Looking Back, Looking Forward: Keeping Perspective

According to The Economist, consumer sentiment is at some of the lowest levels in decades. Yet, this collective feeling does not accurately reflect the actual economic data. Since the pandemic, there’s been a growing divergence between sentiment and economic performance.¹

This may not come as a surprise. After all, we’ve been confronted with new challenges, many of which have come about quickly, such as inflation and higher interest rates. However, a closer look at the economic data may provide some perspective: We’ve also achieved a tremendous amount of progress in this economic cycle. The latest data shows that Canadian household net worth increased for the third consecutive quarter, by 3.4 percent to reach $15,704 billion in Q1 2023.² In Q2, U.S. households held the highest levels of net worth ever recorded.³ Canadians and Americans have never been wealthier.

In the U.S., Q3 GDP was recently reported at 4.9 percent, marking the highest economic growth since 2014, after adjusting for the pandemic.⁴ While recent Canadian GDP reports indicate stagnant output over the past two quarters, let’s not forget that the central banks’ objective in aggressively raising rates was to slow economic growth to curb inflation. Over the past two years, economic resilience has surpassed expectations, partly due to low unemployment rates. In Canada, this fell to a historical low of 4.9 percent in June 20225 and continues to remain at relatively low levels.

As we begin another year, keep perspective. Don’t lose sight of the economic and wealth-building progress that can be achieved even during seemingly challenging times.

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^{1. https://www.economist.com/graphic-detail/2023/09/07/the-pandemic-has-broken-a-closely-followed-survey-of-sentiment; 2. https://www150.statcan.gc.ca/n1/daily-quotidien/230614/dq230614a-eng.htm; 3. https://www.federalreserve.gov/releases/z1/dataviz/z1/balance_sheet/chart/#units:usd; 4. https://www.investopedia.com/shoppers-boosted-u-s-economic-growth-to-fastest-in-years-8382874; 5. Since 1979.}