There's an Economic Storm Brewing

There’s an Economic Storm Brewing

All indications say that B.C. is sailing into some rough economic waters over the next year or two. Form your own strategies now on how to deal with that. I had an interesting conversation with a local businessman recently, in which he noticed that there seemed to be less economic optimism around lately. Because this guy has a pretty good feel for the Zeitgeist, I took notice. It helped, of course, that I had the same feeling.

By Tony Wanless / September 15, 2011

All indications say that B.C. is sailing into some rough economic waters over the next year or two. Form your own strategies now on how to deal with that.

I had an interesting conversation with a local businessman recently, in which he noticed that there seemed to be less economic optimism around lately. Because this guy has a pretty good feel for the Zeitgeist, I took notice. It helped, of course, that I had the same feeling.

I guess we’re all reacting to the recent events. It appears that the U.S. is headed for a severe slowdown and, possibly, a double-dip recession. Even if it manages to escape an actual recession, it will appear very much like one.

More than seven million people in the United States are listed as unemployed, although the number is likely higher when you take into account those who have given up looking, or are marginally employed at minimum wage or worse.

This means, of course, that as the nation tries to repair its finances and fights increasingly nastier political battles over the correct way to do that, Americans are going to be keeping their purse strings tight and wallets closed as much as possible.

Since more than than 50 per cent of our exports go to the U.S., B.C. will feel the result of that.

Meanwhile, the financial gyrations in Europe over the massive debt and potential default of some countries such as Greece and Italy is weighing down economic activity in that market. And some Asian countries are actively trying to control their inflationary cycles, so they may start clamping down somewhat on economic activity.

Does this mean we’re headed for another recession in B.C.? Central 1 Credit Union chief economist Helmut Pastrick thinks at this point we have a 20 to 30 per cent chance. But even if we escape, Pastrick sees a muted economic outlook for the next couple of years in B.C.

I think my friend and I have to agree. We can sniff the wind too, and when we hear people talking more and more about saving money or paying off debt, we know something’s coming.

I may be at risk of contributing to the problem, but I’d advise you to start saving as well. Not everyone has fully recovered from the last recession and we may be sailing into more rough water ahead.