Summary:
A recent article I found talks about the financial worries that many Canadians are having about the near future of the economy. 65% of Canadians are worried about their finances. Of that, 27% worry about paying off their debt, 18% about retirement, and 22% about losing their job. On the other hand, 44% of Canadians actually believe their financial situation will improve in the next year of so. Craig Wright, the senior vice-president of RBC forecasts a real GDP growth of 3.1% this year because of “solid consumer spending, historically low interest rates, and improved credit markets,” so the economy is recovering very well.
Connection:
The article, like chapter 5 in our text, talks about the two things that are important to all Canadians – unemployment, and inflation. Like I said in the above, about one fifth of Canadians are worried about losing their jobs because of the future increase of interest rates and the strengthening of the Canadian dollar. This is in fact a cause and effect. Because the Canadian dollar is so strong, it will cause inflation, and the government raises the interest rate to control this inflation. One thing I find interesting in the article is the use of the term, “real GDP growth.” This is because GDP growth is not always correct due to inflation. For “real” GDP growth to happen, this growth must be greater than the increase of inflation.
Reflection:
Although I was not surveyed in the RBC Canadian Consumer Outlook Index, I would fall under the 44% of Canadians that believe their financial situation will improve in the next year. The interest rate hike will not affect me because my family is not paying a mortgage right now. In addition, I believe the strengthening of the Canadian dollar will benefit me instead because it is a great investment opportunity. Also, none of my family members are worried about losing their jobs in the near future. My father is self-employed, and my mother has a very stable job working at the bank. All in all, I sleep very well at night because I do not have to worry about my finances.
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