The evidence is mounting. Canadians are buckling down for a recession by saving their money and worry about job loss is on everyone’s lips as they see their wealth in stocks and real estate diminish.
“There are a number of tangible ways that people feel a recession,” TD Bank Financial Group director of economic forecasting Beata Caranci said.
In Canada, the recession began in the last quarter of 2008. Between the peak of employment in October of 2008 and the end of 2009, Caranci predicts Canada will see 400,000 job losses. In January alone, Canada shed 129,000 jobs.
“So clearly it affects people directly,” she said. “And people, often when they’re worried about their future, they start thinking about savings more, and when people save more it causes a ripple effect through the economy, causing sales to drop, which causes retailers and other people to lose their jobs.”
When people spend less money, businesses suffer, she added.
“In this cycle we’re seeing about a 30 per cent decline in corporate profits, and that would be the largest annual decline on record,” Caranci said. “So obviously as profits decline, stock market wealth is affected, and you see real estate wealth being affected because home prices fall as confidence falls.”
Caranci predicts the most job losses will come in the next six months, and then the fiscal and economic stimulus provided by governments will start to take effect.
“We think by the end of this year you’ll start to see recovery, but it will be relatively shallow,” she said.
“It’ll feel like a much better year in 2010. This year is going to feel very difficult for people.”