Could Inflation’s Surge Lead to Stagflation? Canadian Economic Impact Analysis The Conference Board of Canada, 15 pages, March 25, 2022 Issue Briefing by Kip Beckman

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

The Conference Board of Canada, 15 pages, March 25, 2022
Issue Briefing by Kip Beckman

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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. Table of Contents Key Findings Overview Stagflation Scenario Similarities Between the 1970s and the Present Conclusion Methodology

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.

Key Findings
Overview
Stagflation Scenario
Similarities Between the 1970s and the Present
Conclusion
Methodology