Is lagging productivity more economically dangerous than inflation?
BNN Bloomberg
As Canada’s economic productivity continues to slump, economists say it presents an additional challenge to affordability when coupled with elevated inflation.
Trevor Tombe, a professor of economics at the University of Calgary, said in an interview with BNNBloomberg.ca last week that when people think about affordability issues, they often focus mainly on prices but that stagnant productivity could present a larger challenge to the economy than current inflationary pressures.
He said that if prices increase at a faster-than-normal rate, it presents problems due to reduced purchasing power. However, income growth is heavily tied to productivity.
“While recent inflation is certainly presenting challenges to affordability, lower productivity growth [means] lower income growth and that strains us as individuals and as families,” Tombe said.
