macro-ality trumps seasonality The threat of tariffs has become reality with significant consequences for the economy, jobs, and inflation. The weight of uncertainty has already led to a notable shift in housing market activity.
changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest. Against this background, and with inflation close to the 2% target, Governing Council decided to reduce the policy rate by a further 25 basis points.” For the Vancouver Region, this “pervasive uncertainty” has had the effect of significantly restraining housing market activity. Whereas typical seasonality sees sales rise 49% between January and February, last month saw sales rise by a more muted 14% month-over-month. Following a consistent pattern of improving activity since October, with four consecutive months of year-over-year sales gains and sales moving closer to their long-run monthly averages, that trend was completely reversed in February. Sales of 2,665 were down 18% year-over-year and 35% below the prior 10- year February average of 4,084. Subdued sales, in tandem with continued above average new listings, had the effect of pushing inventory higher in February. There were 19,482 active listings across the region at the end of the month, up 42% from last February and 50% above the prior 10-year February average (of 12,968 listings). For potential buyers who need to make a move, or those willing to see through this latest bout of uncertainty, the opportunities are abundant. Looking ahead, the general expectation for stronger housing market activity this year has quickly been turned on its head. While market seasonality typically sees activity build into the busy spring market, expect “macro-ality” to play an outsized role in the months ahead.
The threat of US-imposed tariffs on Canadian exports have hung overhead for months, but on March 4th, the nation woke up to find that those threats had become reality. While these tariffs were partially walked back over the course of the next two days—first with a one-month exemption on automotive exports, and then with a one- month exemption on all CUSMA-compliant exports—long-term damage has already been done to one of the closest economic, cultural, and diplomatic partnerships in history. For BC, the costs of a prolonged trade war with the US would be substantial, though on a relative basis, the province would fare better than others. In 2024, total merchandise exports from BC were $54.5 billion, of which 53% ($28.7 billion) went to the US. That paled in comparison to provinces like Alberta at 89% ($161.6 billion), Ontario at 77% ($194.9 billion), and
Quebec at 75% ($91.0 billion). In fact, BC had the second-lowest US export exposure of any province in Canada. Still, finding new customers for tens of billions worth of goods and replacing trade relationships that have been decades in making would not come without significant challenges for businesses and labour. US tariffs on Canada will weigh on economic output and consumption, which is disinflationary . However, in response, Canada has announced a series of targeted retaliatory tariffs on US imports, which is inflationary . This puts the Bank of Canada in a difficult position when it comes to determining monetary policy. So far, the consensus among economists is that a trade war will lead to deeper interest rate cuts. The Bank’s decision to cut its policy rate on March 12th provided some insight into how it is navigating the situation. “The pervasive uncertainty created by continuously
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