Economic Chaos or Opportunity? History Repeats Itself — Which Path Do We Choose?

“A smooth sea never made a skilled sailor.” – Franklin D. Roosevelt

We’ve seen this before. Markets rise and fall. Rates soar, then crash. Governments overspend, consumers overborrow, inflation bites — and then, somehow, we bounce back stronger.

Right now, the economy feels like a boat tossed on unpredictable seas. Between higher interest rates, stubborn inflation, and growing uncertainty, it’s easy to feel adrift. But the truth? We’ve been here before. And we’ve come out ahead — every time, economic Chaos or Opportunity?

The Optimist’s View: Set Your Sails — The Wind Will Change

Let’s talk about what we’re seeing — and why it’s not all doom and gloom.

Interest Rates: They’ve Peaked Before, and Then Dropped

In 2008, the Bank of Canada cut rates by 2.5% in one year.
In 2020? A 1.5% drop in less than 12 months.
From May 2024 to June 2025: another 2.25% drop already underway. Pattern? Rates rise fast, then fall fast. Always have. History suggests we’re halfway through this rate cycle.

Real Estate: Prices Are Holding, and Equity Is Plentiful

Vancouver Island’s home prices are only 1.7% below 2022’s peak.
Anyone who bought in 2020? They’ve gained nearly 60% in home value.
Plenty of equity means refinance opportunities are still alive, especially after the first rate cut in June 2024.

For buyers who missed the 2021–2022 boom: your time might just be now.

Employment & Growth: We’ve Bounced Back Before

Yes, unemployment is up slightly.
Yes, consumers are cautious.
But Canadian inflation is back near target (1.7%) and wages are still rising.

In past recessions — like in the early 1980s, the 2008 financial crisis, or COVID’s 2020 chaos — we saw stronger growth emerge after periods of belt-tightening.

Tariffs, Debt & Deficits? Been There, Done That

In the 1930s, the Smoot-Hawley Tariff Act sparked a global downturn. Today, tariffs are still making noise, but we’re also:

Far more globally integrated
Faster to respond with policy
Quicker to innovate our way through disruption

And yes — even Warren Buffett said Trump’s tariffs are “a tax on goods.” But as with all taxes, we adapt.

The Other Side: What Happens if the Elephant Sneezes?

But let’s not sugarcoat it. When the U.S. sneezes, Canada doesn’t just catch a cold. Sometimes we get pneumonia.

Signs of Trouble:

U.S. job losses and jobless claims rising again
Consumer sentiment lowest in 12 years
Deficits soaring: $1.83 trillion, and counting
Tariff wars and political unrest mounting

If the U.S. economy staggers into full-blown stagflation — high inflation + low growth — it won’t just be a sneeze. It’ll be a stampede.

What That Could Mean for Us:

Canadian exports fall (we sell 75% to the U.S.)
Our bond yields rise if U.S. debt causes panic
Fixed mortgage rates could stay high even if BoC cuts
Investor confidence erodes if U.S. markets spiral

So, What Do We Do?

The “Set Your Sails” Strategy

Refinance if you can. Use your home equity. Rates are falling — timing matters.
Buy smart. Home prices have corrected slightly. With long-term amortizations, monthly payments are within reach again.
Stay diversified. Markets will rebound. Real estate, balanced investments, and steady income matter more than chasing hot trends.

The “Elephant Sneezes” Contingency

Build emergency savings.
Lock in fixed rates if you’re unsure about the future.
Don’t overextend on credit. U.S. bankruptcies and credit write-offs are flashing warning signs.