Page 4 - D17883 - LBMAO - Reporter Jan-Feb 2022 - web optimized

Message from the CHAIR

THE CANADIAN ECONOMY WILL FACE

CHALLENGES IN 2022

david campbell came across a couple of noteworthy charts that may be of interest to our members as they clearly point out the
LBMAO President I challenges for the Canadian economy going into 2022. There’s an old saying in economics that Canadians are
“Hewers of Wood and Drawers of Water”. Below is a chart showing our Net Exports by Type – you can clearly see what
we sell (export) and what we buy (import):

"Trying to predict
the inventory
requirements
for the spring
of 2022 will be
exceptionally

difficult as many
of our members'
sales have been
driven by new
housing starts."

However, if you look closely at the above chart you see it is actually energy that is our primary
export. Maybe we should be called “Drawers of Oil and Hewers of Wood”.
This is why our currency has traditionally been viewed as a “Petro Loonie”; however this relationship seems to be
breaking down of late. Even as oil broke above $85 this week our dollar actually slid ~1.5 cents to settle just above
$0.78
Trying to predict the inventory requirements for the spring of 2022 will be exceptionally difficult as many of our
members’ sales have been driven by new housing starts. Keep in mind the following chart from the Superintendent of
Financial Institutions regarding rising interest rates (and the fact that Variable Rate Mortgages now make up over half
of all mortgages):
Could be some trouble if and when Tiff
(Bank of Canada Governor Tiff Macklem)
starts cracking up rates and these mortgage
payments begin to rise.
The home improvement sector has not
suffered the same economic crisis that other
retail sectors have over the past 2 ½ years.
2022 will be challenging as inflation, higher
interest rates and consumer fatigue will
have an impact on the demand for products
sold in our stores. Keep inventories
balanced and gauge how your customers
are going to spend over the next several
months!

4 LBMAO Reporter - January-February 2022 www.lbmao.on.ca