 Welcome to Mind Your Business ! Consider this your weekly guide to understanding what’s happening in the worlds of economics, business and finance. By Peter Armstrong | | |  | Housing numbers this week should show a more balanced market. (Andrey_Popov/Shutterstock) | | | Canada's notoriously unhinged housing market will come back into focus this week. Home sales numbers should give us a look at how hot the spring market has been thus far.
Home sales and average prices have been pretty grim since the peak in March of 2022.
But there has been fairly widespread speculation that the spring market (which normally sees a solid resurgence in both sales and average prices) was going to post some solid gains.
So much so that the Bank of Canada worried that cutting interest rates in March would fuel an already warming market.
The Canadian Real Estate Association has said it expects nearly 493,000 residential properties will be put up for sale in 2024. That's a 10.5 per cent increase from 2023.
CREA says average home prices are forecast to climb nearly five per cent year-over-year. (That would push the average price to $710,468 this year.)
This is how the national market looked when we got the last numbers. | | |  | | | Look for that chart to be updated here on Monday morning.
But as I write this, the average price of a home (not seasonally adjusted) was $698,530 in March 2024. That's up two per cent from March 2023.
At least part of the expected increase in home prices comes as a result of the expectation that interest rates will start to come down soon.
Right now, most economists believe the Bank of Canada will start cutting rates this summer. There is some dispute about whether they think rate relief will come in June or July.
But there are millions of mortgage holders hoping it comes sooner rather than later.
Only about half of all mortgage holders have had to renew at higher rates. The rest will see their borrowing costs climb considerably in the coming 18 months or so.
And those are people who took out mortgages when rates were at their lowest and home prices were approaching their peak.
Last week, the Bank of Canada's Financial Stability Review highlighted concerns about those renewals and the fact that those with a variable rate mortgage are looking at their monthly payment going up by more than 60 per cent. | | |  | | | So, these next few months will be key.
How mortgage holders weather this next storm of renewals will shape part of the landscape.
The next big data drop will come via the latest inflation numbers on May 21. That will inform how we view the Bank of Canada's next decision on June 5.
So, hold on to your hats, a lot is about to happen.
What do you think these next few months will bring?
As always, send me a note.
My email is: peterarmstrong@cbc.ca | | |  | | Canadian home sales figures will be released this week. The Canadian Real Estate Association will unveil the latest statistics on Wednesday. | | | | | | Canadian housing starts for April will be released on Wednesday. Economists expect to see very little change from the previous month. That would make some sense as building permits slowed this winter. | | | | | | The latest U.S. inflation numbers are out on Wednesday. Economists expect the year-over-year rate of inflation cooled to around 3.4 per cent last month. | | | | | Three things to read, watch and listen to this week | | |  | A distinctly Canadian take on film. (ckchiu/Shutterstock) | | | 1. The state of the Canadian film business | | | How much money do you think the Canadian film industry made last year?
It was a pretty good year. PAW Patrol: The Mighty Movie took the world by storm. Blackberry was a hit. Smaller films like I Like Movies (which was just lovely) and Brother received critical acclaim.
Box office revenue climbed to the highest level since 2014.
And yet, all told, Canadian films' box office revenue came in at... $10.6 million.
That's not a lot of money.
And yes, to be clear, that's box office, and does not include money made by selling the streaming or TV rights.
The numbers come from the Canadian Media Producers Association's annual report on the state of the film industry.
The headline of the report is that between April 2022 and March 2023, "the media production sector in Canada contributed $14.05 billion to Canada’s GDP, generated $12.19 billion in production volume and created nearly 240,000 jobs."
But the part that jumped out at me were those numbers looking at box office revenue of Canadian feature films buried way in the back of the release. (Hat tip to the Globe and Mail's Barry Hertz, who tweeted out the chart last week.)
I guess I just figured Canadian films were bringing in more theatre audiences than that. But then I asked myself how many films I went to see in the theatre last year and how many of those were Canadian.
I saw the PAW Patrol movie and Blackberry, but the rest I watched at home. And I'm betting many of you did the same.
Check out the CMPA report here. | | | U.S. population decline kicks in | | | I've written in this space about the geopolitics expert Peter Zeihan. His most recent podcast episode looks at the latest U.S. census data and, he says, the news is not great.
"Our birth rate has dropped to a 40-year low," said Zeihan in this episode.
He says the numbers now show the American birth rate is at about 1.6 per woman.
When you factor in an aging population, excess deaths due to COVID-19 and the ongoing opioid crisis, Zeihan says that rate needs to be closer to 2.3 just to keep the population where it is.
The whole world is dealing with a falling (in some cases plummeting) birth rate. As more people move away from farms and into city centres, they typically have fewer kids.
As they have fewer kids, the available workforce shrinks. And with that, the revenue available to governments shrinks just as aging populations require more government spending.
That doesn't mean imminent disaster. In fact, Zeihan says it can have a positive short-term impact on the economy.
He says a cohort of younger Americans between the ages of 20 and 45 are having fewer kids.
"The money they would spend on schooling and buying a bigger house they can use for more furnishings and travel and more restaurants and more high-octane growth that feeds through the system, and that has a multiplier effect," he said.
The issue is that only pushes the problem further down the road.
"After 20 years, you start eating into your working-age population, and after 50 years, you start eating into your skilled worker population as well as your tax base," he said.
China is leading the world in birth rate collapse, but Germany isn't far behind.
Zeihan says the U.S. has some structural issues that have acted to blunt the impact. Mostly, he points to the amount of land in the U.S. Whereas in many Asian and European countries, you either live in a rural area or a city, Zeihan says America is huge and has vast tracts that fall in between — suburbs and smaller towns where prospective parents don't feel as constrained by cost of room to grow.
The podcast is a short one and lays out the argument for what America needs to do — immigration reform would be best, but politically unlikely, says Zeihan.
Check out Peter Zeihan's podcast here. | | | 3. More ads are coming to a streaming service near you | | | One of the things I liked best about the advent of Netflix and the other streamers was saying goodbye to ads.
Shows were built differently and the experience of watching them morphed as the streamers settled into their groove.
It was probably naive to think it would last.
And sure enough, ads are seemingly everywhere.
Amazon is now running a couple of ads before your show on Prime starts (unless you chip in an extra few bucks a month).
And now Gizmodo is reporting Amazon is introducing "pause ads" and "trivia ads."
You can read Amazon's blog post explaining the concept here.
But they are precisely what they sound like.
When you hit pause, your show will freeze where you stopped it. But when you hit play again, Amazon will run an ad.
"These pages will let users add items to their cart without having to leave Prime Video. Pause ads, in particular, are going to be ever-present whenever you pause your content with a transparent banner showing you products you can add to your cart," wrote Kyle Barr at Gizmodo.
Trivia ads will get viewers to answer a few questions, offer some product information and give you an option to add said product to your cart.
YouTube has been running these kinds of ads for a while now. Hulu started running pause ads last year.
It makes sense. After all, Amazon didn't launch Prime as a standalone business — it's a perk to bring more customers to its giant online store.
And there are billions of dollars at play.
So expect to see more of this as the economic realities of broadcasting bite into the streamers, who are worried about revenue now that they've worked their way through the years of maximum growth.
Read the Amazon blog post here.
Check out the Gizmodo piece here. | | | How the economy looks beyond Bay Street | | | Investing $1,000 | | | If you could invest $1,000 in any index anywhere in the world, where do you think it would see the biggest gains?
The U.S. S&P 500 is probably the one we talk about most. Few of us would guess the TSX in Canada, as it had a rough patch through 2022 and 2023.
Would you even think to look at India's main index, the NIFTY?
Over the last five years, it's the one with the strongest returns. A $1,000 investment in 2019 would yield a $1,924 return. | | |  | That chart actually puts the TSX in a better light than I would have thought. (It's been on a pretty good tear since the end of October.)
Here's what the folks at Visual Capitalist say about how they put the chart together:
"This data was sourced from Investing.com, and covers the five-year period from April 1, 2019, to April 1, 2024." | | | Share this newsletter | | or subscribe if this was
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