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Written By: Benjamin Pipicelli, Lexx Thomson, Dorje Gyaltsen, & Gordon Huynh

Economics Newsletter – Feb 9, 2024

Canada’s Economy at a Glance

Author’s Commentary

Canada’s Consumer Spending 

In Canada’s current economic landscape, a complex interplay unfolds between increased nominal spending and diminishing purchasing power. While per capita spending has surged, driven by rising prices for essentials, a concurrent decline in volume-based spending signals a squeeze on households’ financial flexibility. Looking ahead, there are hopeful signs of growing financial prudence, particularly among younger demographics, yet concerns linger regarding the impact on employment and the looming challenges of mortgage renewals in 2025. Navigating these complexities demands a nuanced approach from policymakers, emphasizing proactive measures to support affected industries and mitigate financial vulnerabilities, thereby fostering sustainable growth amidst evolving global economic dynamics.

News and Noteworthy

Ferrari Breaks Out To Record Highs On Earnings, Lands Formula 1 Legend Lewis Hamilto

Ferrari stock soared to all-time highs Thursday after outpacing Q4 earnings forecasts. Meanwhile, Ferrari Formula 1 fans are ecstatic about reports that racing legend Lewis Hamilton may be donning a red suit for the 2025 season, rather than Mercedes’ (MBGAF) black, white and green. Ferrari (RACE) reported adjusted earnings of 1.62 euros (about $1.75) per share, a 33% increase from last year. Net revenues for the quarter increased 11% to 1.52 billion euros ($1.65 billion). FactSet analysts expected earnings of 1.56 euros per share on 1.51 billion euros in revenue. Read more.

‘Tip of the iceberg’: General Motors eyes more EV battery investment in Quebec

General Motors’ (GM) $600 million joint venture to build a battery materials facility in Quebec is the “tip of the iceberg” when it comes to the Detroit automaker’s plans in Canada. Speaking at the EV Innovation & Technology Conference 2024 event in Toronto on Tuesday, Sarah Goldfeder, director of government relations and corporate affairs for General Motors Canada said, “My dream is that every vehicle that General Motors makes has a piece of Canada in it.” Read more.

Lightspeed to focus on growth in 2024, as stock plummets amid macro uncertainty

Lightspeed Commerce (LSPD.TO)(LSPD) chief executive Jean-Paul Chauvet says the company will focus on sales growth in 2024, even as macroeconomic uncertainty weighs on its fiscal outlook. The commerce software company reported a 27 percent increase in sales in the third quarter of its 2024 fiscal year on Thursday, with sales increasing from US$188.7 million last year to US $239.7 million. The company reports its financial earnings in U.S. dollars. Read more.

Canadians expect they need $1.7M to retire

Canadians believe they will need $1.7 million to retire, according to a BMO Financial Group survey, but millennials expect to have to save even more before they stop working. BMO’s annual retirement survey found that Canadians on average believe they will need $1.7 million, matching the figure in last year’s report. Millennials – those between the ages of 28 and 44 – believe they will need more, expecting to save $2.1 million in order to retire. Read more.

Housing affordability won’t return to pre-pandemic levels in the next two years

Housing affordability in Canada will not return to pre-pandemic levels in the next two years, according to Desjardins’ latest housing outlook, even if economic weakness weighs down home-buying activity. “Even with our forecast for a mild recession, an eventual reduction in interest rates and modest price gains, we don’t anticipate a return to pre-pandemic affordability levels within the next two years,” Desjardins principal economist Marc Desormeaux wrote in a report released on Tuesday, adding “that primarily reflects a very unaffordable starting point.” Read more.

Economics Society News, Events, and Articles

– Keep an eye out on our Instagram page @uweconsoc for updates regarding future events

– Check out our most recent original article, Redefining a Middle: An Exploration of the Global Middle in the Case of China and India, written by Stefan Venceljovski