes.
  • Housing – the market is going to slow down over the next 6 months but mainly in the condo space – condo supply (used and new) still available but housing supply (used and new) is less than market demand. In other words, condo supply is slightly growing but demand is dropping; this is not the case with housing.  Right now, expensive housing has been growing faster than lower priced housing – so people are chasing prices up.
  • Next six months – 3rd wave is going to slow the market, despite there being rapid testing, vaccine (which have a lot of logistical issues on speed of rollout).  This is not going to be a very good winter, economically.
  • We are all buying time until the vaccine comes – the gov’ts, businesses, all of us.