Could Inflation’s Surge Lead to Stagflation? Canadian Economic Impact Analysis

Name: Could Inflation’s Surge Lead to Stagflation? Canadian Economic Impact Analysis
SKU: 11560-0405-WEB
Availability: InStock

Canadian Economics

March 25, 2022

Canadian

Pages:15 pages25 min read

Author: Christopher Beckman

$0.00

This issue briefing looks at what would happen to the Canadian economy if 1970s-style stagflation developed over the near term. The Canadian economy could see sharply weaker growth and rising unemployment—1970s-style stagflation—if inflation expectations become unanchored. Some measures of inflation expectations, including our surveys of business and consumer confidence, suggest that they are on the rise. Rising expectations would lead to much higher inflation and interest rates over the next three years, resulting in significantly weaker growth in both consumption and investment spending.

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This issue briefing looks at what would happen to the Canadian economy if 1970s-style stagflation developed over the near term.

Document Highlights

The Canadian economy could see sharply weaker growth and rising unemployment—1970s-style stagflation—if inflation expectations become unanchored.

Some measures of inflation expectations, including our surveys of business and consumer confidence, suggest that they are on the rise.

Rising expectations would lead to much higher inflation and interest rates over the next three years, resulting in significantly weaker growth in both consumption and investment spending.