1. Gen Z asserts itself
Gen Z begins entering the workforce this year. In just two years, Generation Z — people born in the late 1990s and since — will account for about one-third of the workforce. In contrast to millennials, Gen Z is motivated more by challenging workplace projects than money. Surveys show Gen Zers prefer face-to-face over digital contact. Gen Z is also among the most entrepreneurial generations yet. That makes its members a flight risk in regimented workplaces where unorthodox thinking is discouraged. Gen Z is more likely than millennials to prefer private workspaces over open-space layouts. And social-media savvy Gen Zers, accustomed to free flow of information, demand unprecedented managerial candour. Turnover will be high in workplaces that don’t provide it.
2. Modestly pricier food
Canadians can expect to pay between 1.5 per cent and 3.5 per cent more for food in 2019, or an average of $411 more per family than in 2018. Accounting for that projection’s wide range is how Canadians adjust to an expected rise in prices for vegetables and dairy products, but expected lower prices for seafood and meat. Unfavourable weather conditions in California and South America will drive up vegetable prices more than any other food group in 2019, up by an expected 4-to-6 per cent. Another staple, dairy products, will rise in price between 1 per cent and 3 per cent. But seafood prices will ease after an earlier period of supply shortages. And prices will drop for meat, which appears to be in permanent decline for personal health, environmental and animal welfare reasons.
3. Higher borrowing costs
The Bank of Canada (BoC) is expected to raise its key lending rate twice this year. If you financed your home with a 2.5 per cent variable-rate mortgage amortized over 25 years, expect your monthly mortgage payments to rise to $1,200 a month, or an additional $800 or so per year. A five-year fixed-rate mortgage — one of the most popular mortgage products — that comes up for renewal this year currently has a renewal rate of 3.54 per cent, which will rise still more later in the year. That’s quite a jump from the rate five years ago of 3.05 per cent. But the news could have been be worse for mortgagees and credit-card borrowers. Until recently, the BoC was expected to raise rates three times this year. Concerns about slow world economic growth, trade wars and a troubled Canadian oilpatch have encouraged the BoC to take a more gradual approach in its campaign of raising rates to contain inflation.
4. Lower health-care cost inflation
Canadian medical costs are expected to rise 6 per cent in 2019, or 3.9 per cent after factoring in inflation. That’s a reduction from 2018. It’s also lower than the forecast global rise in health-care costs, as well as the North American average increase. Canadian health-care providers are using computerized data collection, preventive health measures and stricter procurement methods to reduce the escalation in health-care costs. Because core health-care services in Canada are covered by provincial programs, “cost inflation (in Canada) is driven by expensive prescription drug therapies,” Greg Durant, senior vice-president at international insurance broker Aon’s Canadian office, told Benefits Canada recently. But “these therapies, while expensive, are also game-changers, in that they keep employees active and productive to a degree that would be impossible otherwise.”
5. The plastic stigma
A nascent campaign to reduce plastic waste will gather momentum in 2019. The alarming increase in plastic waste contributes to the global crises in fresh water and food shortages. Until now, it has been governments taking the lead in curbing the damaging impact of the estimated five trillion pieces of plastic in our oceans. The Oceans Plastics Charter, a set of protocols introduced by the Trudeau government last June for sustainable management of plastic waste worldwide, has been signed by five G-7 countries, with Japan and the U.S. the only holdouts. This year the campaign becomes more high-profile, personal and widespread. Municipalities, schools, museums and institutional food service providers (who operate employer and health facility cafeterias) are reducing their use of plastic cups, straws, cutlery and bottles. The food industry, led by the major food producers and grocery chains (which already charge for plastic bags), are making the transition to nonplastic packaging. And on the home front, plastic substitutes such as beeswax wrap, reusable silicone bags and edible plastic wrap will soon become everyday household staples. “It takes about five seconds to make a plastic bag,” says Catherine McKenna, the federal environment minister. “(Then) they last in our environment, in our oceans, for five centuries.”
6. Your personal data is safe with us
E-commerce sites, and websites generally, have been coy until now about their customer security measures. That ends this year as online merchants, especially, seek competitive advantage from straight talk with online customers about security. In detailed plain language, website operators will explain how visitors’ personal data is used (mostly to customize product offerings), and is safeguarded by, among other things, not selling it or otherwise making it available to third parties. Europe’s landmark General Data Protection Regulation (GDPR), which took effect last year, triggered a sweeping security overhaul of all European websites, which has boosted e-commerce in the European Union. North American website operators will ramp up their privacy protections to match or exceed the GDPR standard in a bid to increase market share by claiming the most user-safe sites.
7. The 5G era begins
The latest generation in telecom gear, dubbed 5G, debuts this year. It will boost the speed of online traffic as much as 100 times over current technology. Long under development by Canadian telecom giants such as Vancouver-based Telus Corp., 5G will become available to everyday users this year. Mobile-phone leaders Samsung and Huawei are launching consumer 5G products in 2019, and Apple is rumoured to also have 5G products ready for the market this year. Experts believe widespread adoption of 5G won’t come until 2020. In the meantime, early adopters will experience high-def video broadcasts of concerts and sports events. And futuristic applications are on the horizon, including holographic phone calls, mobile artificial-intelligence computing, autonomous, or driverless, vehicles and even remote surgery.
8. A smart-tech boom in real estate
“Proptech” will become a mainstay of real estate development this year. Property technology includes virtual and augmented reality software that enables prospective buyers and tenants to view and assess a model kitchen, office suite or mall space while it is still under construction. More use will be made of drones to measure job-site progress and to manage docking stations for home delivery of groceries (another trend that will gain strength in 2019). Artificial-intelligence (AI) devices, already replacing mundane tasks such as data entry, will prove their worth this year with just-in-time delivery of building materials to work sites. In housing, buyers will insist on mobile device control of lighting and other household amenities. Developers will be challenged to ensure this new functionality is protected from cyber hacking. And while autonomous vehicles might seem far off, developers are already redesigning parking in shopping centres and apartment blocks to accommodate them.
9. In autos, a blast from the past.
With Canadian auto sales set to plateau in 2019 after five years of record sales, automakers are pinning their fortunes on what they consider to be sure bets — refashioned favourites from earlier times. The bids for nostalgia appeal include Ford’s Ranger pickup and Bronco SUV, Jeep’s Gladiator pickup and Land Rover’s Defender SUV. These 2019 models serve the North American industry’s shift, accelerating this year, away from family cars to gas-guzzling light trucks during what the industry prays will be a prolonged era of low pump prices. To compensate for lower volumes, the industry will inflict sticker shock on showroom visitors who recall what those vintage brands cost in their earlier heydays. The base price of the humble 2019 Ranger pickup, for instance, is about $40,000 (Canadian), and Jeep’s Gladiator pickup is expected to debut at about $45,000. The industry’s gambit for moving that metal is to dress the new models up as “lifestyle trucks” with luxury trimmings that justify — the industry hopes — higher selling prices.
10. At last, the foldable smartphone
The foldable screen smartphone finally arrives this year, with model launches by smartphone leaders Samsung and Huawei. No word yet from Apple, but it is sure to enter the market sooner than later rather than lose further market share to a Huawei that eclipsed it in handset sales last year. Foldability has long been a mainstay in mobile devices, notably cellphones and pagers. But smartphones have been a holdout. As they have boasted ever larger screens for easier viewing, they have become bigger and more difficult to stow in a pants pocket or small purse. The breakthrough, which heralds a durable trend in foldable handsets as prices come down, is a needed boost for an industry sector with few innovations in recent years.
11. An emerging crisis in emerging markets
It’s worrisome enough that global debt has soared 20 per cent since 2007. In emerging economies, debt has skyrocketed by 50 per cent. Meanwhile, the world’s major central banks, including the Bank of Canada, are resolute in continuing their tight-money campaigns. Massive debt and rising interest rates are a toxic mix, weakening the currencies of developing countries struggling to meet debt obligations denominated in greenbacks or euros with local currencies that have weakened against those of the major economies. Meanwhile, slow growth in the European Union and slowing growth in China will have a damaging knock-on effect in the emerging economies on the periphery of those regions, including Eastern Europe and Southeast Asia. The resulting further weakening in the currencies of Brazil, Argentina, South Africa, Turkey, Saudi Arabia and other heavily indebted countries risks heightened political instability and rising geopolitical tensions in 2019.
12. A re-emergence of value investing in stocks
This year should raise the curtain on a new golden era in value investing, now emerging from a periodic slump. In the remarkably long bull market in stocks that is now ending, there have been few genuine value stocks to buy — those that are undervalued and promise generous investor rewards over the long term. But the record corporate profit margins that have sustained lofty stock valuations in the 2010s will suffer a humbling comedown this year from historic highs. Meanwhile, the era of cheap money — a needed economic tonic since the Great Recession — has given way to interest-rate hikes that will continue this year. That combination has started to shift money away from increasingly risky equities to newly attractive fixed-income securities, depressing stock prices further. That is a familiar cycle, in whose early stages there’s little discrimination in the punishment dealt to shares in good and not-so-good companies. The result is a bargain-hunter’s market for seekers of underpriced high-quality stocks, which will grow as the year progresses, and continue into 2020.
13. Alternatives to the political nightmare of carbon pricing
From Alberta to Paris, proposed carbon-pricing schemes will be a flashpoint of populist discontent this year, building on protests that began in 2018. Farmers and a financially strained working class worldwide see carbon pricing as a hike in their cost of living. Climate-change expert Justin Gillis accuses fellow activists in the climate movement of making a “fetish” of “politically toxic” carbon pricing, as if it is the only means of fighting global warming. Three alternatives to carbon pricing will stand out this year. An overhaul in municipal building codes would sharply diminish poorly constructed structures as a major source of greenhouse gas emissions. A clean electricity standard would require that a minimum amount of power be derived from low-carbon sources. (Much of North American power is still generated by coal-fired plants.) And more commuters would give up their vehicles if the likes of Toronto, New York and Washington didn’t suffer deteriorating subway systems. Putting a price on carbon emissions is essential. But fierce resistance to it is holding up progress on other fronts, and it might have to wait until North Americans are ready to embrace it.
14. Canadian rivals to Toronto in AI
Toronto has become North America’s second largest tech region, after Silicon Valley. But leadership in artificial intelligence will increasingly be shared by Toronto with dynamic AI growth centres Ottawa, Vancouver, Montreal and Edmonton. The nation’s capital is home to 1,700 tech firms employing 68,000 people. And per capita, Ottawa boasts more engineers, scientists and PhDs than any other Canadian city. Growth stimulates growth, and the presence in Ottawa of AI firms such as BluWave-ai, Zighra and Stratelogics will attract still more talent and startups to the city. Amazon has just opened its second Vancouver R&D facility, focused on cloud computing and machine learning. Amazon joins leading local AI firms Mobify, Santuary.AI and Finn.ai. Montreal’s AI roots are deep and have been strengthened by Facebook’s recently expanded AI operation, Google’s new machine-learning office and Microsoft’s acquisition of Montreal AI startup Maluuba. Google has opened the first non-U.S. branch of its DeepMind unit in Edmonton, attracted by longtime AI research leader University of Alberta. U of A hosts the pioneering Reinforcement Learning and Artificial Intelligence research program (RLAI). And Royal Bank of Canada has bolstered its financial technology prowess (“fintech”) by launching its Borealis AI division in the Alberta capital.
15. More diverse travel options
Mini-vacations or staycations, wellness tourism and so-called B-leisure, or “bleisure,” travel (mixing business with pleasure) will each continue to grow in popularity. In 2019, more hospitality operators will seize on these opportunities for growth. Large hotel/resorts will bolster their fitness facilities beyond workout equipment to yoga, heart-healing therapy and “lucid dreaming sleepovers” to profit from a wellness tourism market expected to grow some 50 per cent by 2020, to $919 billion (U.S.). B&B operations will become more commonplace in major cities, offering spas, serenity pools and the like to staycationers. And both B&Bs and large hotels will offer family-friendly packages for travelling businesspeople in partnership with tour operators who can schedule museum, concert and rock-climbing sorties into a business itinerary. “The line between a business trip and a leisure vacation is increasingly blurry,” says Avis Car Rental, which in a recent survey found that 92 per cent of respondents do some work on leisure vacations and 56 per cent of businesspeople with children include their families in business trips.
16. Gun-shy central bankers
The authority of central banks, which wield enormous influence in shaping the global economy, will be at least somewhat undermined in 2019. The impunity with which U.S. President Donald Trump has relentlessly, and in unprecedented fashion, attacked the U.S. Federal Reserve Board makes all major economy central bankers vulnerable as never before to political interference. The frustrating slow pace of Europe’s economic recovery will put added pressure on the European Central Bank (ECB) as well. A 2019 of continued trade wars and heightened volatility in the stock, currency and commodities markets will make economic forecasting acutely difficult for central bankers. And a new cohort of populist government leaders — from Italy to Brazil — who traditionally hold central banks suspect will make central bank strategy more open to political second-guessing than ever before.
17. A Canadian TV show with global trend-setting potential
The Canadian sitcom Kim’s Convenience (CBC), now beginning its third season, depicts a South Korean immigrant family’s painstaking progress with its small business (a convenience store) toward middle-class stability. The drama-comedy hits the social hot buttons of income inequality, immigrant striving to fit in without losing cultural identity and a bid to keep alive the North American dream of upward mobility. The show has just gone international on Netflix. Because Kim’s Convenience powerfully resonates with other cultures, notably the U.S., Europe and the Pacific Rim, it is bound to be copied elsewhere and in many forms, including books, plays and made-for-the-internet drama and comedy series. Kim’s Convenience, says the New York-based Bloomberg News, “highlights a type of success story that is crucial to the health of the American (and Canadian) middle class — and one that is in great danger.”
18. Cobalt, tech’s unlikely handmaiden
In the midst of a widespread commodity price slump, cobalt will continue to command record prices this year. Cobalt is a proxy for the dynamism of the Information Age, due to its ubiquity in preventing the lithium-ion batteries in mobile devices and electric cars (EVs) from overheating and exploding into flames. The long-obscure metal soared more than 300 per cent in value between 2016 and 2018, the year it set a record high of almost $100,000 (U.S.) per ton. Prices will continue strong this year as demand for mobile computing devices and electric vehicles keeps growing. The world’s largest private cobalt stockpile — about 3,000 tons — is held by Cobalt 27 Capital Corp., listed on Toronto’s TSX Venture exchange. As long as cobalt remains in high demand, its limited supply — most of the world’s reserves are in the Democratic Republic of Congo — will rank it among the world’s priciest base metals.
19. China blues
Setbacks in China this year might prove to be the worst since the launch of its Industrial Revolution in the 1980s. A new trend of diminished consumer expectations will last into 2020 and likely beyond. A heavily indebted Chinese middle class, not unlike that of Canada, has already succumbed to a “consumption downgrade” as wage growth falls behind cost-of-living increases. China’s automakers forecast zero growth in sales this year, after last year’s first sales decline in 28 years. Chinese GDP growth is expected to slip, to 6.3 per cent this year and 6.0 per cent in 2020 — a far cry from the double-digit growth rates of the 2000s. President Xi Jinping’s vow to make housing affordable to all is jeopardized by a real estate sector staggering under enormous debt and bracing for a 10 per cent drop this year in new house prices. The biggest question is the status of Xi’s two pet megaprojects, China’s “Vision 2025” bid to achieve leadership in a half-dozen or so of the 21st-century’s leading technologies; and his Belt and Road initiative to rebuild the ancient Silk Road from China’s Pacific coastal cities through Central Asia and Africa to Europe.
20. New menu items
Tahini might be the biggest food trend of 2019. The Middle Eastern paste made from toasted, ground hulled sesame is a boon for those on vegan diets, providing some of the fibre, calcium and protein lost in forsaking meat. Tahini is also an ideal substitute for peanut-based foods for those with peanut allergies. Non-dairy ice cream, already widely available, will now be offered in a bigger variety of flavours, including banana, avocado and oat milk. Oat milk, another 2019 trend, is creamier than other “alt-milks” and works well in lattes and cappuccinos. The family of “adaptogens” will gain prominence in 2019. These are plant-derived foods and additives, including roots, berries, fungi and herbs, often available in pill or powdered form. They are believed to relieve stress, and can be added to a variety of traditional dishes and beverages. And cannabis “edibles” become legal this fall. Cannabis-infused beverages and baked goods will begin their march to ubiquity this year. We will know the phenomenon has reached its apex with the arrival of cannabis Timbits.
David Olive is a business columnist based in Toronto. Follow him on Twitter: @TheGrtRecession
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