Economic think-tank says it’s back to reality after post-pandemic spending

It’s back to reality for the Canadian economy after a post-pandemic spending boom.

That’s according to the Conference Board of Canada. In a new report, the Conference Board said the economy is about to stall because consumers have now burned through savings they built up during the pandemic.

Senior Economist with the Conference Board Richard Forbes said it’s not necessarily bad news.

“I would take it as more of a good news story than a bad news story here,” said Forbes. “There’s going to be a bit of a slowdown like I mentioned, but it’ll be pretty mild. It’s more just the economy coming back down to earth, rather than any big downturn that’s coming.”

It’s something London couple Brett Weber and Anna Nagy learned the hard way. They say they’ve had to cut back on anything but the essentials.

“We’ve had to cut back more than ever,” Nagy told CTV News. “We had a lot of stuff that ended up happening. We needed to move, I’m now having a baby, I run my own business. Even that’s hard. We can’t buy a car.”

Another major factor that will slow the economy is the interest rate hikes.

The Conference Board said the full effect has not yet flowed through.

“Households that need to renew high mortgages will feel the greatest pinch,” said the report.

It’s something those in the housing market are watching closely, according to London real estate agent Chester Pawlowski.

“The prices have been coming down slowly,” he said. “But with the prices coming down, the interest rates have risen, so it’s kind of been a wash right now. So we’re waiting to see when the interest rates settle.”

As for Ontario specifically, Forbes said the downturn in consumer spending will be countered somewhat by government investment in new industry, such as battery plants in southwestern Ontario.

“So between that and a few automotive retooling activities at different motor vehicle companies, we see a lot of bright spots in terms of the business investment picture,” said Forbes.

The Conference Board says economic output in Ontario will remain slow in 2024, with a rebound not expected until 2025.