We’re in a good place

The U.S. economy is continuing to show its resilience and consumers are continuing to, well, consume. I lead with the U.S. conditions despite being a very proud Canadian as they are the world’s largest economy and seem to be the drummer that world markets dance to.

We are far from the “recession” expectations that 2023 began with and there are signs that the post-Covid world is moderating:

• Inflation is moderating with a slow descent to its target rate of 2% in sight

• Labour markets remain healthy with unemployment rates in the low single digits

• Interest rates are expected to trend lower, while the jury is still out on when optimistic expectations seem to be just as powerful as actual rate reductions

• Historically the cost of consumer borrowing is well within a viable range

• Higher loan and mortgage rates will have the intended slowing effect that in turn will reduce inflation rates

• Canada is ahead of the U.S. curve on interest rates and our economy is slowing faster but we aren’t a significant part of world GDP, actually less than 3%.

• 2024 is a U.S. election year and historically that has been a market-friendly dynamic

Markets are lofty in certain sectors such as technology but offer value in the high-quality names in most other sectors. We could say we are in a “glass half empty” or “glass half full” period that should continue to benefit a long-term investing strategy