RE:RE:RE:RE:RE:Analyst CommentTorontojay wrote: I'm of the opinion that unemployment will rise over the next year or so and I think it will be around 5-6%. This will certainly impact Goeasy in the short run but they will consistently remain profitable nonetheless. If you believe unemployment will remain at current levels then we can agree to disagree. If you think the Fed is going to raise rates well into 2023 and bring down inflation back to a 2% target then unemployment has to increase. Let's just say, I don't think we're going to have a soft landing.
Majority of job gains since start of pandemic are public service jobs that won't go anywhere any time soon.
On the private side the vast majority of people are in positions that either ensure a company can operate (back office), deal with sales or are performing the services required for the company to make their revenue.
Goeasy borrowers have fixed debt and even upon refinancing the amount they have to pay is relatively flat. Goeasy doesn't have multiple times leverage, but you look at something like Banks or insurance companies that make money of leverage, a 1% loss on assets is a multiple percent decline in equity.
Several of my own thoughts below:
Inflation occuring now is in relation to supply restraints due to increased logistic costs and delay as it has been shown that Just in Time inventory systems collapse by one part missing. Crude is a big contributor and all it takes is one already volatile supplier country to impair prices. But lets say we have 10% interest and $200 crude, power price like Europe that are double, triple, 10 times historical levels, quite difficult for inflation to disappear if inputs cause price to go up.
Fed and BOC types can't seem care of the why something is happening rather than the fact that this is occuring and that inflation will not be impact at all due to interest rates only individuals and companies suffering due to challenges with debt.