Canada’s second-quarter GDP growth lags expectations; contraction seen in July

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The_Foxer

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www.reuters.com

Canada's Q2 GDP growth lags expectations; contraction seen in July

Canadian economic growth lagged in the second quarter and most likely dipped into negative territory in July, data showed on Wednesday, signaling the economy may be cooling more quickly than expected ahead of a rate decision next week.
www.reuters.com www.reuters.com

Now - the interesting thing is many of the media outlets are ONLY reporting the increase and NOT reporting that it's substantially below expectations or that it appears to have gone negative in July. They're touting it as that the economy is doing great!! We're increasing by leaps and bounds!!

Except that it was expected that we were going to do much better. And it's looking like the third quarter will be worse than expected too, and it was already expected to slow down.

And the BOC is still expected to raise rates at it's next announcement, which will slow things down further.

Given the world economic issues and assuming the war in ukraine will be resolved by spring next year one way or another, I'm still thinking we're probably going to see a recession in Canada in 2023. Maybe that's why trudeau is making rumblings about an election before then?
 
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The_Foxer

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Tecumsehsbones said:
I thought most of the contraction happened in the cold months.
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It is often the case. People have bought all the clothes and such they need, they go out less, they travel less, etc. Some types of work aren't as well suited for the winter. But it's not usually as stark a difference as some think.

I'm told a lot of the 'growth' was in semi durable goods, clothing and the like. People updating wardrobes to go on vacation and to go back to the office, which wasn't an issue during covid. (i myself have taken to doing laundry again, so that'll be an upwards movement in detergent sales).

We'll see. I think our manufacturing and exports will start to slow. We are first and foremost a trading country. I think housing starts are going to slow and that's a big part of our economy.

basically, they hoovered money into the economy during coivd and that drove up inflation, and now they're trying to hoover it right back out to drive down inflation but that is going to have a negative impact on the economy. And because the tools they're using are blunt instruments they will almost certainly overshoot their goals and drive us into recession. Which is what usually happens. And in the meantime prices are still shooting up higher than they were.
 
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Taxslave2

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Housing starts can't cool down as long as turdOWE brings in half a million immigrants a year. At minimum we need 250 000 starts a year just to break even.
 
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The_Foxer said:
It is often the case. People have bought all the clothes and such they need, they go out less, they travel less, etc. Some types of work aren't as well suited for the winter. But it's not usually as stark a difference as some think.

I'm told a lot of the 'growth' was in semi durable goods, clothing and the like. People updating wardrobes to go on vacation and to go back to the office, which wasn't an issue during covid. (i myself have taken to doing laundry again, so that'll be an upwards movement in detergent sales).

We'll see. I think our manufacturing and exports will start to slow. We are first and foremost a trading country. I think housing starts are going to slow and that's a big part of our economy.

basically, they hoovered money into the economy during coivd and that drove up inflation, and now they're trying to hoover it right back out to drive down inflation but that is going to have a negative impact on the economy. And because the tools they're using are blunt instruments they will almost certainly overshoot their goals and drive us into recession. Which is what usually happens. And in the meantime prices are still shooting up higher than they were.
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Why would you think housing starts will slow when we are importing 500,000 immigrants yearly ?
 
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The_Foxer

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pgs said:
Why would you think housing starts will slow when we are importing 500,000 immigrants yearly ?
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We weren't building enough as it is, so there's no apperent correlation between developer's plans and the gov'ts ever-increasing targets

With housing prices currently "falling" (ie still more than they were pre pandemic by a fair bit but down from the peak) developers will want to sit on any project that isn't EXTREMELY lucrative until they see the bottom of the drop. it's not that expensive to sit on undeveloped land they may already have, and they won't want to buy more unless it's kind of a steal until they know what it's really worth. The value of land is based entirely on what the value of what they can build on it is.

With higher interest rates to come by all accounts they'll tend to hold off on buying a lot of land until they see what housing prices drop to. That will tell them what they can afford to spend on the land. In the meantime they'll focus on some of their projects that area already green lit and they've already either started on or have all the approvals to start and have started pre-sale, and they'll still build SOME but there will be a slowdown. There probably already is.
 
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pgs

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The_Foxer said:
We weren't building enough as it is, so there's no apperent correlation between developer's plans and the gov'ts ever-increasing targets

With housing prices currently "falling" (ie still more than they were pre pandemic by a fair bit but down from the peak) developers will want to sit on any project that isn't EXTREMELY lucrative until they see the bottom of the drop. it's not that expensive to sit on undeveloped land they may already have, and they won't want to buy more unless it's kind of a steal until they know what it's really worth. The value of land is based entirely on what the value of what they can build on it is.

With higher interest rates to come by all accounts they'll tend to hold off on buying a lot of land until they see what housing prices drop to. That will tell them what they can afford to spend on the land. In the meantime they'll focus on some of their projects that area already green lit and they've already either started on or have all the approvals to start and have started pre-sale, and they'll still build SOME but there will be a slowdown. There probably already is.
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The price of new housing cannot drop until there is a comparable drop in labor and material costs . Pretty hard to get that drop with transportation and supply train issues driving costs ski high . Prime property will maintain most of its value for the foreseeable future .
 
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pgs said:
The price of new housing cannot drop until there is a comparable drop in labor and material costs . Pretty hard to get that drop with transportation and supply train issues driving costs ski high . Prime property will maintain most of its value for the foreseeable future .
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Well it's dropping already, but i'm sure there's a near bottom to that so fair point. But - you missed what i said. Land value is based on the value of what you can build on it. It's a reverse calculation not a forward one. So - if a developer looks at land and says The market will pay 1000 dollars for the home i can build on that, it costs me 800 dollars to build the home, therefore the land is worth 200 dollars. (super simple but you get the idea.

So if the market goes down by say 100 dollars - the home is worth 900, the cost is still 800, the land is now worth 100.

So you get a very significant drop in land value before you need to worry about labour etc. BUT people won't sell their land that cheap if housing prices are still high (edited to add that)

in addition you can focus on economy of scale projects only. But those are fewer and farther between so you might see a drop in price but you get fewer homes built and they tend to be small apartments.

So that's what i mean about the developers - they can't decide what to pay for land until they know what the final selling prices will be and right now that's in flux. So they will TEND to wait on many projects till they can see what the real value of the homes and therefore the land will be
 
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Taxslave2

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Tecumsehsbones said:
And yet you decry any attempt to ease their lot as SOSHULISM!
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The problem in Ft. Mac today is largely because most of the town burned a couple of years ago. Meanwhile oil production continues. And the money flows. Many workers are only there to work, they live elsewhere in the world.
 
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The_Foxer said:
Well it's dropping already, but i'm sure there's a near bottom to that so fair point. But - you missed what i said. Land value is based on the value of what you can build on it. It's a reverse calculation not a forward one. So - if a developer looks at land and says The market will pay 1000 dollars for the home i can build on that, it costs me 800 dollars to build the home, therefore the land is worth 200 dollars. (super simple but you get the idea.

So if the market goes down by say 100 dollars - the home is worth 900, the cost is still 800, the land is now worth 100.

So you get a very significant drop in land value before you need to worry about labour etc. BUT people won't sell their land that cheap if housing prices are still high (edited to add that)

in addition you can focus on economy of scale projects only. But those are fewer and farther between so you might see a drop in price but you get fewer homes built and they tend to be small apartments.

So that's what i mean about the developers - they can't decide what to pay for land until they know what the final selling prices will be and right now that's in flux. So they will TEND to wait on many projects till they can see what the real value of the homes and therefore the land will be
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To a degree however labor and material cost still have a bearing on new home prices . Construction of new is still happening here in the lower mainland , we will see where things are in a year from now .
 
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The_Foxer

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pgs said:
To a degree however labor and material cost still have a bearing on new home prices . Construction of new is still happening here in the lower mainland , we will see where things are in a year from now .
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Well for sure costs to construct have a bearing. There's lots of costs we haven't even discussed which can change as well such as the cost of holding financing at a time of higher interest rates, gov't red tape costs etc.

But first and foremost those all put pressure on land prices. Eventually it gets to a point where the land value is so cheap that people decide not to bother to sell right now, and then that has a negative impact as well.

At the end of the day tho, the sale price of homes will always be the highest the market can bear when there's a shortage. So i think in about 2 or 3 years we'll once again see prices climbing to match whatever the absolute most people can possibly pay for the limited product available. At that point there will be even FEWER homes having been built vs population growth.

For the youngsters starting out hoping to be home owners some day, the situation just got a whole lot worse, not better.
 
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pgs

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The_Foxer said:
Well for sure costs to construct have a bearing. There's lots of costs we haven't even discussed which can change as well such as the cost of holding financing at a time of higher interest rates, gov't red tape costs etc.

But first and foremost those all put pressure on land prices. Eventually it gets to a point where the land value is so cheap that people decide not to bother to sell right now, and then that has a negative impact as well.

At the end of the day tho, the sale price of homes will always be the highest the market can bear when there's a shortage. So i think in about 2 or 3 years we'll once again see prices climbing to match whatever the absolute most people can possibly pay for the limited product available. At that point there will be even FEWER homes having been built vs population growth.

For the youngsters starting out hoping to be home owners some day, the situation just got a whole lot worse, not better.
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Here in LaLa land house prices have always been out of reach for those just starting out .
 
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