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Yes, Virginia, Supermarket Profits HAVE Increased
The following commentary was first published by Centre for Future Work Director Jim Stanford at the Progressive Economics Forum’s blog site, and then republished by Heterodox Economics Blogs and covered by rabble.ca. Supermarket executives were up on Parliament Hill last week, appearing before the Standing Committee on Agriculture and Agri-Food’s inquiry into food inflation grocery chain profits. They repeated the now-familiar argument that supermarkets have not caused food inflation, they have merely passed along higher input costs to their customers; their profit margins have been stable, it is claimed. Don’t believe them. Here are a few data points on the argument that the chains haven’t actually profited from inflation, since their…
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Latest Interest Rate Hike Increases Risk of Recession
On December 7, the Bank of Canada increased its policy interest rate for the seventh time since March, by another super-sized increment of 50 basis points (0.50%). The rate is now set at 4.25%. The Bank of Canada has been among the most aggressive of any OECD central bank in lifting interest rates to slow economic activity. Centre for Future Work Director Jim Stanford was interviewed about the Bank’s decision in numerous media outlets. In this segment on CBC News Network, anchor Andrew Nichols asked about alternatives to higher interest rates for controlling inflation: Another CBC story, by Stephanie Hogan, provided a roundup of differing views (including Jim’s) on the…
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Canadian Domestic Economy Fell Into Recession in the Autumn
New economic data from Statistics Canada, covering the third quarter of 2022 (July through September) indicate that the recession feared by many forecasters has already started in Canada’s domestic economy. After a year of rapid slowing, real domestic demand (excluding international trade) shrank in the third quarter at a 0.6% annualized rate. After months of rapid interest rate increases imposed by the Bank of Canada to slow job-creation and economic activity, many components of domestic spending (especially those sensitive to interest rates) are now contracting. Household consumption, residential building activity, business machinery and equipment investment, and public sector investment all declined in the third quarter. Despite the contraction in domestic…
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Saying the Quiet Bits Out Loud: Bank of Canada Aims to Raise Unemployment
It will seem irrational to most Canadians, but the surprising truth is that the Bank of Canada is explicitly trying to increase unemployment. The Bank’s Governor Tiff Macklem recently claimed that the unemployment rate in Canada was too low: “unsustainable,” in his words, and must be increased by using high interest rates to slow down economic activity and reduce employment. This idea – of using unemployment as a deliberate tool to undermine wages and protect business profit margins – has been implicit within orthodox monetary policy for many years. But it’s both rare and angering to hear that made explicit as the goal of economic policy. In this commentary, originally…
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Webinar on Inflation, Recession … or Both!
Centre for Future Work Director Jim Stanford recently presented a keynote lecture to a webinar on Canada’s uncertain macroeconomic outlook, hosted by the B.C. office of the Canadian Centre for Policy Alternatives. The presentation covered the causes and consequences of the recent acceleration of inflation in Canada – stressing that higher prices cannot be blamed on rising wages or ‘overheated’ labour markets. Instead, a combination of supply disruptions, international pressures, and record profit-taking by Canadian businesses are the main forces driving faster inflation. Unfortunately, the conventional response to higher inflation (quickly hiking interest rates to reduce employment and overall spending) will make things worse. Most economists now expect a recession…
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CBC’s The Current Looks at Inflation and Food Prices
The sharp acceleration of food prices (up over 11% in the last 12 months) has sparked anger and hardship in Canadian families struggling to pay the bills of day-to-day life. It has also raised troubling questions about the corporate power of the major supermarket chains, which control a dominant share of the overall food retail industry. Centre for Future Work Director Jim Stanford recently joined Matt Galloway, host of CBC’s national radio program The Current, for an in-depth conversation about food prices, why they’re so high, the role of corporate profits in driving up prices for food and other necessities – and, most important, what we can do about it.…
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Who Wins, Who Loses in the Fight Against Inflation
The Centre for Future Work recently co-published with the Canadian Labour Congress a major new report on inflation: its causes, consequences, and how it could be tackled in a more balanced and fair manner (rather than throwing the whole economy into recession, which seems the inevitable outcome of the Bank of Canada’s current strategy). The report has generated considerable attention in print, broadcast, and social media. CBC’s daily political podcast, Front Burner, published a feature-length interview with report author Jim Stanford (Director of the Centre for Future Work) on why the Bank of Canada’s current approach is punishing workers for inflation they clearly did not cause. He discusses the options…
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Podcast: Inflation, Recession, and Fairness
Centre for Future Work Director Jim Stanford recently joined renowned political analyst and opinion researcher David Herle, on his Herle Burly podcast, to discuss the rising risk of recession in Canada, why the Bank of Canada is raising interest rates so aggressively, and whether there is a fairer way to manage post-COVID inflationary pressures. Stanford warned of the dangers of applying 1970s-vintage inflation theories and remedies to the unique combination of supply disruptions, energy price shocks, and oligopolistic market power than explain the current upsurge in inflation. He also emphasized that governments have ample fiscal room (given rapidly shrinking deficits) to support jobs and economic activity in months if the…
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Appearing Before the Senate Committee On Banking, Commerce and the Economy
Centre for Future Work Economist and Director Jim Stanford was invited to appear as a witness before the Senate of Canada’s Standing Committee on Banking, Commerce and the Economy, to discuss the darkening outlook for Canada’s job market, and appropriate policy responses. The appearance lasted for one hour. Jim’s appearance was broadcast on CPAC. Here is a video link (Jim’s testimony starts at the 1:01:00 mark): Here are Jim’s speaking notes for his opening remarks: Speaking Notes for Dr. Jim Stanford, Economist and Director of the Centre for Future Work Madam Chair and Senators, thank you very much for the opportunity to appear before you today. I…
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Don’t Make Monetary Policy on Twitter
The Bank of Canada has been under attack from all sides for its actions (or, in some critics’ eyes, inaction) in response to rising inflation. To reinforce public support for its actions, the Bank has launched a communications offensive to explain – and justify – its actions. The Bank even posted a lengthy thread on Twitter arguing that since inflation hurts “all Canadians,” its efforts to bring inflation down through rapid interest rate hikes will benefit us all. This attempt to dumb-down monetary policy making was not just ineffective in its tone. It inadvertently revealed major flaws in the Bank’s economic reasoning. In this commentary, originally published in the Toronto…