Uncertainty is now something that businesses will need to accept as a fact of life as we go forward, according to Stephen Poloz, former Bank of Canada Governor and a speaker for this year’s online CADA Summit in February.
As an economist, Poloz advises governments by offering an analysis and forecast based on risk. He prefers to have stability and to be able to plan ahead, which is a far cry from what anyone has had between the pandemic and other global forces of change that have paved the way for a period of intense disruption for businesses.
“There are very fundamental reasons why volatility in business is much higher today,” said Poloz in an interview with Canadian auto dealer. “I think it’s important for business to be looking beyond COVID and understanding those forces that are underneath the surface that have been acting all along. And I think that’s where the volatility is coming from.”
Poloz said there were several stressed sectors that are still being impacted, which is a situation that will likely linger for a long time.
This also means that there will be an elevated unemployment rate that will remain for a period of time while the economy adjusts to our new, post-pandemic conditions.
Increases in debt are nothing new and have been around for a couple of decades. Poloz said it is one of the most important vulnerabilities of our financial system and the economy itself, but that consumers have been saving their money during the pandemic — thanks to federal programs and a lack of places to spend money.
“People pay down their debts, they put money in their savings account,” said Poloz. “So most economists believe that there’s pent up demand and there’s money available for us to have a pretty good recovery in 2021.”
However, he also notes that there may still be a risk of a behaviour change, where consumers decide to continue saving more money — precautionary saving, as he calls it — in case a similar situation occurs again.
On the topic of uncertainty, David Frum, a respected analyst and frequent contributor to U.S. news networks, offered some more optimistic news.
Frum, who plans to discuss Canada-U.S. relations during his online presentation for the CADA Summit, said there is no doubt that we have entered a period of turbulence and uncertainty unlike any other transition in America. This is the obvious news, but there is light at the end of the tunnel.
The January Capitol riots have now come and gone, and Joe Biden has been sworn in as the 46th president of the United States. Frum said former President Donald Trump sabotaged Biden every way he could, although Democrats clinched enough votes to secure the U.S. House and Senate.
There was, eventually, a peaceful transfer of power, which could lead to a normalization of Canada-U.S. relations with Biden as president. In fact, Frum said there was no question about it.
“It will be more normal, more predictable — not to say trouble-free,” said Frum. “I mean, Canada’s best relations are like a super, highly sprung automobile. If there’s any bumps, you feel it because there’s just so much at stake; the relationship needs to be excellent and anything less than excellent becomes a problem.”
Frum said there are always problems, but that there will be people of goodwill on both sides of the border and the process of solving problems will go back to normal. The most important thing in the Canada-U.S. relationship, he said, is the question of: can the Biden administration get the global world trading system back on track — back to normal?
“This is an integrated world, and it’s not enough for trade to move well North and South across the border,” said Frum. “Best to move well across the planet.”
Canadian auto dealer also interviewed Jeremy Gutsche, CEO of Trend Hunter and a New York Times best-selling author. Much of his work centres around the idea that people have more potential within their grasp than they realize, especially around success, but that there are certain “traps of success” that uniquely block them from realizing their full potential.
Gutsche is an entrepreneur at heart, and an author who wrote his first bestseller in 2008 about exploiting chaos. The book is about how periods of chaos create opportunity, which he said garnered a lot of attention from brands, billionaires and CEOs. He worked with them on how to think in times of chaos.
“What I study is how your success, the fact that you’ve got a great dealership —it’s been generating money and working out so well, and (you’re) connecting with your community and pushing out great automobiles,” said Gutsche. “That success causes a series of particular traps, which cause us to cling to the status quo.”
Gutsche used the metaphor of the hunter versus the farmer to explain the concept: that humans have been hunting for more than a million years, but 10,000 years ago when they planted the first seed, it pre-wired us to repeat and optimize whatever led to the previous year’s harvest.
For successful people, he said there are a series of traps that have caused them to miss out on new opportunities. And for anyone with an entrepreneurial spirit, “you don’t want those traps kicking in,” said Gutsche.
Working through these issues is something he plans to tackle during the online CADA Summit in February.
The event is sponsored exclusively by TD Auto Finance.
