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How Is Human Fear Of A Deadly Disease Affecting The Economy?

The stock market has experienced a major blow due to the deadly virus currently dominating the globe. With the world’s richest losing billions as a result, how else is the human fear for a deadly disease affecting our economy? Read more from Mr. Saretsky.

Latest on Canadian Real Estate Developer Trends by Steve Saretsky

Human sentiment is a fascinating beast. Sudden fears of contagion sent markets tumbling this past week, vaporizing $6 trillion in global stock market wealth, and setting off negative economic feedback loops that have raised credible fears of a global downturn. The S&P 500 sank 11.5% for the week, the fourth largest weekly drawdown for the index since World War 2. Back home, the TSX slid 8.9%, the worst week since the financial crisis.

Ultimately begging the question, now what?

There is now widespread belief central banks will come to the rescue. Federal Reserve Chairman Jerome Powell is already standing by ready to cut interest rates after saying Friday that the U.S. central bank will “act as appropriate” as the virus poses “evolving risks” to the economy. Apparently there is no issue cheap money can’t solve, including global pandemics…

While it seems highly doubtful cheaper interest rates will force consumers out of quarantine, nor relieve supply chain disruptions, it may at least provide a temporary relief to financial markets. Even still, the global economy was already slowing prior to this black swan event.

Canada’s economic growth slowed to an annualized rate of 0.3% in the fourth quarter, the worst performance in almost four years. This could finally prompt Bank of Canada Governor Stephen Poloz to the chopping board on March 4th. After all, this is the kind of  “economic shock” that Poloz has been warning could eventually trigger a crisis in household debt imbalances.

Ironically, in typical Canadian fashion, virus panicked mobs of weekend shoppers are looting local Costco stores in the morning, and flooding open houses in the afternoon. The lust for Real Estate remains unfazed, at least for now…

Three Things I’m Watching:

1.The Canadian FIRE sector continues to grow. The percent of gross domestic product (GDP) represented by the finance, insurance, and real estate sectors in Canada hit new highs in Q4 2019.
better dwelling

2. The Canada 5 year bond yield continues to tumble. Mortgages are about to get a whole lot cheaper.
Canada bond

3. Demand-supply conditions remain tight across Canada. The sales to new listings ratio has recently risen to a level consistent with a seller’s market, implying growing upward price pressure. How will the virus impact conditions moving forward?
new real estate listing

Steve Saretsky profile picture

About Steve Saretsky

Steve Saretsky is a Vancouver Residential Realtor and author behind one of Vancouver’s most popular Real Estate Blogs Vancity Condo Guide. Steve is widely considered a thought leader in the industry with regular appearances on BNN, CBC, CKNW, CTV and a contributor to BC Business Magazine.

For more expert insights on the real estate market and trends, visit Saretsky’s website at www.stevesaretsky.com

Steve Saretsky
[email protected]
604-809-8149