info@learn-to-trade.com
Call us: 416-510-5560
Blog

Macroeconomic Headwinds Point to an Unavoidable Recession

Canada’s inflation rate cooled in July to 7.6%, down from its peak of 8.1% in June. This has led some to believe that we will avoid a recession. But inflation is still unmanageably higher, at its third highest point over the last four decades and up more than double from the 3.7% mark from a year ago.

Sky high inflation forced the Bank of Canada to hike its key overnight lending rate by 75 basis points, moving the policy rate to 3.25% from 2.5%. Since March, the central bank has raised its policy rate by 300 basis points, the fasted pace since the mid-1990s, to crush inflation and bring it down to its mandated target of two percent. Chances are good the Bank of Canada will raise its rates again when it next meets on October 26. A four percent rate is possible.

Is Canada Heading for a Recession?

The sharp increase in interest rates is expected to slow economic growth in the back half of 2022, with a recession needed to bring inflation back down to two percent. A recession may be necessary to tackle inflation, but it could lead to job losses, pay cuts, and a drop in the stock market. In early 2020, the TSX fell more than 35% before erasing all of those losses in January 2021. During the 2008 financial crisis, the TSX also fell by around 35%. It took more than two years for the index to recover.

Even executives on Wall Street believe the likelihood of a recession is all but unavoidable. During their second-quarter earnings calls, the highest number of S&P 500 companies (240) in 10 years mentioned the term “recession.” This is well above the five-year average of 52. The previous record was during the first quarter of 2021, which was the start of the pandemic, when 212 companies cited recessionary concerns.  

Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses

Inflation is still at decades highs, which means the next time the Bank of Canada meets in October, it has virtually no choice except to raise interest rates, which could trigger a recession. The trading experts at Learn-To-Trade.com can teach you how to prepare your portfolio for a recession and profit no matter what the broader markets are doing.

Learn-To-Trade.com is Canada’s oldest and leading provider of stock market trading courses. Over the years our trading professionals have taught investors of every skill level how to trade more confidently and profit more consistently.

At Learn-To-Trade.com we understand that investors have different needs. That’s why we provide a unique, Lifetime Membership that allows you to re-attend any part of the comprehensive program as often as you’d like.

To learn more about Learn-To-Trade.com’s stock market trading courses, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.

George Karpouzis

George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members.

Recent Posts

  • Blog

Odds of Big Interest Cut Increases as September Inflation Falls to 1.6%

The odds of the Bank of Canada making an oversized, 50-basis-point interest rate cut when…

8 months ago
  • Blog

Are Falling Interest Rates Good for the Canadian Dollar?

The Canadian dollar has not exactly been having a good year against its American counterpart.…

8 months ago
  • Blog

Energy Stocks Back in the Spotlight as Tensions in the Middle East Escalate

Earlier this year Energy was one of the better-performing sectors, rising 17% from January to…

8 months ago
  • Blog

S&P 500, Dow, and TSX Surge to Record Highs After Fed’s Big Interest Rate Cut

The U.S. Federal Reserve made a big splash, announcing an oversized interest rate cut; a…

9 months ago
  • Blog

Stock Market Rebounds, But Smaller U.S. Rate Cut Expected

September is living up to its reputation as being one of the worst months for…

9 months ago
  • Blog

Bank of Canada Announces Third Straight Interest Rate Cut

The Bank of Canada cut its overnight lending rate, which impacts interest rates charged for…

9 months ago