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Is the Economy “Hot”? Or is it Cold, and Getting Colder?
The Bank of Canada is widely expected to increase its policy interest rate again this week, for the eighth time in the last 10 months. Media and financial market commentary on its decision has made numerous throwaway references to how Canada’s economy is still “running hot,” and that i why a rate hike is needed. This common claim is surprising, and not consistent with economic evidence. Canada’s economy is not “running hot” by any concrete measure. Here are six: Final domestic demand in Canada has been weakening for over a year, and was shrinking in the third quarter of 2022 (latest data). Were it not for the export sector (with…
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Submission to BC Inquiry on Labour Standards for Gig Work
On-demand work organized through online digital platforms is an extreme form of precarious employment. In this business model, workers perform specified tasks, directed by apps on their smart phones; resulting revenues are controlled by the firm which operates the platform. Workers 1 are responsible for providing required tools and a place of work – such as a car or a bicycle. They are compensated for each task on a piece work basis, while the platform appropriates a large share of revenues as its cut of the arrangement. This model of work first became widespread in passenger transportation (so-called “ride share”1 work through businesses like Uber and Lyft), and then spread…
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Profits, Not Wages, Have Driven Canadian Inflation
Every January, the Globe and Mail newspaper publishes a fascinating set of charts (curated by journalist Jason Kirby) prepared by Canadian economists, with their insights into economic trends likely to shape the following year. Centre for Future Work Director Jim Stanford was invited again to participate in the collection. He submitted the following chart and text, highlighting the dramatic increases in corporate profits in Canada that have been the dominant distributional outcome of recent inflation. In recent months, the Bank of Canada has focused on the labour market as the main culprit behind higher inflation: The unemployment rate is too low, wages are rising too fast and this so-called “overheating”…
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When Will We Learn? Speculation is no Way to Build a Real Economy
History repeated itself last year in financial markets: several high-flying ventures that once generated a frenzy among financial speculators, came crashing back to earth in the face of higher interest rates, fears of recession, and a rush to the exits by more prescient investors. In this commentary, originally published in the Toronto Star, Centre for Future Work Director Jim Stanford reviews five speculative bubbles that popped in 2022. The most dangerous, from a macroeconomic perspective, is the accelerating downturn in Canadian housing prices – as rising debt charges squeeze prospective buyers. A major downturn in housing will have big impacts on real employment and spending. The common lesson from these…