Go for that dream home despite dropping markets, Edmonton economist says - Action News
Home WebMail Wednesday, November 13, 2024, 07:23 AM | Calgary | -0.1°C | Regions Advertise Login | Our platform is in maintenance mode. Some URLs may not be available. |
Edmonton

Go for that dream home despite dropping markets, Edmonton economist says

Plunging stock prices have some market watchers wondering how the downward trend will affect the economy. Edmontons chief economist, John Rose, said although consumer confidence may dip, he advises people to stay on their solid investment path.

'If you have your financing sorted out, by all means, I would proceed,' economist says

Edmonton's housing and employment markets have made steady gains since the financial downturn of 2008. (Concierge Auctions)

Plunging stock prices have some market watchers wondering how the downward trend will affect the economy, jobs and future investment.

Edmonton's chief economist, John Rose, said although consumer confidence will likely waver, he advises people to stay on a solid investment path.

"If you're considering a major expenditure such as a house or a car, if you have your financing sorted out, by all meansI would proceed," Rose told CBC News Thursday.

The Dow Jones Industrial Average lost just over 1,000 points, or four per cent, to finish at 23,860.46 Thursday. The Canadian S&P/TSXComposite Index dropped by 265 points, or 1.7 per cent, to close at 15,065.55.

"The relationship between the stock market and the economy is in the sort of near termis very, very, very loose," he said. "There's only a very indirect connection."

Strong local, global economy

For the first time since the financial downturn in 2008, all the major global economies are strong, with Europe and emerging economies in Africa and Asia in "positive territory" in terms of growth, Rose said.

"The global economy has got a lot of momentum at this point in time," he said.

"It would really take a very significant shock at this point to push the global economy in particular, but to a lesser extent Canada and the United States, into recessionary conditions," he said. "It would take a real, real severe shock."

Rose said Edmonton, compared to other Canadian jurisdictions, has positive momentum withsteady housing and employment sectors.

Vulnerable energy sector

The impact of falling stock markets will be more obvious for the energy sector, Rose said.

"This kind of volatility in particular isnot good for the energy sector," he said. "Because it's driven, obviously, by energy prices, which tend to bounce around."

John Rose, the city's chief economist, says it would take a 'severe shock' to plunge the globe into a recession. (CBC)

In the long run, the energy sectorwill feel the effects more sharply compared to the retail and construction sector.

"In a volatile market, the energy sector always comes out a bit of a loser."

Employment

The jobs situation in Albertahas been steadily improving.

Last month, Statistics Canada released job figures showing Alberta made modest gains in the accommodation, food services and natural resources industries, adding 26,000 mostly full-time jobs.

Statistics Canada is set to release new employment figures Friday.

For Alberta as as whole, the energy sector is still down almost 30,000 jobs from the peak in July 2014, including 9,000 jobs in Edmonton.

"So [a] long way to go, but those numbers will continue to improve," Rose said.

If stocks continue on theirrocky path in the second half of 2018, then we'll likely see negative effects on employment as companies start to pull back their investments, he said.

@natashariebe