Despite the threat of a recession this year, major economies are clinging to the possibility of a soft landing that avoids a painful downturn and widespread layoffs, something that’s typically proved elusive when central bankers raise interest rates to tameIn recent weeks, there have been hopeful signs. Labour demand is easing in Canada, notably through fewer job vacancies, rather than major downsizings. Wage pressures seem to be abating.
Mr. Poloz said this spate of high inflation is different from past iterations, which were usually caused by excess demand – “too many dollars chasing too few goods.” Instead, much of the recent runup in consumer prices can be attributed to soaring energy prices and supply-chain disruptions. Now, those factors are fading away, reflected in shorter delivery times and shipping costs that dropped to prepandemic levels.
In this country, what’s changing is labour demand. The number of job vacancies has tumbled by more than 200,000 from peak levels in the spring. The hope, among many economists, is that companies will dampen their hiring plans, but spare their workers from layoffs. In turn, that is helping consumers. Despite higher interest rates that are meant to curb demand, consumer spending hasn’t fallen dramatically. Purchases are waning in some areas – for instance, people are buying far fewer kitchen appliances than early in the pandemic – but are picking up in others, such as vehicles and travel.
“I actually think the risk – if we’re going to be surprised – is that the Bank [of Canada] and the Fed have to do more because the consumer is so resilient,” Mr. Porter said.
Verbal gymnastics by State Sponsored Media .. The homeless of Vancouver would disagreed