Worries of a recession in 2023 got another jolt this weekend with former Bank of Canada governor Stephen Poloz warning the country’s economy is at a greater risk of a “hard landing” – a rapid economic slowdown following a period of growth and approaching a recession.
For small businesses, it's a prediction that brings concern.
Jennifer Devitt (right) wraps flowers at her store, Devitt House, in Waterloo on March 26, 2023. (Hannah Schmidt/CTV Kitchener)
Waterloo gift shop owner Jennifer Devitt is once again making some changes.
“I think I’ve really had to adjust to what people might buy from us versus what they were buying from us before,” said Devitt, owner of Devitt House. “Some of those things have changed as accessibility has opened up.”
After navigating pandemic lockdowns and dealing with rising inflation, Devitt is now thinking about how her Waterloo-based gift shop will weather a possible recession.
“I see businesses that have chosen to close or that have moved or that have made other decisions and moved onto different options and I certainly would like to be here for a good long time, so I would certainly hope that that’s possible,” she said.
Devitt says she's had to adjust to people's changing buying habits. (Hannah Schmidt/CTV Kitchener)
In an interview airing Sunday, Poloz told CTV’s Question Period host Vassy Kapelos the Bank of Canada and federal government’s efforts to reign in inflation are working, but the chances of a hard landing remain.
“So, we can literally have growth and more jobs being created while inflation is decelerating,” he said. “That combination is unusual but only happens when the supply side is doing the work…we can get lucky here and have a nice soft landing but it’s going to take some luck at this stage.”
Economic forecaster Ted Mallett says there is hope for Waterloo region. He predicts the local economy could stave off the worst effects of a possible recession and be a growth leader.
“Our K-W-C [Kitchener-Waterloo-Cambridge] is really one of the economies in the metro areas where we expect growth to be the fastest,” Mallet said. “We put it in the top five in the country over the next four years, so the prospects for growth in the region are very good.”
Some economic forecasters predict governments will be pressured by banks and economists to limit spending, suggesting that they be cautious with upcoming budgets.
At Devitt House, there’s still hope the business can thrive even in a recession.
“I hope we can just continue to offer things that add to people’s quality of life,” explained Devitt. “I don’t think people realize just by that little bit of thought, by checking locally first, what a difference it can make. It’s just a huge difference so that’s what I think we need to maintain that model.”
(CTV Kitchener/Hannah Schmidt)
