When it comes to the state of the economy, particularly during a federal election campaign marred by the COVID-19 pandemic, a former Bank of Canada governor likens it to be a “tripod of angst.”
Stephen Poloz, who spent seven years at the helm of the central bank until 2020, said many Canadians are “understandably distraught” by the handling of federal finances.
“There is a sort of tripod of angst among regular folks: high government debt, the possibility that we’ll have higher taxes, and higher inflation connected to that debt,” Poloz said in an interview Tuesday. “People need some reassurances.”
Still, Poloz debunks fears of runaway inflation, adding there is a reason why “this hasn’t been an issue for people for nearly 30 years and suddenly it is.”
While prices have in fact risen significantly over the past year, he said that’s only a natural trajectory and shouldn’t be conflated with woes of inflation.
“Prices have risen, as they should when demand exceeds supply. Some wages have gone up, and that should also happen when demand exceeds supply,” said Poloz.
There are also supply chain concerns that add to price increases, given that Canada’s economy is “far more trade-dependent than almost every other major economy,” he added.
“We can point to specific things and we can explain them, but those things don’t add up to a persistent inflation. What they add up to is a higher price here and there.”
The consumer price index rose 3.7 per cent on an annualized basis in July, and Bay Street is estimating the gauge jumped 3.9 per cent year-over-year in August, according to data tracked by Bloomberg. The consumer price index for last month will be released Wednesday.
“There are longer term issues that we need to keep an eye on, so I don’t dismiss inflation fears out of hand,” said Poloz. “It is a tricky thing to navigate, especially when you factor in other vulnerabilities. That doesn’t mean we don’t have many mitigating factors at play that are making things easier to handle.”
The commodities boom that has played a big role in stirring inflation fears also propelled the loonie earlier this year, pushing it as high as 83 cents against the U.S. dollar in June. That sort of move tends to raise alarm for export-related sectors, which are put at a disadvantage when the Canadian currency rallies.
Asked about whether this should be cause for concern, Poloz said apart from the average “mindfulness from businesses,” the loonie isn’t much to worry about.
He said Canada entered the pandemic with an enviable position for most comparable nations and, for the most part, it’s kept that up during each wave of the virus.
The biggest worry for the country’s economy has to do with whether another crisis is emerging at the tail end of the pandemic in Canada or elsewhere, said Poloz.
“Lots of countries can’t do the things we’ve done, but they’ve tried. So, they’ve put themselves in a much more strange situation. This is where I’m more concerned about inflation and how the global ramifications affect us,” he said.
“You take where we’re in now and layer on top another Asian financial crisis? Well, that would be a real setback.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
