Financial Pain is on The Way
November 7, 2022
Beware, the financial storm clouds are closing in, writes Peter Watson.
That was the tone of a recent warning by Finance Minister Chrystia Freeland.
Her conclusion was that many households are going to be adversely affected.
Interest rates are being aggressively increased to try to control inflation. That will slow the economy, businesses will suffer, and workers will be laid off.
Our future for some will be no work, higher mortgages and other loan payments, plus higher cost of living caused by inflation. Many households live close to the edge now and in the future, many may not be able to make ends meet.
Higher interest rates are likely to continue because the Canadian inflation rate as measured by the Consumer Price Index is just less than seven per cent as reported by Statistics Canada.
Many are predicting a recession in 2023.
People will feel the financial pain, but the unfortunate reality is pain is necessary to slow down our economy. That is why the Bank of Canada has been aggressively infecting pain by increasing interest rates.
From a financial perspective, that’s a case of “tough love.”
As best as possible, when things get financially difficult, try and reduce and eliminate some forms of spending. That will be difficult but will lead to a better outcome than suffering a financial collapse, including the possibility of bankruptcy.
Canada has the task at managing its economy. We all have the task of managing our household finances.
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. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com