Canadian, US boating markets poised for 2024 recovery – Wells Fargo

The Canadian and US boat markets should be poised for recovery and even a bit of modest growth in 2024, according to Wells Fargo international economist, Nick Bennenbroek.

Speaking to a capacity crowd at the annual NMMA Canada State of the Industry Breakfast taking place during the Toronto International Boat Show, Bennenbroek reviewed a number of key indicators suggesting interest rate cuts and stronger economic activity toward the late spring and beginning of summer 2024.

“One of the most positive signs that we’re seeing right now is progress on the inflation front,” he said. “It’s still not quite where we would want it to be from a central bank perspective and getting those inflation rates back to 2% or 3%. There is still some volatility in rates, but things are generally moving in the right direction.”

The decrease in inflation levels should in turn facilitate a reduction in interest rates, said Bennenbroek – potentially as early as April, but more likely by late spring or early summer.

“As inflation improves, we see that central banks are likely to have interest rates start to go down from around about the middle of this year,” he said. “The progress with reducing inflation is a little bit slower than we and the bank of Canada would like, so we’re looking for an initial rate reduction to incur in June of this year. Currently those overnight rates are 5%. We think we’re going to get one percentage point of rate cuts this year down to 4% and again, inflation’s probably going to keep on improving next year and we are looking at another one percentage point of rate cut next year down to 3% as well.”

With the Canadian and US economies so heavily integrated, an uptick in the US can only have positive outcomes in the Canadian market, he added. “With 77% of Canada’s exports going into the United States, what happens with the US economy is extremely important for Canadian businesses and households,” he said. “Our overall forecast for quite some time has been expecting to see a mild recession in the US, but with inflation improving as much as it has and both employment and incomes holding up to quite as well as they have, we have been surprised and at this point rather than expecting a small downturn, we actually think we’re going to get through this period without having even a mild recession in the US, which would be a remarkably good outcome for both the United States and Canada.”