As we enter 2020, it’s helpful to look back and reflect on all that has come these past 10 years, beginning with the economic crisis of 2008/09.
Beginning with the housing crisis, the 2008/09 recession culminated in the loss of trillions of dollars globally, and entire nations going bankrupt as a result of the crisis. No one could have foreseen that a US mortgage crisis would have such global impact, but it serves as a reminder of how linked the global economies are.
While Canada fared far better than the United States and many European nations, we’ve still seen impact to our nation’s growth and certain sectors in our economy.
Now that we’re climbing out of this, let’s highlight some of the major activities, mostly in Canada but globally that affect our nation, in no particular order:
Too big to fail and taxpayer bailouts
We saw both Canada’s and the US governments bailing out large corporations in order to keep people working and prevent further significant economic losses. You may recall Canada bailing out General Motors, and even though the automaker is still making cuts and closing plants in Canada, they’ve paid back all the bailout funds that were provided to them in 2009. Much is the same in the US where banking institutions, automakers and more have been able to return the bailout funds to the government (and then some), while other institutions remain under the control of the US government.
Financial Regulations increase
While Canada had regulations already in place, we saw the Frank-Dodd Act pass in 2010 in the US adding regulations much like Canada’s to the US financial industry. There still hasn’t been much prosecutorial success in bringing justice for those who lost everything due to financial mismanagement by mortgage lenders, and many American homeowners still remain underwater with their mortgage being more than the value of their home, but these measures should prevent any future recurrences of the mortgage crisis.
Interest Rates to 0%
Federal reserves and national banks slashed their prime interest rates in order to spur economic stimulus, and a decade later many have not moved the needle much to increase. In fact, 2019 saw a decrease in key lending rates in a few nations. This makes it cheap to borrow, spurs consumer spending, however has consequences.
Bye bye retail
The “Amazon effect” has seen a huge change in the retail landscape throughout the globe. North America is seeing major institutions like Sears shuttering all its stores and filing for bankruptcy, and we’re seeing many more having to make serious closures to their bricks and mortar with attempts to carve out a piece of the online retail sales pie. This has great impact to the economy because retail customer service has been a backbone of the economy for so long, and many minimum wage jobs have now been lost as a result.
Canada’s energy sector takes a hit
Our nation’s economy is closely tied to our natural resources, and we saw Alberta’s economy take a hit in 2014 when commodities prices tanked, causes over 100,000 job losses in Alberta’s oil field alone, not to mention the ripple effect of those job losses. While Alberta still isn’t out of the woods, major city centres like Calgary are seeing an insurgence of other sectors such as technology coming in to the vacant commercial spaces that once housed oil companies.
Trade agreements
Canada’s not the only nation who has been affected by trade, and I think we hear more about it now than ever before. NAFTA was re-written and after many MANY discussions back and forth between Canada, Mexico and the USA, an agreement was finally reached. The US however is still issuing trade sanctions and limits on products with Canada, China, and many other nations globally. This started primarily in 2017 and in 2019 we finally saw the impact on the corporate balance sheets of those companies affected by the increase in tariffs.
Brexit
While it’s still not finalized in the UK, their decision to leave the European Union is primarily one of trade. As a member of the EU, the UK is able to trade with other EU nations economically, and use the consistent currency to hedge any currency issues.
The new age of DATA
While tech companies have become massive and our online behaviour is recorded in everything we do, we didn’t see the profitability and overall affect that the collection and use of that data can have on a larger scale until the Cambridge Analytica case. This put Facebook in the hot seat at Congress, and has resulted in *some* change to the collection and use of consumer’s data.
Cannabis is legalized
Some states in the US and the entire nation of Canada has seen the legalization of cannabis. When things first began it was the hot spot to invest for many innovators, but now we’re seeing a cooling off and operational issues come to light with commercial cannabis companies across Canada (i.e. CannTrust). Cannabis company stocks have been affected, but there is still plenty of opportunity for this new sector.
Geopolitical strife
One thing President Trump is good at is causing political strife, through trade, military, or economic actions. We’re seeing more than we have in many years, the affect of one nation’s leadership on the world.
Climate Change
From Greta Thunberg’s rise to climate activism fame to the devastating natural disasters such as the most recent Australian wildfires, climate change is the hot topic on every government’s lips. It was a game-changer for Canada’s most recent election, seeing the Green Party secure more seats than it ever has, but the cost of disaster is taking its toll. I believe we’re going to see more investment in and jobs coming to sustainability and environmental-related areas, which will turn our economy in a different direction. We’ve seen the rise of the entrepreneur and creative class, and next up is the environment.
And… that’s a wrap! While this is by no means an exhaustive list, it gives some highlights to what the past decade has been affected by – good and bad.