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Email this8:20 pm
October 29, 2017
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6.8%. Not decelerating fast enough to help and the fast increasing of rates is just adding to the hurt! It’s crazy!
https://www150.statcan.gc.ca/n1/daily-quotidien/221221/dq221221a-eng.htm
9:21 am
October 30, 2022
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I think Jeremy Siegel has it right, need to use forward looking projections on housing and aggregate demand (not focused on supply chain problems) also real wages should be up 5% given history and inflation. 3% in inflation is doable and inflation has been beat as of NOW! No more hikes necessary! Why risk a deep recession?
10:32 am
April 27, 2017
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Looking at the food prices and assuming 5% salary hikes, I am having real trouble declaring victory over inflation. Nor is it at all obvious that rental prices stopped growing (for example). The argument that supply chain problems were going to have a short-lived impact on inflation proved to be BS 2 years ago; not sure why its going to work better this time.
The headline number was lowered thanks to gasoline prices dropping. And thats thanks to short term releases of US reserves and Covid lockdowns in China. Both of these factors will be reversed soonish.
In general, long term consequences of inflation taking hold will be worse than a recession. And unless we can all of a sudden start producing more resources, goods and services, there isn’t another way.
4:27 pm
October 29, 2017
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mordko said
Looking at the food prices and assuming 5% salary hikes, I am having real trouble declaring victory over inflation. Nor is it at all obvious that rental prices stopped growing (for example). The argument that supply chain problems were going to have a short-lived impact on inflation proved to be BS 2 years ago; not sure why its going to work better this time.The headline number was lowered thanks to gasoline prices dropping. And thats thanks to short term releases of US reserves and Covid lockdowns in China. Both of these factors will be reversed soonish.
In general, long term consequences of inflation taking hold will be worse than a recession. And unless we can all of a sudden start producing more resources, goods and services, there isn’t another way.
Exactly! There is no way to quickly replace the workers that have left the workforce. And consumption, such as groceries hasn’t and won’t significantly drop. Perhaps other things that aren’t necessities will fall in consumption but I don’t see massive supplies increasing any time soon. I think interest rates will continue upwards.
4:52 pm
April 27, 2017
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Vatox said
Exactly! There is no way to quickly replace the workers that have left the workforce. And consumption, such as groceries hasn’t and won’t significantly drop. Perhaps other things that aren’t necessities will fall in consumption but I don’t see massive supplies increasing any time soon. I think interest rates will continue upwards.
I don’t know either way. There are a lot of complex factors at play. One of the factors is shortage of resources; energy being the obvious one. Will take a long time to replace production; perhaps 10 years. Like we haven’t trained any engineers for the industry. But then population is still getting older… Maybe those who quit the work force will be forced or enticed to come back.
We’ll see. Way too early to declare victory when food prices are up 10%.
4:54 pm
January 13, 2022
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Vatox said
Exactly! There is no way to quickly replace the workers that have left the workforce. And consumption, such as groceries hasn’t and won’t significantly drop. Perhaps other things that aren’t necessities will fall in consumption but I don’t see massive supplies increasing any time soon. I think interest rates will continue upwards.
And stick around a lot longer than some think.
6:33 pm
January 28, 2015
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Groceries still over 11% inflation and oil on the rise . I see many more rate hikes, with BOC staying synchronized with the US fed expect a lower hike in Jan to match the US fed .25% ,as they go we go
8:12 pm
October 29, 2017
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mordko said
Maybe those who quit the work force will be forced or enticed to come back.
I’m thinking automation is where we are headed. And vertical farming too.
8:57 pm
April 27, 2017
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Vatox said
I’m thinking automation is where we are headed. And vertical farming too.
Vertical farming sounds very cool but takes a lot of artificial heat and light. We don’t generate enough energy to make it the main supplier of food over traditional farms which have sun to thank for helping out.
3:51 am
April 14, 2021
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Vatox said
6.8%. Not decelerating fast enough to help and the fast increasing of rates is just adding to the hurt! It’s crazy!
Not so crazy, when you see the likes of the $1.7 trillion short-term spending bill the US passed. It seems as though any deflationary gains made by increasing interest rates is simply lost to more inflationary spending; almost as if politicians are deliberately trying to sabotage the effort.
5:29 am
January 28, 2015
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HermanH said
Vatox said
6.8%. Not decelerating fast enough to help and the fast increasing of rates is just adding to the hurt! It’s crazy!Not so crazy, when you see the likes of the $1.7 trillion short-term spending bill the US passed. It seems as though any deflationary gains made by increasing interest rates is simply lost to more inflationary spending; almost as if politicians are deliberately trying to sabotage the effort.
Totally agree ,no different here at home the liberals need to stop spending and show some restraint . I'm sure will see massive tax increases coming to service the out of control debt
6:46 am
September 11, 2013
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If you search this site you'll find prior explanations why domestic government debt at current levels is not a problem, some might be interested to read up on it. And I'm hoping those who articulated those views will let us know if that changes.
7:32 am
March 18, 2021
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hayman said
I think Jeremy Siegel has it right, need to use forward looking projections on housing and aggregate demand (not focused on supply chain problems) also real wages should be up 5% given history and inflation. 3% in inflation is doable and inflation has been beat as of NOW! No more hikes necessary! Why risk a deep recession?
The forecast is for interest rates to peak in June 2023 in Canada and in America. Inflation will spike at the start of 2023 in both countries.
9:32 am
April 6, 2013
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Bill said
If you search this site you'll find prior explanations why domestic government debt at current levels is not a problem, some might be interested to read up on it. And I'm hoping those who articulated those views will let us know if that changes.
Government debt continues to not be a problem.
DBRS confirmed Government of Canada's AAA rating in September and wrote this about the debt:
Fiscal Accounts Have Rapidly Returned To A Sustainable Position
According to the FY22-23 budget, the federal [budget] deficit is expected to decline from the pandemic-related peak of 14.9% of GDP in FY20-21 to just 2.0% in FY22-23. Early data from this fiscal year suggests that the budgetary result will likely outperform the 2.0% projection. The federal government posted a modest surplus in the first quarter of the year (April to June). Overall, the large and rapid improvement in the fiscal accounts has been driven by sharply higher revenue, which is benefiting from strong nominal GDP growth, as well as lower outlays, as pandemic-related programs have been wound down. With provincial budget results also significantly improving over the last year, the combined fiscal policy stance across the general government (i.e. federal plus provincial plus municipal governments) has returned to a sustainable position.
The government debt-to-GDP ratio is markedly higher than before the pandemic but the trajectory is now firmly downward. The IMF estimates that gross debt-to-GDP for the general government increased from 87% in 2019 to 118% in 2020. The ratio declined to 112% in 2021 amid a strong economic recovery and better fiscal results, and the ratio is projected to decline to 102% in 2022 and 88% in 2027, which is close to the debt ratio prior to the pandemic.
11:59 am
September 11, 2013
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Thanks, Norman1, update much appreciated.
Depending on what province you live in the situation might be a bit more dicey (Ontario?), considering provincial debt, I don't know. But you can always move, least I think you still can.
6:14 pm
April 6, 2013
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Province of Ontario is doing okay. No need to move.
Fitch affirmed Ontario's AA- rating last month. Negligible risk of debt default even if the budget deficit gets unexpectedly worse over next few years:
… An exceptionally strong economic and fiscal turnaround is currently underway, with the province reporting a small surplus in fiscal 2021-22 and sharply improved debt burden metrics. Recent strength is tempered by expectations of near-term economic and fiscal erosion as inflation, higher interest rates, a weakening housing market and other macroeconomic risks weigh on projected performance.
… The risk profile [of 'Stronger'] expresses Fitch's expectation that there is negligible risk of the issuer's inability to cover debt service with the operating balance [budget revenues minus expenditures] weakening unexpectedly over the scenario horizon (fiscal 2022-23 to 2026-27) due to lower revenue, higher expenditure, or an unexpected rise in liabilities or debt-service requirements.
10:25 pm
October 29, 2017
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HermanH said
Not so crazy, when you see the likes of the $1.7 trillion short-term spending bill the US passed. It seems as though any deflationary gains made by increasing interest rates is simply lost to more inflationary spending; almost as if politicians are deliberately trying to sabotage the effort.
Just to clarify, there is no deflation. It’s simply deceleration of inflation. Deflation is when year over year inflation goes below zero, signalling that overall prices have dropped. Lower inflation numbers such as the desired 2.0%, is not a price drop it’s just a slower increase.
8:57 am
March 18, 2021
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Norman1 said
Province of Ontario is doing okay. No need to move.Fitch affirmed Ontario's AA- rating last month. Negligible risk of debt default even if the budget deficit gets unexpectedly worse over next few years:
… An exceptionally strong economic and fiscal turnaround is currently underway, with the province reporting a small surplus in fiscal 2021-22 and sharply improved debt burden metrics. Recent strength is tempered by expectations of near-term economic and fiscal erosion as inflation, higher interest rates, a weakening housing market and other macroeconomic risks weigh on projected performance.
… The risk profile [of 'Stronger'] expresses Fitch's expectation that there is negligible risk of the issuer's inability to cover debt service with the operating balance [budget revenues minus expenditures] weakening unexpectedly over the scenario horizon (fiscal 2022-23 to 2026-27) due to lower revenue, higher expenditure, or an unexpected rise in liabilities or debt-service requirements.
Due to the negative spread between inflation and the Fed funds rate and the Bank of Canada rate. If they keep on lying about the infaltion rate saying its a lot lower than it actually is then a lot of the long term debt will be paid off if the spreads stay negative between inflation and the Fed funds rate and the bank of Canada rate.
2:55 pm
November 18, 2017
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TommyT: The inflation statistics are based on consistent criteria, and we still haven't heard where these claims of false numbers are coming from. Is there a track record of "secret" numbers or are there attempts to compare different statistics in a deceptive apples-and-oranges fashion?
Governments spending more, if it leads to higher production, would be a net gain and help reduce inflation. Note the IF.
RetirEd
RetirEd
3:58 pm
April 27, 2017
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RetirEd said
TommyT: The inflation statistics are based on consistent criteria, and we still haven't heard where these claims of false numbers are coming from. Is there a track record of "secret" numbers or are there attempts to compare different statistics in a deceptive apples-and-oranges fashion?Governments spending more, if it leads to higher production, would be a net gain and help reduce inflation. Note the IF.
RetirEd
Occasionally government spending increases productivity (eg new roads) but most of the time it works the other way round.
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