Canada's future prospects are good

Despite the continuing crisis in the Eurozone and the still sluggish US economy, there is still good news for the Canadian economy. Although growth has slowed and inflation is clearly in check at 1.3%, Canadians are optimistic about job security; the real estate market is balancing itself out; and consumer debt is under control. The real estate market in the country's three major cities - Vancouver, Toronto and Montreal have softened somewhat, but mainly in the condo market. While most parts of the country have seen a slowdown in sales activity, there is probably no need to be concerned for the future given the changing demographics.

A study by the Bank of Montreal (BMO) found nearly two-thirds, or 64% of respondents, are optimistic about their job security. And 41% believe their company will be growing and hiring in the future. This optimism exists despite job losses in July, which are likely due to seasonal adjustments, and relatively high unemployment at 7.3%, but still below historic norms.

Wages will rise modestly in the next twelve months, led by non-union employers and will stay ahead of inflation according to BMO economist Sal Guatieri, which will support household purchasing power.

With Finance Minister Jim Flaherty calling on Canadian businesses to use its cash reserves to invest in the economy and the Bank of Canada Governor Mark Carney telling Canadian companies with substantial cash assets to give back to shareholders, it's likely employee optimism is justified.

On the home front, a report by CIBC examined the changing demographics and found that the housing market will stay strong over the next 10 years. House prices may decrease but will stabilize. The vast majority of first time home buyers are between the ages of 25 and 34. The number of Canadians in this age group will grow and housing demand will see an annual growth of 9%, which is roughly the same growth as we have seen in the last ten years.

So what's going on right now?

The real estate market has slowed somewhat but people are still purchasing in most areas of the country. Prices are coming down for single residential dwellings. Mortgage interest rates are historically low and we are starting to see some discounting again of variable rates. The pace of growth in the economy has slowed but there are still jobs available. Inflation is in check, consumers are still shopping, and managing their debt loads. Overall, it's business as usual for consumers.