The latest prediction for a recession

Jeff Schuster from LMC Automtoive presents at TalkAuto 2022

If we aren’t already in a recession, we should enter one soon. And it should last throughout most of next year, according to an industry expert.

But it may bode well for vehicle sales.

However, Jeff Schuster, president of global forecasting at LMC Automotive, recently told attendees of TalkAuto, hosted by Canadian Black Book in November in Woodbridge, Ontario, that the recession shouldn’t be severe.

“We are looking for a recession next year,” he said. “And that recession has turned into more of a moderate recession, probably starting yet this quarter, but lasting through the majority of 2023 before things recover and we start to see positive GDP growth.”

He noted the Bank of Canada and other central banks around the world are trying to deal with inflation first and foremost. They’re not trying to ignite a recession but that’s a by-product of trying to cool inflation that has hit levels not seen in decades.

The fact that the bank went with a 50 basis point increase as opposed to 75 is a good sign. He said that could be a signal of good news but time will tell as future announcements are made

“But that could be some signalling that maybe we’re starting to get to the end of the significant increases,” Schuster said.

Yet, even though recessionary times are likely ahead, vehicle sales shouldn’t suffer. In fact, this could be a recession where vehicle volume actually increases.

“And that is hard to digest as a forecaster,” Schuster admitted. “But I think if you look at the obviously the progression of where things have come, we’re still well below demand from a supply standpoint.”

Elements of pent-up demand still exist, he added. “Even though consumers are dealing with rising interest rates, certainly vehicle prices that are elevated — managing the monthly payment is a challenge — but we may have shrunk that new vehicle market in general.”