Article source: ConstructConnect
Presently, there are a lot of negative factors in play. One might easily cite the disturbing psychological and other impacts of the fighting in Ukraine; the ongoing supply shortages that are only slowly being resolved; an affordability crisis, especially for first time buyers, in residential real estate; general price inflation that shows little sign of letting up; and central bank moves to raise interest rates.
These are probably the chief concerns giving rise to speculation, voiced by some analysts, that the U.S. and Canadian economies may be headed into recession.
Providing counterbalance to such a notion, however, are hearty upbeat messages coming from some of the latest data releases and private sector pronouncements with respect to spending plans.
Consumer spending comprises more than half of gross domestic product (GDP) in both the U.S. and Canada. The share south of the border is 70%; to the north, 56%. (In Canada, foreign trade is a bigger part of the overall economy.)
Retail trade accounts for much of consumer spending. February 2022’s total shopkeeper revenue in the U.S. was +15.9% year over year. Canada’s latest year-over-year increase, but for January, was +12.0%.
There’s no question that some of those y/y sales gains, expressed in ‘current’ dollars (i.e., $s not adjusted for inflation) were due to sizable price increases. For example, sales by gasoline stations have soared mostly because the price of petrol has taken off (i.e., up by one-third or more y/y in both the U.S. and in Canada).
But place the +15.9% y/y retail sales gain in the U.S. next to a +7.9% increase in the Consumer Price Index (CPI) and that means there was still a significant part of the climb that was ‘real’.
Similarly, in Canada, the +12.0% y/y jump in retail trade outstripped the +5.1% y/y increase in the CPI during the same month.
By the way, according to Statistics Canada, the retail sales gain in Quebec in January was +25.0% y/y, with Montreal at +29.0%. (Toronto was +15.1% y/y and Vancouver, +11.0%).
