When Bank of Canada Governor Tiff Macklem faces the media this Wednesday after what is sure to be another sharp interest-rate increase, reporters will almost certainly ask him some version of “Do you expect a recession?” or “Are you trying to engineer a recession?”But would he and his colleagues be upset if their aggressive interest-rate hikes lead to a quarter or two of shrinking demand for goods, services, and even for labour? Of course not. That’s the objective of the rate hikes.
First, it’s notable that RBC is the outlier here; economists at the rest of the country’s banks do not predict a single quarter of outright GDP decline, let alone two in a row. But what RBC describes as a “moderate recession” is, arguably, not a recession at all. The National Bureau of Economic Research, which has long been the official arbiter of what does and does not constitute a recession in the United States, looks to a range of additional indicators – including employment, real income, industrial output, and wholesale and retail sales – to determine if a downturn in GDP constitutes a recession. In Canada, the C.D. Howe Institute’s Business Cycle Panel takes a similar broad approach to calling recessions.
“The very definition of a recession essentially rules out having one without job losses,” Mr. Shenfeld saidWhich brings us back to the situation the Canadian economy finds itself in, and where the Bank of Canada has room to manoeuvre. It’s not just labour that’s in a state of excess demand in this country; the Bank of Canada said in the spring that “a broad set of measures” showed that the economy was operating beyond its productive capacity. Which suggests it’s possible to have an economic slowdown that merely brings demand for labour, goods and services back in balance with supply.
Ummm didn't Canada lose 45,000 jobs this past month
Sure it will. Increase interest rates to slow inflation. People stop buying. People lose houses. Or stop doing anything but pay Morgage. Fuel prices go through the roof due to sanctions demand VS volume. Vola. No more jobs. Why didn’t I see. Bloomberg must be right my bad.
Vaccine mandates still hurting employers as employee stood their ground and walked out refusing to be coerced.