Opinion: The economy’s strong pandemic rebound is starting to fade, and central bankers know what needs to be done. Soon we’ll see to what extent they follow through.
Now that the economy’s strong pandemic rebound is starting to fade, there is tremendous uncertainly over what comes next.
But they are worrying far more about recession than a few months ago as central bankers struggle with soaring inflation. In Canada, the year-over-year increase in the Consumer Price Index climbed to 7.7 per cent in May, far beyond the traditional inflation target of two per cent. The U.S. CPI rose 9.1 per cent in June from a year earlier.
But this time, some economists hope the excessive demand from the boom can be cut back without too much human cost. These economists believe that even if the economy experiences two or three quarters of modestly negative GDP, then that impact might be absorbed fairly easily as the hot economy cools down to more normal levels of unemployment and job vacancies.
Many businesses have big sales backlogs to whittle down. After months of drastic employee shortages, employers will be reluctant to turn around and start laying workers off unless the slowdown gets really bad. If the cooling economy does eventually cause a moderate number of layoffs in some industries, then the economy’s starting point of exceptionally low unemployment and high unfilled vacancies should help absorb much of that impact.
These economists believe the sheer scale of required monetary tightening is bound to have a big impact including sizable layoffs. When recessions hit hard, they tend to have disproportionate impact on particular industries, such as those dependent on discretionary consumer spending like home furnishings and restaurants, points out Robson.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Inflation climbed even higher in June amid ‘reopening effect’, economists predict - National | Globalnews.caStatistics Canada will release inflation data for June on Wednesday, a week after the Bank of Canada raised its key interest rate by a full percentage point.
Read more »
Canada goes 'nuclear' with supersized 1% interest rate hike -- will the Fed follow?With inflation burning as hot as a \u0027four\u002Dalarm fire,\u0027 Canada\u0027s central banker is moving aggressively to tamp it out. But it leaves their
Read more »
Canada goes 'nuclear' with supersized 1% interest rate hike -- will the Fed follow?With inflation burning as hot as a \u0027four\u002Dalarm fire,\u0027 Canada\u0027s central banker is moving aggressively to tamp it out. But it leaves their
Read more »
Canada goes 'nuclear' with supersized 1% interest rate hike -- will the Fed follow?With inflation burning as hot as a \u0027four\u002Dalarm fire,\u0027 Canada\u0027s central banker is moving aggressively to tamp it out. But it leaves their
Read more »
Canada goes 'nuclear' with supersized 1% interest rate hike -- will the Fed follow?With inflation burning as hot as a \u0027four\u002Dalarm fire,\u0027 Canada\u0027s central banker is moving aggressively to tamp it out. But it leaves their
Read more »
Canada goes 'nuclear' with supersized 1% interest rate hike -- will the Fed follow?With inflation burning as hot as a \u0027four\u002Dalarm fire,\u0027 Canada\u0027s central banker is moving aggressively to tamp it out. But it leaves their
Read more »