Finance Committee on March 31st, 2022

[Adam Chambers, Conservative, Simcoe North, ON]

That's fair.

Thank you. I appreciate that, and certainly any caveats that would go along with it as well.

We had a great exchange last time on used cars, and I appreciate that there's some work being done on that, as well as on appliances, as you noted in your opening. Scotiabank has predicted, or at least suggested, that by the summer, if we include used cars, this will push the inflation rate to about 8%.

Is that around what you would expect, given your “back of the envelope” math, at this point? Are you at a position to disclose that today?

[Greg Peterson]

We'll have a working paper out shortly, but I would be surprised.

We currently have used cars in the CPI. The weight of used cars in the basket is less than 2%. They're in the basket. Currently we're using the price of new cars as a proxy for the price of used cars. The—

[Adam Chambers, Conservative, Simcoe North, ON]

We'll certainly look forward to the working paper.

In January, the Bank of Canada provided to this committee a finding that the carbon tax added about 0.4% to the inflation rate year over year. Do you agree with that number?

[Greg Peterson]

We haven't done an evaluation, so I wouldn't be qualified to say.

[Adam Chambers, Conservative, Simcoe North, ON]

We talked about housing prices, and I recognize there are a bunch of different ways to include this in the CPI. One thing we could look at would be the disposable income of the household and how much is going to shelter, just in and of itself.

I'm curious as to whether you've done any studies. Can you point to any information on the health of discretionary spending in a household? Perhaps the government has asked you to look at this with respect to housing in particular and how much of disposable income is going to shelter.

[Greg Peterson]

We have done a fair bit of work tracking the household over the course of the pandemic. I can tell you that over that course we've seen household wealth increasing considerably. When we take a look at distributions across income quintiles, we've seen [Technical difficulty—Editor] of gaps between the highest quartile and the lowest quartile.

Through the national balance sheet accounts, we have data on how mortgages have changed over the course of the pandemic.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

If there are relevant studies to that respect that are public or available, we would appreciate it if you would forward those to the committee.

I noticed in one of your recent findings or releases that a record number of Canadians permanently fled the country in Q4, which is the most we've seen leave the country since the 1970s. Do you have that information broken down by age?

[Greg Peterson]

I'm sorry. My area of responsibility is economic statistics, so I'm not intimately familiar with that study.

[Adam Chambers, Conservative, Simcoe North, ON]

If you wouldn't mind, as a takeaway, if it's available.... There was a record number of Canadians—since the 1970s—who left the country in Q4 of last year. I would be very interested in the age category breakdown, because my hypothesis would be that you'll find that more younger people are leaving the country for other opportunities and lower costs of living elsewhere.

We asked young people to stay home and be good citizens for two years, which they did, and we're all very thankful for that. They've re-emerged to an economy that looks very different and to a housing situation that looks completely unattainable. I would be very interested to see some more findings on why people are leaving the country.

Thank you very much, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Chambers.

Now we'll hear questions from the Liberals. We have Ms. Dzerowicz for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair, and a huge thanks to Stats Canada for joining us today. The service you provide is invaluable, so thank you so much for your service to our country.

There's been so much that's changed over the last few years. We're living in such unpredictable times that sometimes we have to remind ourselves of that.

One of my favourite economic historians is a Columbia University professor by the name of Adam Tooze. He just wrote a book by the name of Shutdown.

He basically said that with this pandemic, and in the first half of 2020 alone, 95% of the world's economy suffered a simultaneous contraction. He said that's never happened before. He said three billion adults were either furloughed from their jobs or tried to work from home. He said that's also never happened before. He said more than 1.5 billion young people had their schooling interrupted, and then he also said that the sum of lost earnings just in the first six months of the pandemic was $10 trillion U.S., more than a 10th of the global GDP.

We received an update of the CPI index in February 2022, and I know there have been some increases, which is historic, in the last 30 years.

I like making sure that I'm thinking about it in the context of what's actually happening now. Would it be fair to say that right now we are living in fairly unprecedented times or, at the very least, that the situation that we currently find ourselves in hasn't occurred in probably about 100 years?

[Greg Peterson]

I can't talk about the last 100 years. I can tell you about the 30 years that I've worked at Statistics Canada, and I can tell you that we haven't been through an economic period like this.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

Two of my colleagues have asked for an apples-to-apples comparison of 30 years ago on the CPI versus today. I would ask, if that is provided, that there be a couple of other elements added.

From my perspective, we should also bring in the unemployment rate. What was the unemployment rate at that point, as well as the global economic context? It is important, if we are comparing apples to apples, that we not just look at the CPI numbers, but also understand the context. Also, another big indicator we look at is the employment numbers.

If I could ask you to do that, it would be great.

This is my next question. Today you released some new data showing the eighth month of consecutive growth of Canada's GDP, but we've also seen a strong recovery in Canada's jobs, with over 337,000 jobs gained in February, representing 112% of the jobs lost at the peak of the pandemic. Can you tell us how these strong gains in GDP and jobs interact with inflation?

[Greg Peterson]

There are a number of different ways. There are a number of things we are keeping track of. When you take a look at the employment numbers, for sure, we've been keeping track of how employment has been changing over the course of the pandemic and the gains we've been seeing in recent months. We've been paying very close attention to the impact of that on the wage rate. I don't have that number immediately in front of me, but wage rates are going up, so we're taking a look at the difference, if you will, between changes to the wage rate and changes in inflation insofar as labour is an input.

On the increase in GDP, again I would argue it's the same sort of thing that we're seeing on the CPI. Every industry is a slightly different story, and every industry is being affected by slightly different things.

The changes we have been seeing in the transportation sector have been largely affected by people travelling, for instance. Changes in the accommodation and food services—

[Julie Dzerowicz, Liberal, Davenport, ON]

I'm sorry to interrupt. I have just one more question before we go on, so thank you for that.

Can you speak to whether you have any data that shows how the pandemic supports we provided may have prevented labour market scarring?

[Greg Peterson]

To my knowledge, there is nothing particularly on labour market scarring as such. I would, though, point to the national balance sheet accounts, which take a look at how household finances [Technical difficulty—Editor] and we've broken that down by income and wealth quintile.

[Julie Dzerowicz, Liberal, Davenport, ON]

Can I hear that again, because he cut out? Is that okay? The translators couldn't hear.

[The Chair, Liberal, Peter Fonseca]

I will ask Mr. Peterson to repeat that answer.

[Greg Peterson]

Certainly. We have data from the national balance sheet accounts that take a look at how household wealth has changed over the course of the pandemic, along with savings rates and disposable income, and we've broken that down by income and wealth quintile.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Dzerowicz. Now we'll hear from the Bloc.

Mr. Ste-Marie, you have two and a half minutes.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Mr. Peterson, in the conclusion of your opening remarks, you said that you are concerned about a possible increase in the price of many foods, given that Ukraine is a major exporter of grains and vegetable oil, as you mentioned.

In fact, when we analyze food market transactions today, we see a significant increase in the price of wheat, for example, for the crops expected this summer. The price at which these crops will be purchased next September is therefore already negotiated.

Do you analyze these kinds of statistics?

[Greg Peterson]

Certainly.

In our agriculture statistics program, we keep very close track of what is being planted, and throughout the growing season we keep track of what we expect crop yield to be by commodity.

Canada, of course, is only one producer of these grains, so we also have to consider the production from other global producers, but Canada is a sufficiently large producer in a number of these commodities to have an impact on world prices.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

What do you think would be the best leading indicators to look at in order to predict future inflation? I don't know if my question is clear.

[Greg Peterson]

It isn't part of our mandate to forecast inflation. However, we have many ways of analyzing different aspects of supplier chains.

supply chains, if you will, like the industrial product price index and the raw materials price index.

They offer prices on things that are further up the supply chain.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

Now we'll go to Mr. Blaikie from the NDP for two and a half minutes.