Northern economists lay out predictions for 2024

Up North14:04Northern Ontario economists weigh in on what to expect in 2024

What's the economic future look like for Canada - in 2024? Two of our favourite Northern Ontario economists will give us their predictions.

Two economists at Lakehead University say they expect Canada's economy to accelerate toward the end of 2024, but say Thunder Bay and Sudbury will see different growth prospects.

Livio Di Matteo and Karl Skogstad are both professors in the economics department at Lakehead University. They say there are many economic factors that will influence the coming year in both northern Ontario and across Canada.

For Di Matteo, Thunder Bay's $1.2-billion jail construction project has been boosting the economy in recent years, and will help it continue outperforming the rest of the north over the next year or two.

"That's basically created all kinds of construction jobs and made it almost impossible to find tradespeople," he said. 

"The unemployment rate in Thunder Bay is probably the lowest it's been in 20 years."

Both Di Matteo and Skogstad say there is risk in the rest of the north due to flat resource prices.

"Until resource prices kind of rebound, I think there's going to be an overall slowdown in the economy there," said Skogstad.

The two cited the recent layoffs at the Terrace Bay pulp mill as an indicator of the difficulties that may yet come. 

However, Skogstad said there was a strong wheat harvest on the Prairies, which should bode well for transportation and shipping jobs, particularly at the Port of Thunder Bay. 

Di Matteo said both Thunder Bay and Sudbury have seen employment figures grow in the past decade, though not as fast as southern Ontario, and they say they're not overly concerned about this region's economic fortunes in 2024.

Broader trends in Canada

Both economists said the economy should remain fairly slow for at least the first half of 2024, with hopes that it would pick up again toward the later parts of the year.

Di Matteo said he expected inflation to return to a level between two and three per cent by late summer, and hoped to see the Bank of Canada start cutting interest rates any time after September.

Skogstad said he expected inflation to hit that target by 2025, though he also predicted that interest rates would start easing in the second half of the year. However, he said he only expected to see a quarter to a half point reduction this year.

Cost of living

Housing prices should remain similar, said Skogstad, as the demand remains strong and growing, compared to relatively low housing starts. He said those who have mortgages coming up for renewal this year shouldn't hurry to lock in for another term.

"I wouldn't go for the early renewal. I think the longer you wait, the higher chance that you're going to get the lower interest rates," he said.

Di Matteo said he was concerned about the high municipal tax increases that communities in both southern and northern Ontario were putting forward, because of their potential to worsen the cost of living crisis.

"Personal debt levels are quite high in Canada," Di Matteo said.

"Canadians, right now, are spending about 15 per cent of their income servicing their debt."

Skogstad said he was concerned that Canada's economic output per capita shrank by about two per cent, which hasn't been seen in this country for many years. Other countries have not seen the same degree of GDP per capita reductions. 

He said it was especially alarming compared to the strong growth this year in the United States, but noted that the U.S. is outperforming most other economies.