Last week was "forum week" in Toronto. (That is, it was the Toronto Real Estate Forum.) And as is the case every year, Benjamin Tal, deputy chief economist of CIBC, opened up the event with his usual macro view of the world. For those of you who missed it (as I did), here are some of his key points (via RENX):
The Bank of Canada's overnight rate will ultimately/likely settle into the 2.75-3% range (currently it sits at 5%). He expects rates to start coming down this summer.
Inflation is down, but we're not yet at the 2% target. The "last mile" is always the toughest.
But as we know, the BofC will take a recession over high inflation, any day.
The mortgage market has fallen faster than in the early 90s recession. Tal said that the residential real estate market in Canada is right now facing "the biggest test" since then.
Canada is in what he calls a "per capita recession". But for the million or so immigrants that the country accepted over the last year, we'd be in a full-blown official recession.
Finally, he called this correction in the housing market both "real" and "healthy"; he spoke about normalcy returning in 1-2 years; and he posited that the market will be "crazy" when it does return because of a supply deficit.
This last point is an important one. New housing supply is mostly shut off right now. I say mostly because there are obviously still projects under construction, and there have been and there will continue to be some successful launches. But by and large, most developers are waiting right now, principally because the absorption isn't there. They have no other choice.
But Canada continues to grow. People from around the world continue to want to move here. And there continues to be a need for a lot more new housing. So when the market does return -- and it, of course, will -- there is going to be a supply-demand imbalance. And as is always the case in real estate, there will be a lag in responding to this imbalance.
This is what Tal means by "crazy".
Photo by Wiktor Karkocha on Unsplash

I'm a big fan of Anthony Bourdain and I have seen a lot of his shows. However, up until last night, I was under the impression that he had never done an episode about Toronto. Turns out I was wrong. Yesterday I discovered that, back in 2012, he did one as part of his two-season show, The Layover.
As a born and raised Torontonian and as a fervent supporter of this city, I'm always a combination of excited and nervous before I watch a show like this. I'm excited because I love Toronto and I like seeing it showcased. But I'm nervous because, what if they don't do a good job showing it off?
Maybe it's hometown insecurity, or maybe it's just my inner desire to want to properly sell Toronto to the rest of the world. Either way, my mixed feelings were not unfounded.
The episode opens with Bourdain coming into downtown from the airport and immediately saying, "It's not a good looking town. They sort of got the worst of the architectural fads of the 20th century. It looks like every public school in America, every third-tier city library, Soviet chic, butt-ugly, glass box.”
Things get generally more positive after this initial impression, and eventually Bourdain does admit that the city has great food, nightlife, diversity, etc. But there is this interesting moment in the middle of the episode where a bunch of Torontonians are asked: What one thing would you say best describes Toronto?
Most didn't know how to answer it.
This got me thinking:
https://twitter.com/donnelly_b/status/1722845722876293268?s=20
What is our thing? There are, of course, the obvious answers. We are diverse. We have great ethnic foods. We have numerous sports teams. And people are generally nice. But these are a little too generic and boring for me. There are also truly unique features like our ravine network, but I wouldn't call this our single most notable feature.
The right answer, in my view, is that Toronto is the economic and cultural capital of Canada. It used to be Montréal (which you all know I love deeply), but that's no longer the case today. Broadly speaking, there's only one global city in this country and, like it or not, it's Toronto.
I think it's important to recognize this ranking because economic opportunity is one of the principal reasons that people live in cities in the first place. And if we are to compete globally, we are going to need to be both confident about our place in the world and insanely ambitious about our goals.
So that's my answer: Toronto has global city status. But clearly we need to be much better at recognizing and building on it.

Canada has a lot going for it:
By land mass it is the second-largest country in the world, with the longest coastline. Bookended by the vast Pacific and Atlantic oceans it has enormous trading advantages, alongside access to the largely untapped Arctic to its north. It is a net energy exporter; it has the third-largest proven oil reserves and is the fifth-largest producer of natural gas — but it also boasts large deposits of critical minerals vital to the green energy transition. And, of course, it borders the world’s largest economy.
By purchasing power parity, its economy is ranked 15th globally by size, behind the likes of Turkey, Italy and Mexico. The OECD has forecast Canadian per capita gross domestic product growth up to 2060 to be the lowest among advanced nations.
Poor productivity is at the heart of the country’s growth challenges. In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data. Many would have expected the resource-rich economy to benefit as globalisation powered forward, but its relative labour productivity has actually slipped since 2000.
The solution is probably a simple one: We need to innovate, invest more in R&D, and create stronger links between research and Canadian businesses. But executing on this has proven difficult:
Enormous efforts have been made to understand why businesses in Canada invest so much less in R&D than their counterparts in the U.S., much of Western Europe, South Korea and Japan. Is it our reliance on the export of natural resources and agricultural products? Is it reduced incentives to innovate for our heavily regulated and profitable oligopolies in sectors such as banking and telecommunications? Is it our decades-old reliance on incentivizing industrial R&D through federal and provincial tax credits?
It's hard to imagine a more important topic affecting all Canadians. So I would encourage you to read this recent opinion piece by David Naylor (president emeritus of the University of Toronto) and Stephen J. Troops (president of the Canadian Institute for Advanced Research).
It's a balanced piece. Neither of them are arguing for "empty credentialism" or for research that remains in academia. What matters is what we do with the work that our smartest minds are doing. And the overarching point is that innovative research needs to find demand within Canadian businesses.
Right now, we're very bad at this. That needs to change.
Chart: Globe and Mail
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