Dominion Lending Centres’ chief economist Sherry Cooper. (Portrait by Derek Shapton)
If Canada has a celebrity economist, it’s Sherry Cooper, whose high profile forecasts for BMO were required reading throughout the 1990s and 2000s. The Baltimore native began her career at the Federal Reserve Board and Fannie Mae in the U.S., before moving to Canada in 1983 to work for the brokerage firm Burns Fry (later acquired by Bank of Montreal). In 2013, Cooper stepped down from BMO—at 62, many assumed she was retiring. But Cooper, who has a new platform as chief economist with mortgage broker Dominion Lending Centres, is on a mission to demystify the turbulent housing market for Canadian consumers.
People thought you were retiring when you left BMO in 2013, but now you’re back working as chief economist for Dominion Lending Centres—among other things. Did you ever really retire?
No, not at all. I never intended to retire at that point. I’m really fortunate because a lot of things have come my way and at this stage I feel like I’ve got the right mix of career opportunities—it’s a portfolio, really. As opposed to going to the same place every day. I’m teaching, I’m a consultant with MDC Partners, which is in advertising and public relations, and I’ve been doing the speaking circuit. But my primary function is with Dominion Lending Centres and I love that because they’re mortgage brokers, and housing is certainly the largest financial investment of most households. It’s so important to consumers—and so dependent on the economy and on interest rates.
As a female economist, you’re a bit of a rare bird. The Economist recently compiled a list of the world’s 25 most influential economists and there wasn’t a single woman on it. What made you enter the field?
It was serendipitous, really. I always liked math—I was usually the treasurer for different fundraising activities and things in school—but the reason I took my first economics course was that it was offered at 10 a.m. I had a hole in my schedule and wanted to fill it, and I thought, Oh, Econ 100—that’s available. At the time, I didn’t have a clue what economists did. It’s certainly true that women weren’t going into economics. I went to a single-sex school, Goucher College in Baltimore, and there were only four economics majors.
Was there a particular moment when you decided you should be one of them?
On my very first exam—Principles of Economics—my professor wrote at the top, “Your understanding is so deep as a mere beginner. You ought to become an economist.” And that sentence—“you ought to become an economist”—just resonated with me.
You’ve seen a lot of changes on the business landscape since the early days of your career, especially with respect to women’s career advancement. What was the work environment like when you came to Canada to work for brokerage firm Burns Fry in the 1980s?
Being a woman in investment banking was certainly different. I loved that I was unique—I certainly got plenty of attention. But it was an old boys’ club, a male locker room. Sexual harassment was de rigueur, though no one ever called it that back then. People thought that sort of attention was complimentary. I remember firing a guy for sexual harassment, and I talked to my boss about it and he said, “Sherry, if we fired everybody here who hit on you there’d be nobody left.” But it was also exciting and a lot of fun. I liked the informality of it. My office was literally off the trading floor and I loved the hustle and bustle of markets. In those days, without the Internet and real-time access to information, talking to clients was hugely important because they had no idea what was going on and we knew more than they did. That’s all changed. The whole industry has changed.
How so?
Well, the investment dealers are owned by banks, so now you’re talking about commercial banking, charter banking, as opposed to individual partners and partnerships. In addition, the trading environment worldwide has changed. It’s far, far, more mathematical and professional—most traders now have MBAs or PhDs in mathematics. Having said that, there are still far too few women in capital markets and investment banking compared to any other part of the bank.
What needs to change to encourage more women to enter those fields?
The “up or out” culture—the idea that if you’re not interested in moving up in the ranks, you should get out. If you work in one of those areas, the demands on your time are enormous. You have no life and you stay until two in the morning. I think there’s a hazing factor in that the guys at the top did it so you’ve got to do it too.
You’ve talked openly about being interested in serving on a corporate board, yet despite very public dialogue about the importance of gender diversity, no major firms have approached you. Why do you think that is?
I think it’s because they have a matrix of skills they’re looking for—things like auditing, HR, industry knowledge, risk management—and I don’t fit into any of those categories. They want people who’ve had profit and loss responsibility and my function has always been in research. So I don’t fit into any of the boxes. What they’re looking for are CEOs, and there aren’t that many women who have been CEOs of major corporations. Which doesn’t mean that there aren’t many, many qualified women. It’s just that they have to think outside the box a bit.
What does that say about the general state of governance in Canada?
Well, I think the state of governance in Canada is better than in the U.S., so let’s give ourselves a little bit of credit. In Canada we don’t see many CEOs who are also chairs of their own board and that happens often in the U.S. But still there’s a lot of improvement needed and there’s a lot more diversity that I think is needed. But I don’t see it changing any time soon. I did take the Rotman course for directors, though, and I loved being back at school. I was actually class valedictorian.
What did you say in your speech?
I talked about the fact there are too many companies where the C-suite protects the board from speaking to the rank and file or participating fully in issues that are very much real but are not brought to their attention. It’s unfortunate that so many CEOs only tell the board what they want them to know rather than laying it all out. That’s something that needs to change. I think the role of board members is to ask the tough questions and keep asking until they get answers they understand. It’s sort of a “noses in, fingers out” kind of thing. You’re supposed to oversee, but not micromanage. But that balance is complicated.
As an economist, you’re under huge pressure to make the right calls. What’s one of the worst you’ve ever made?
When the Canadian dollar hit 60 cents, 62 cents—I think at one point it might have even gone below 60 cents—I talked about dollarization, and people interpreted that to mean that I was predicting dollarization or that I was prescribing it when I knew the U.S. had no interest in us adopting its dollar. There was never going to be a merger of the Bank of Canada and the Federal Reserve Board. I was really talking about the costs of an ever-declining currency. So it wasn’t actually a call, but I’ve been pinned with that. I think my Wikipedia page still mentions it, though it was almost 30 years ago.
And your best call?
I was very early in saying inflation is not going to be tomorrow’s issue and that was way back in the early ’80s. I was very early in saying interest rates were going to fall for a very long time and that was in the early ’80s. I remember saying in a speech 9% was going to seem like a very high yield someday. And remember, it had fallen from, like, 15%, so that was a crazy thing to say. I was early in saying that budget deficits were not the end of the world—and I still say it: Get off of this worry about the Canadian government debt.
I can’t neglect to ask you about housing. What’s your outlook on the Canadian market?
Well, when you look at the aggregate numbers for Canada, they’re very misleading because they’re dominated by Toronto and Vancouver. Outside of those cities, things have softened quite considerably, but in these two outliers the price increases are dominated by the single family home market and, let’s face it, the supply of single family homes is pretty much fixed and demand is growing, so prices will continue to rise.
What will that mean for families in those cities who find themselves priced out of the market?
What has to happen given that young families can’t afford single family homes in large measure is that we’re going to see condo buildings that are geared more to families. They’ll have two or three bedrooms, playgrounds and indoor play facilities. I think there’s going to be a big market for that. But condo price increases have been much more muted and so the story of the big increase in house prices is a story of single family homes in two cities.
Do you ever plan to stop working?
I don’t. As long as I’m healthy, as long as I’m able, I will continue to work. If I had to dig ditches, I would be in a different situation. But I love intellectual stimulation, and I’m passionate about what goes on in the world, so it’s not really work. It really bugs me that we have boomers turning 60 or 65 and it’s as though we’re assuming that they’re just going to drop out. That would be a travesty—we’re healthier than any previous generation and we have so much to offer. And growth rates in all industrialized countries are trending downward. The potential growth in countries like the U.S., Canada and Europe is hovering around 2% or less. So to take this huge chunk of the labour force and put them out to pasture is only asking for weaker and weaker growth.
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