While it may be difficult for jittery investors to see past current market hysteria and turbulence, economic strategist Sherry Cooper has a simple message: hold on.
Cooper, executive vice-president of Bank of Montreal and Harris Bank in Chicago and a leading economic forecaster, predicts Canada’s battered economy will begin to rebound by spring next year.
“I have revised up the growth numbers for next year, particularly the last three quarters . . . because the stimulus that’s coming into the economy from the dramatic easing in monetary policy as well as the dramatic increase in government spending is very, very positive,” she said in an interview with Business Edge.
But Cooper says because of recent events, federal Finance Minister Paul Martin should delay bringing down a budget until at least February. Martin has said he will present a budget or a fiscal update by the end of the year.
“By then, we’ll see what has happened with the Christmas season, and we’ll know the ramifications of whatever terrorist activity might occur between now and then,” says Cooper, who is also chief economist of investment dealer Nesbitt Burns Inc.
“At this stage, to be trying to project government spending increases for security as well as the general pace of economy, I don’t see what it adds.”
Martin said last week that Canada’s economic growth could range between 0.6 and 2.0 per cent next year, well below the five per cent achieved in 2000, while 2003 numbers look stronger.
Cooper’s remarks echo Federal Re-serve chairman Alan Greenspan, who told the U.S. House of Representatives’ Joint Economic Committee last week that the economic downturn is expected to be temporary. One-time price adjustments in areas such as insurance premiums and security costs will not necessarily have implications for longer-term growth prospects and rapid technological advances, said the head of the U.S. central bank.
Cooper was in Calgary last week to promote her new book, Ride the Wave: Take Control in the Acceleration Age. (Financial Times-Prentice Hall; $36.95)
While the book pre-dates the Sept. 11 terrorist attacks, Cooper says her main theme – maintaining a focus on longer term economic fundamentals through times of adversity and change – is more relevant than ever. However volatile, the stock market right now is a great place to be with a longer-term perspective, she adds.
“The only thing I’d do if I were able to edit the book right now would be to add a chapter . . . on the terrorist attack and the implications,” she says.
“I have always said you must invest for the long term. You should not be in the stock market unless you have a minimum five-year horizon. My book is all about volatility and turbulence, and that though over the extended period of time the average return on stocks is about 12 per cent per year, there will be great volatility around those numbers.”
Cooper suggests the explosive growth of the Internet, particularly business-to-business revenue, will help bolster the economy, and she predicts a period of e-commerce “hypergrowth” that will have immense implications for the economy and financial markets.
Cooper also says most Canadians, especially baby boomers, are not saving enough or investing enough on a regular basis. “We’re notoriously bad at saving money. Canadians are a bit better than Americans, but we’re not good enough,” she says.
“Boomers have to recognize their nest egg the day they stop working has to be larger than they imagine.”
The author of The Cooper Files: A Practical Guide to Your Financial Future, which was ranked the number two business book in 1999 by the Globe and Mail, Cooper says she wrote her latest book “for anyone who cares about wealth accumulation and understanding why the world is the way it is from an economic perspective.”
“My life work is in that book . . . what I speak about in my job is exactly the content of the book,” she adds.
“I’m grateful that it has got relevance to the issues that are so much in the forefront today.”
