A monthly scorecard on the state of the economy in North America and beyond
Nathan Denette/The Canadian Press
Canada’s big banks offered homebuyers a big fat incentive last week when, led by the Bank of Montreal, most dropped their five-year fixed mortgage rates to an unheard of 2.99 per cent. Like the failing Detroit auto industry of the early 2000s, with its zero per cent financing, no-money-down offers, Canada’s banks appear willing to sacrifice some profit to keep the mortgage market booming. They’re still making money—and certainly won’t go bankrupt like two of the Big Three automakers did—but there is a similar whiff of desperation here at a time when the housing market appears to be cooling. Even in once hot markets like Calgary, prices have flattened.
These ultra low rates are bad news for Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney, who’ve been warning Canadians for years to stop taking on record debt loads in this era of easy money. BMO’s rate does come with a few catches, like a maximum 25-year payment period. But that doesn’t mean buyers won’t find themselves in trouble five years from now if rates rise.
Maybe the bigger concern is what happens if the housing market really does head south, and what that means for the Canadian economy. Over the past decade, construction was the second-fastest growing industry, creating one million jobs. It now accounts for an incredible one-tenth of Canada’s GDP. Rising house prices have also made Canadians feel richer and insulated from economic troubles. As the U.S. showed, when housing is stripped from the equation, things can quickly go from bad to worse. Record-low mortgage rates might help keep the economy chugging along, but let’s just hope we’re not now running on fumes.
After watching their parents get burned, 52 per cent of young people say they will never be comfortable investing in the stock market (29 per cent of all ages say the same thing), according to a survey by MFS Investment Management. So much for the recovery.
Gander, Nfld., once famous as a European stopover until the advent of long-range jets, has briefly reprised its old role thanks to extraordinarily strong headwinds over the Atlantic. The unexpected visits are good for the local economy, too, bringing in tens of thousands in additional landing fees.
Apple is used to being loved by consumers. But one of its Beijing stores was instead pelted with raw eggs after a botched iPhone 4S launch in China. Customers who waited overnight in frigid temperatures were furious when the store didn’t open.
Taco Bell has decided to go upscale to better compete with the Chipotle restaurants of the world. The chain, which built its business on dirt-cheap tacos and talking dog commercials, plans to offer such ingredients as black beans, cilantro rice and corn salsa.
66 per cent Americans who believe there is a “serious conflict” between rich and poor, according to a recent Pew Research Center survey
710 ml The size of the new Tim Hortons “extra large” cup—roughly the equivalent of four average-size coffees
20,000 The number of new technology products on display last week at the annual Consumer Electronics Show in Las Vegas
24 million Customer accounts hacked in a cyberattack at Zappos, a U.S. retailer owned by Amazon.com
$413 million The price of Lions Gate Entertainment’s acquisition of Summit Entertainment (maker of the Twilight film series)
$100 billion The estimated value of Facebook based on its much-anticipated initial public offering, expected this spring