There are silver linings to this storm

Q2 Newsletter 2024
June 10, 2024

By Ian Ardill

Happy Spring! As we enjoy the warmer weather, we are busy keeping our eyes on the market. 

Recently I read a fantastic article by economist David Rosenberg that captured my thoughts around our economy. It is not all doom and gloom, but if we take off our rose-coloured glasses, the economy is showing many signs of stress: stagflation, shrinking GDP, rising unemployment, and a capital gains tax increase. 


When we look at the inflationary factors that are driving up costs, such as mortgage costs and carbon tax, we are arguably in a recession. And that’s not all: Canada is in stagflation, which is when there is higher unemployment, rising prices (you’ve seen grocery prices), and a slowdown in the economy—all at the same time. If we remove housing/rent from the conversation, inflation is around 1.5%. This is a massive difference from the 6% we saw just 24 months ago, indicating we are in a disinflationary period. Which, on its own, is a good thing.  Except…


Canadian GDP per person is shrinking, and fast. It has now declined in five of the past six quarters for a total decline of $4,200 per person, returning us to 2017 levels. And so, from a financial perspective, an average Canadian’s quality of life is diminishing, as has generally been the case over the past 10 years.   

Higher Unemployment

The job market is struggling, too. The number of people searching for full-time employment—career seekers—has doubled in the last year. Coming out of the pandemic, the labour market looked promising, but that is not the case today. A lot of people are desperate for better-paying jobs and long-term careers. 

Capital Gains Tax Increase

From my perspective, the capital gains tax increase is disincentivizing individuals from reinvesting in their businesses. We already live in one of the most heavily-taxed regions of the world. Until recently, a business owner’s corporation provided a reasonably effective retirement planning tool—a fruit at the end of their labour for successfully running their own company. Unfortunately, many of the rules have changed as they relate to passive income and income splitting—two strategies that were of considerable effectiveness for business owners. And now, to boot, capital gains tax increases further erode the value of owning a successful business.

Silver Linings

To summarize, these are trying times for the economy. But, there are silver linings.  First, indicators point to a Bank of Canada announcement dropping interest rates by a quarter or half a point by December, and I believe the BoC will drop rates by a further full point in 2025. 

We can position your investments strategically

Here’s a second silver lining:  it is quite possible to position your investments strategically to weather the storm. For example, we could balance your portfolio with more exposure to the stronger US economy or other viable markets. In addition, we see some buy opportunities on the Canadian side in private equity investments.

While the Canadian economy isn’t exactly flourishing right now, this too shall pass. Meanwhile, let’s manage the risk in your portfolio appropriately to give you peace of mind, by taking advantage of some buy opportunities (see my story on REITs) and weathering the storm proactively.

P.S. Here is the article from the Financial Post that inspired this reflection: David Rosenberg: Tanking economy, productivity mean Bank of Canada should cut rates with or without the Fed. 

Also: “Canada’s gross domestic product per capita: Perspectives on the return to trend”: 


Ian Ardill, B.A., M.T.S.
Private Wealth Advisor
CEO, Ardill Group

Direct: 1 905 717 5698
Office: 1 905 907 7000