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The Niagara Independent, January 25, 2019 \u2014 <\/em>This week there was a stark news item from a well-respected financial firm that Canadians must brace for harder economic times. Jim Mylonas of BCA Research Inc. alerted Canadians that the country\u2019s economy is teetering and this year will likely tip into a recession. What is disconcerting is that Canadians are being told to prepare for a recession even though the North American economy is healthy and poised to grow through the year. What\u2019s more is this foreboding warning comes from a learned market analyst, a global macro strategist in a Montreal firm that has been forecasting markets and economies for 70 years.<\/p>\n Bloomberg News found the BCAB Research statement striking: \u201cCanada\u2019s economy may soon endure something it hasn\u2019t faced in 68 years: A recession without the U.S. in the same boat.<\/em>\u201d In a Bloomberg interview, Mylonas explained that Canadians\u2019 incredibly high household debt combined with rising interest rates will push the country\u2019s economy into recession. That will occur even when, south of the border, the American economy is expanding.<\/p>\n At the core of Mylonas analysis is his forecast that the strong U.S. economy will force the Federal Reserve as well as the Bank of Canada Governor Stephen Poloz to raise interest rates. Given Canadians\u2019 debt-to-disposable-income has climbed over the last year to 175 per cent, he reasons debt-laden Canadians will not be able to finance any higher borrowing costs. The climb in interest rates will cause pain that the country has not experienced in many years.<\/p>\n Mylonas states: \u201cIf the U.S. economy is doing relatively well and the Fed is raising rates, it\u2019s very hard for the Bank of Canada to just sit on hold and not follow the Fed. We\u2019re now at the point where the Bank of Canada is going to be flirting with triggering the next recession if it hasn\u2019t already.\u201d<\/p>\n Mylonas\u2019s bottom line on Canada: \u201cI think we\u2019re just on the precipice of embarking on a serious recession. It\u2019s not a matter of if, but when.\u201d<\/p>\n The Financial Post<\/em> makes the point, \u201cIf Mylonas is right, it would be the first time since 1951 that Canada slipped into a recession without the U.S. also contracting.\u201d<\/p>\n This imposing forecast is supported by other significant economic indicators. The Canadian dollar sank in 2018 almost 8 per cent against the American dollar, the second-worst performer among Group-of-10 currencies. The consensus among global market analysts is that Canada\u2019s economic growth will wane in 2019 as lower oil prices will have a negative pressure on the country\u2019s economy. And, most analysts are calling for an economic slowdown this year based on the fact that, historically, Canadian markets retract roughly every eight years and the last recession took place a decade ago in 2008\u201309. Canada is overdue for a market retraction.<\/p>\n There is also a growing concern that the federal government is not proving responsive to current economic realities and that its actions could prompt a made-in-Canada recession. The Trudeau Government\u2019s deficit budgets and increased spending \u2013 and its lack of support for Canadian business \u2013 has prompted vocal criticism from the most unlikely of places. Stephen LeDrew, who is the past president of the Liberal Party of Canada, states outright that Justin Trudeau is harming Canada\u2019s image as a place to invest, \u201cNo one wants to invest here given what this Liberal government has done.\u201d John Manley, former Deputy Prime Minister and Minister of Industry in the Chretien Government, observed in a recent CBC interview, \u201cWhat Canada needs is more businesses that can scale up and become global. We have a big problem. The Trudeau Government\u2026 has left business out of their messaging and deliberations.\u201d<\/p>\n This week, Financial Post<\/em> financial commentator Kevin Carmichael stated the pessimistic economic forecasts should be concerning Finance Minister Bill Morneau and his officials. However, Carmichael notes, \u201cThere’s little evidence those in charge are willing to acknowledge the economy could be headed for a rough patch.\u201d Is it perhaps a case of hubris – or simply blissful disbelief?<\/p>\n Both Canada\u2019s current economic factors and our Federal Government\u2019s non-response are cause for concern. We\u2019ve been forewarned.<\/p>\n <\/p>\n Chris George<\/em><\/strong>\u00a0is an Ottawa-based government affairs advisor and wordsmith, president of\u00a0CG&A COMMUNICATIONS<\/a>. Contact:\u00a0ChrisG.George@gmail.com<\/a><\/em><\/p>\n