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Financial Stability on Pins and Needles

Financial Stability on Pins and Needles

December 7, 2021

The new variant of COVID-19 has increased the financial worries of Canadians, writes Peter Watson.

Last week the Bank of Canada warned that interest rate increases were likely to happen in the first part of next year in order to put the brakes on inflation.

One particular concern we have seen is the rising prices of homes as well as the dangerously high amount of household debt – both of which serve as significant risks to individuals and the country.

Economic prosperity has a better chance of occurring when we can return to more normal times. Since early 2019, the greatest financial challenge has been the pandemic.

Then late last week news spread about a new COVID-19 variant that was first discovered in South Africa. Could this be the start of the next wave that would throw much of the world economy into another economic slowdown?

The result was of the news was instant panic. Stock markets around the world plummeted. On Friday the S&P 500 lost 2.27 per cent which is the largest single day loss since February.

As similar loss happened in Canada. The S&P/TSX Composite index was down 2.25 per cent.

Gasoline prices that had been a strong contributor to high inflation suddenly dropped 11 cents per litre at the pumps.

If another wave of COVID-19 fears spread, governments, including our own, would likely continue programs of economic relief. This would add to the staggering high levels of government debt that have already resulted from the pandemic.

We will recover from the pandemic, but we don’t know when. Until then the financial stability for many is on pins and needles.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Peter Watson provides wealth management services through Watson Investments –