Consumers less confident in BC

Re-diculous posted this link to an article in todays Vancouver Sun about a dramatic drop in consumer confidence in BC.

Consumer confidence in B.C. plunged to its lowest level in five years last month as high energy prices and economic concerns test people’s resolve, the Conference Board of Canada reported Monday.

The board said B.C. consumer confidence fell 9.3 points in June to 94.3 – dropping below 100 for the first time since mid-2003.

The consumer confidence rating across Canada dropped 6.2 points in June to 79.6, following a seven-point drop in May, leaving the second quarter reading at its lowest level since the fourth quarter of 1995 when it was 68.8.

There’s been a lot of buzz in the news about inflation and recession worries lately – could this drop in consumer confidence be blamed on the media?

39 Comments
newest
oldest most voted
Inline Feedbacks
View all comments
alexcanuck
alexcanuck
12 years ago

Did anyone see this on Bloomberg this morning?
http://tinyurl.com/6ahsne
They are repackaging those rotten fish (the CDO's of the subprime mortgages) and trying to sell them again! I was in a rush and only skimmed it, but it blew my mind that anyone would get fooled again by a new name. The whole credit crunch is nowhere near over. This is the deflation Alistair Cookie is talking about. All those imaginary dollars going poof and turning back into thin air.

scc
scc
12 years ago

Keep in mind that most of the money supply is a consequence of fractional reserve banking (legalized leveraged monetary expansion by banks). The resulting positive feedback loop is spectacular while the money supply is expanding and catastrophic when it retracts. This was further enabled by the facilities that fueled the "Sub-prime" problems (CDOs/structured investments, CDS, easy bond rating agencies, low interest rates from central banks driving the heard to invest in this "high quality paper", etc.).

Alistair Cookie
Alistair Cookie
12 years ago

@patriotz – I am really not interested in seeing debates over whether we currently have “inflation” or “deflation”. These are simply arguments over what “inflation” (unqualified) is supposed to mean, i.e. over terminology and are meaningless in any operational sense. The relevant fact is that we are now seeing the highest consumer price inflation in a couple of decades and that is negative for RE prices. Ask ten different economists to define inflation and you'll get ten different answers… 😉 Peter Schiff has a great way of explaining price inflation in relation to money supply inflation (what I feel is true inflation). Basically: a widget's price is directly proportional to the growth or contraction of the money supply. I agree with you that the consumer price inflation we are currently witnessing is negatively affecting RE, but it is really only… Read more »

Alistair Cookie
Alistair Cookie
12 years ago

@patriotz – It is easy for the central banks to prevent consumer price deflation just by increasing the money supply. They cannot prevent asset price deflation because asset prices must adjust to fundamentals. Disagree. Fundamentals are always in place, what changes is the banking industries ability to lend and receive back the credit they have extended. It is not so easy to increase the money supply when banks are loaded with massive amounts of suspect loans. If their balance sheets are impaired, they will not be able to extend credit. If they are not able to extend credit, the money supply stagnates. If they wait for loans to be repaid, or foreclose on asset price deflated homes and resell for less than loan value, the money supply shrinks causing true deflation. Asset price deflation can influence the money supply, which… Read more »

Re-diculous
Re-diculous
12 years ago

Sir John Templeton passed away today at age 95. All should consider his famous "4 most expensive words of investing", namely: "It's different this time"

Vansanity
Vansanity
12 years ago

condohype – I agree 100% with your thoughts on the BoC rate next week. Well said!

Vansanity
Vansanity
12 years ago

Look away Look At Me, another downer article. Catalyst Mill closing Pulp Mill in BC: http://www.canada.com/victoriatimescolonist/story… This is the first pulpmill that I've heard has been closed, so far its been the sawmills. I could be wrong, there may be others that I haven't heard of. As for my old hometown in the Kootenays, the mill is still closed (several months now), most of my family that lost jobs are either moving to Alberta or retired with a $25K buyout or have found other jobs (only 1 has). The town's real estate is slowing in sales and increasing inventory (sound familiar?). Last I checked there was 154 homes on the market, whereas last year at this time there was 24. Also, on BNN this morning, they were reporting Siemens plans to cut 16,750 jobs globally. In Canada they employ 6,000… Read more »

Raincouver
Raincouver
12 years ago

.

There's a thread over on RET about getting out of a pre-sale contract. If this is such a hot RE market why would anyone want to sell? Just hold and unload for a profit just before the 2010 Games. Wasn't that the theory?

All of a sudden there's a proliferation of 'reasons' why sellers must exit the market rather quickly … job offers in distant countries…family obligations…nothing to do with wanting to bail. No, nothing like that.

Peek a boo, I see y
Peek a boo, I see y
12 years ago

Look at Me wrote "That’s funny how you only choose the bearish headlines, why not post the article in the Sun last Friday how BC leads the nation in economic growth.

At least pretend to be neutral."

Hey, Look At Me!

Why does the blogmeister have to pretend anything? An interesting topic is an interesting topic, isn't it? He and many of us here find "bear" topics interesting. Is there a "bull" blog you would recommend? Yes? No? Hey, why don't you start one up? If you can make it interesting, people will come. Seriously! Keep in mind that you'll find a lot of lazy passersby criticize your blog. You know the kind I mean, don't you?

patriotz
patriotz
12 years ago

It is easy for the central banks to prevent consumer price deflation just by increasing the money supply. They cannot prevent asset price deflation because asset prices must adjust to fundamentals.

You have spades of evidence to support this south of the border.Highest consumer price inflation in decades, highest housing price deflation in a single year ever, bear market in stocks.

Consumer price inflation causes asset price deflation.

Case closed.

blueskies
blueskies
12 years ago

deflation will be fought

tooth and nail at great

cost to the hoi poloi……

we.are.so.screwed!

stagnate
stagnate
12 years ago

deflationary pressures are starting to pick up of late; inflationary and deflationary pressures are both evident, a clash of the titans so to speak. i think the bond market now is reacting to the deflationary pressures, interest rates have come down the last week or two. not a big problem unless unions start leveraging significant wage increases tipping the balance the other way.

condohype
12 years ago

Link to Reuters story about the BoC becoming more aggressive on curbing inflation.

condohype
12 years ago

The Bank of Canada meets on July 15. If they up the interest rate, the party's over. My guess is that they'll keep the rate as is, with rate increases coming in future meetings.

Funny thing, this creature called inflation. It may just be the beast the kills the RE boom.

patriotz
patriotz
12 years ago

Here’s the best proof I can offer as to the amount of deflation the residential housing market in the US is experiencing That is asset price deflation, which is something entirely different from consumer price deflation. Consumer goods are things you have to buy. Assets are things you don't. The asset price deflation we are currently seeing is in fact partly due to consumer price inflation, as we also saw in the 70's. The difference in the 70's is that it was stocks and bonds, right now it is housing and stocks with bonds likely to follow (higher interest rates). I am really not interested in seeing debates over whether we currently have "inflation" or "deflation". These are simply arguments over what "inflation" (unqualified) is supposed to mean, i.e. over terminology and are meaningless in any operational sense. The relevant… Read more »

Vansanity
Vansanity
12 years ago

Just to beat the building permit horse beyond death, below is a link and an excerpt. Developers are seeing an end in residential sector. Too bad! I was hoping they would keep the break-neck pace of building crappy condo's going for the remainder of the year or so. Glut glut glut! Oh well, 27,000 plus under construction right now… nothing to see here. http://www.canada.com/ottawacitizen/news/story.ht… Non-residential permits were up 12.8 per cent to $2.9 billion in May. "The rise came mostly from strong increases in the industrial and institutional intentions," Statistics Canada said. Residential permits fell 6.6 per cent to $3.7 billion during the month, led by a big decline in multi-family permits. "The value of permits in the residential sector has been on a downward trend since September 2007," the agency said. Charmaine Buskas, senior economics strategist at TD Securities,… Read more »

blueskies
blueskies
12 years ago

The BC economy is not booming, with economic growth approaching negative territory. House prices continue to fall as sales volumes sky dropped in June. The outlook for Vancouver real estate has never been more bearish with the Olympic fever ignited in our anus.

spin, spin, spin 🙂

blueskies
blueskies
12 years ago

quoted here and then summarily executed for their lack of any kind of valid argument or realistic data.

drachen:

you have such a way with words

🙂

Joe Stalin
Joe Stalin
12 years ago

The truth will set you free. The new carbon tax and cap and trade will mean that BC will soon become the economic wonder of the world. We are standing at the feet of a great new society. We have crossed the rubicon into a whole new century of prosperity. The more taxes the better so please keep sending in your loot.

Thanks

Joe Stalin

betamax
betamax
12 years ago

Dunno, I feel feverish whenever I think about the Olympics.

Drachen
Drachen
12 years ago

Anonymous

Here's a fact for you;

Your sarcasm/irony detector is malfunctioning.

"Olympic fever is ignited in all of us."

I mean really, does that sound like he's serious?

Anonymous
Anonymous
12 years ago

John, sales plummeted year over year and listings are growing, some places like N.van the number of listings is up approx 113%.

DT condo listings are up 65% YOY, so what you are saying and what is actually happening is quite the opposite.

Months of inventory is growing and Sell/List ratios are were below 50 for the month of June.

Please post some facts!

does this sound fami
does this sound fami
12 years ago

"Why Is Southern California Housing So Expensive?

Conventional wisdom goes that Southern California is experiencing a severe housing crisis with no end in sight. A lack of developable land, years of underbuilding, and a huge surge in population due to Southern California's desirability as a place to live have engendered a serious imbalance between housing demand and supply. Adding fuel to the fire is the fact that Southern California's wealth has grown significantly due to its robust and diverse economy. With all these factors at work, we are told, it's no wonder that home prices have risen so spectacularly"

Does Muir Think we a
Does Muir Think we a
12 years ago

Yes John, it's true, it's all true, and wait until the world receives our calling card during the Olympics.

Burden of Proof
Burden of Proof
12 years ago

"The BC economy is still booming"

I assume you are joking. Just in case, here is a report from the BC Business council that shows a shrinking economu. The economy was in recession with negative growth last quarter.

Like I said, I assume that you are joking and not an out right liar.

http://www.bcbc.com/Documents/BCEIndexv7n1.pdf