'We remain optimistic, as ominous as it seems': Chamber of Commerce hangs onto hope as recession fears loom

The Windsor-Essex Regional Chamber of Commerce is holding onto hope that a balance can be struck between taming inflation and not tipping the economy.

This, as concerns about a possible recession grow nationwide.

“Clearly there are some external factors that are in play,” said WERCC president and CEO Rakesh Naidu. “We're just coming out of pandemic, we have high inflation, which is the highest we've seen since 1990s. We have supply chain issues and shortages, which is adding to inflation, adding to an increase in costs and everything.”

Naidu said other factors are also coming into play like lockdowns in China and war in Ukraine. “If you put all of that together, it's a storm that we're currently experiencing and it doesn't look like it is going away anytime soon.”

Ian Lee, an associate professor at the Sprott School of Business at Carleton University in Ottawa said to CTV News Thursday that the risk of a recession is increasing, saying other experts are suggesting the same.

“I'm reading a lot of people like Lawrence Summers, the former finance minister under President Barack Obama, Distinguished Professor of Economics at Harvard, he says it's over 50 per cent risk. Wells Fargo Bank this morning, said 50 per cent. It's 50/50. Former Deputy Prime Minister John Manley said come up with a similar figure.”

Lee explained, “I am in the same camp right now. I think it's 50/50. It's a flip of the coin. I don't mean they're flipping a coin, but I think it's that we're not certain it could easily tip into recession, but they might be able to pull off a soft landing.”

Lee notes officials aren’t sounding the alarm on a recession just yet, but said if Canada does fall into one, it could be in late 2022 or early 2023, adding if you’re among the concerned, now is the time to resist extra spending.

“You've got to pay your essential bills,” Lee said. “You absolutely must pay your rent or your mortgage. That's job one. And groceries. Everything else should be seen as discretionary. No matter how much that hurts. That means you may have to cancel a trip. A big planned holiday you've been dreaming for for three years because of COVID, it may have to be postponed. You've got to temporarily say I'm cutting that out of my budget temporarily until the storm has passed.”

Lee continued that manufacturing communities like Windsor have historically been impacted differently than places that are service dominated like Toronto or Ottawa. “Services companies tend to keep their people on the payroll and just accept the hit from reducing income and maybe losing some money. Manufacturing companies like the GMs and the Chrysler's, and the Fords have historically responded by laying people off.”

Mean time Rakesh Naidu doesn't expect things being as bad as 2008.

“It's not imminent and I think there's still opportunities for the federal government to look into how they can stave it off or how they can reduce the impact or how they can get the economy to have a softer landing.”

According to Naidu, 2008 was not a typical recession. “I think it was very deep and it was for very long. There I think the demand had dropped significantly. Unemployment level was high. That's not what is currently. That's where things are very different. We have a very low unemployment here in Canada and record unemployment in the U.S. There's still a huge demand, Canadians are sitting on a very high disposable income.”

“We remain optimistic, as ominous as it seems, because of the external factors, I think there's still some opportunities for us to manage this better,” Naidu said.