• Commentary,  Employment & Unemployment,  Inflation,  Macroeconomics

    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…

  • Commentary,  Inflation,  Macroeconomics

    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…

  • Commentary,  Employment & Unemployment,  Inflation,  Macroeconomics

    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…

  • Employment & Unemployment,  Inflation,  Macroeconomics,  Research

    Orthodox Cure for Inflation Will Be Worse than the Disease

    Evidence is growing that Canada’s economy, and most other OECD nations, is heading into recession. Dramatic increases in interest rates around the world, motivated by a desire to clamp down inflation that broke out after the COVID pandemic, is undermining investment, job creation, and household spending power. The Centre for Future Work has jointly released a major new report with the Canadian Labour Congress documenting the flaws in the Bank of Canada’s diagnosis of current inflation, and the risks in its one-sided approach to solving the problem. The report, titled A Cure Worse than the Disease? Toward a More Balanced Understanding of Inflation and What to Do About It, was…

  • Commentary,  Employment & Unemployment,  Inflation,  Macroeconomics

    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…

  • Commentary,  Employment & Unemployment,  Macroeconomics

    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…

  • Inflation,  Macroeconomics,  Research

    Slowing Economy Should Give Bank of Canada Pause … But It Won’t

    New GDP data released last week confirm that higher interest rates and other headwinds have already slowed economic growth in Canada to a crawl. This should give the Bank of Canada pause to reconsider its schedule of aggressive interest rate hikes. That inflation was never attributable to overheated domestic economic conditions. Instead, statistical evidence indicates that current inflation is mostly the result of several unique post-pandemic factors: supply chain disruptions, higher energy prices, and a catch-up of consumer spending from depressed pandemic levels. Moreover, those largely temporary forces are already abating: several key global price indicators have fallen substantially in recent months (including petroleum, food, and shipping costs). By undercutting…

  • Commentary,  Employment & Unemployment,  Inflation,  Macroeconomics

    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…

  • Commentary,  Employment & Unemployment,  Macroeconomics

    “We Need All Hands on Deck in this Labour Market”

    Centre for Future Work Director Jim Stanford appeared on CBC’s News Network, with host Natasha Fatah, to discuss new employment data confirming a rapid slowdown in Canada’s labour market. He argued that a perverse consequence of aggressive interest rate hikes by the Bank of Canada has been a reduction in labour force participation: down 0.7 points since the tightening began in March, equivalent to the loss of 225,000 workers. “We need all hands on deck in this labour market”, he said, to address supply chain problems, the health care crisis, and other challenges. In this context, “throwing cold water over the whole economy” has a perverse, self-defeating impact on the…

  • Commentary,  Employment & Unemployment,  Macroeconomics,  Wages

    Higher Interest Rates Starting to Bite in Canada’s Labour Market

    New labour force data from Statistics Canada confirm that Canada’s economy is already slowing down sharply as a result of aggressive interest rate increases begun by the Bank of Canada in March.  With the U.S. economy (Canada’s largest trading partner) already in technical recession (with two consecutive quarters of real GDP contraction), and monthly GDP data showing no growth since May, this new report adds to worries that Canada’s economy is heading into recession as well. The labour force data confirm that the aggressive monetary tightening begun by the Bank of Canada in March is having a negative impact on employment and participation in Canada’s labour market. Employment fell in…