Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Income Inequality Hits A High, Economic Mobility Disappears
Canadian households are seeing the gap between the rich and poor widening very fast. The gap between the top and bottom 40% of households, known as the income gap, has expanded to the widest point on record. As it widens, inequality widens and class mobility also becomes more difficult. When these pressures combine they turn into a major liability for the whole country, as the lack of reward for hard work and productivity becomes discouraging to households.
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Canada Avoiding The Financial Crisis Is A Myth Highlighted By Australia Comparison
Canada and Australia have similar fundamentals, but very different outcomes. Both countries have comparably sized economies, and have seen rapid population booms. However, there’s few similarities with how these economies performed. In the 1980s, Canada’s economy was roughly twice the size of Australia but that has tumbled to just 1.25x in recent years. The major divergence occurred 10-15 years ago, during the Global Financial Crisis, revealing Canada’s escape from recession was a myth. Rather than delivering a swift blow to overleveraged investors, the liability was shifted to households via excess leverage. This became a drag on productivity, a problem that Canada has yet to recover from.
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Bank of Canada Holds Rates For The First Time In A Year, Carbon Tax Cuts Inflation
Canada’s central bank did something they haven’t done in a while—nothing. The Bank of Canada (BoC) left its key policy rate unchanged at its April announcement. It was the first time in a year the BoC declined to cut rates, citing trade war uncertainty as the reason. Policymakers were heavily criticized for slashing rates at the last meeting, which was seen as squandering its resources to respond to falling inflation on the horizon.
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Canadian Real Estate Prices Hit Multi-Month High, Demand Weakest Since 2009
Canadian real estate prices are on the rise despite a complete collapse in demand. The CREA HPI shows the price of a typical home climbed to $712,200 in March, hitting a multi-month high not seen since September 2024—though only post-industry revisions. At the same time, the market has seen sales collapse to one of the lowest levels on record, while inventory climbed to multi-year highs. More inventory and fewer sales typically don’t result in higher prices, a strong indication of excessive credit stimulus.
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