As omicron piles on economic fears, Canadian outlook offers glimmer of bland optimism

Headlines that make the heart race may be good for the news business, but they aren't so hot for economic stability.

Amidst a fireworks display of breaking stories that include warnings of a new and potentially worse COVID-19 variant of concern, Friday's stock market tumble, worrying inflation updates and a new round of supply chain problems caused by B.C.'s flooding, data out this week on the Canadian economy is expected to be reassuringly bland.

And after a weekend of hand-wringing, there are increasing signs — at least in financial circles — that despite a name that sounds like a Marvel Comics villain, the omicron variant is just more of the same.

"Investors [are] betting that the impact of the omicron COVID-19 variant will be less profound than initially feared," the Wall Street Journal reported Monday, as stocks and oil rebounded from "their largest one-day percentage decline since April 2020."

Of course, there remains plenty to learn about the latest coronavirus variant and its impact on the Canadian economy, but a new stream of business news out this week — including the country's growth rate, unemployment figures and the state of Canada's banks — is expected to be reassuring.

While Canadian inflation hovering near five per cent remains a worry, new data for gross domestic product, out later this morning, is not expected to show the kind of economic growth that would set inflation soaring.

Instead, economists assess that the data from July to September will show the economy grew at an annualized rate of 3.2 per cent. If that's the way things turn out, it will be a sharp bounce-back from an economy that shrank in the second quarter.

While that is healthy growth for an advanced economy, it is also bland enough to avoid sparking new inflationary fears.

As Bank of Montreal economist Doug Porter said in a report to investors earlier this month: "Given the wildness of the prior 18 months, no one is complaining about ho-hum."

Meanwhile, BMO's results will be out Friday, at the end of a series of bank-profit numbers that begin Tuesday with the Bank of Nova Scotia. Despite all the gloomy economic headlines, Reuters is predicting a boost in dividends, saying Canadian banks, as a group, are "set to post strong results."

Lower down the financial food chain, the Canadian Federation of Independent Business has released a moderately optimistic outlook in its monthly Business Barometer. 

Small business owners are a bit like Canadian farmers, who will never admit to things being absolutely good; so a CFIB release that says, "Overall, small business optimism is on an upswing," sounds positively buoyant. 

Among the CFIB report's reservations are that its optimism index has not gained back September's losses and a growing expectation of sharply rising prices and higher wages in coming months.

WATCH | Rising food prices a major contributor to Canada's inflation rate: