Two major storm centers buffeting world economic prospects are: 1) worries about the solvency of certain nations and banks in Europe, plus potential domino effects; and 2), the U.S. deficit problem made seemingly unsolvable by political rigidities.
Canada sits under the gathering clouds so much better off than other nations. At the highest level, our employment growth over the past couple of years has been strong, incomes have been rising and our banks have shored up what were already strong positions with even more capital.
Stepping down a tier, more jobs and higher incomes in Canada have been leading to healthy housing demand with stable-to-rising home prices. These are necessary contributors to good consumer confidence.
Office vacancy rates in our major cities are much lower than across the border, absorptions rates are higher and government finances at all levels, while perhaps somewhat strained, are still in relatively better shape.
Even on a political level, the outlook is for greater stability in Canada than in most other nations over at least the next four years. The Conservatives in Ottawa govern by means of a majority.
In many other “rich” nations, leadership comes in the form of minority rule or coalition government (Great Britain, Australia, and Germany).
Alternatively, upcoming elections (Spain, Germany, France, and the United States) are rendering the positions of those in power more precarious.
Workers, especially in the public sector, are being told they must lower their expectations. This is leading to what might be termed Frankenstein politics. In protest, the villagers are taking to the streets with pitchforks and torches.
Additional calls for restraint have led to wide-spread strikes and labor uprisings in Greece, Portugal, Spain, the U.K. (where there was vicious rioting based on perceived socio-economic inequalities) and some States in America.
Compared to other nations, Canada is the place to be. This does not mean we won’t be rocked by the changing economic landscape. Most noticeably, the slowing world economy will take some of the oomph out of commodity prices.