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Available Expert - Canada’s unemployment rate and federal guardrails

Tuesday, March 15, 2022

Queen’s expert Don Drummond (Policy Studies) is available to talk about the nearly record-low unemployment rate and how the labour market has crashed into the federal government’s guardrails.

Headlines have been focusing on the surge in employment of 337,000 and the drop in the unemployment rate to 5.5 per cent in February, close to the record low of 5.4 per cent in May 2019. Many key labour market indicators — employment, employment-to-population ratio, and hours worked — have returned to their pre-pandemic levels. However, despite these labour market indicators, monetary and fiscal policy are still piling on stimulus.

The federal government said it would use labour market “guardrails” to determine when and how quickly to withdraw the extraordinary fiscal stimulus in place since the onset of the pandemic. The government has been vague as to how the guardrails were to be defined.

“Under any reasonable interpretation, the labour market has crashed into the guardrails. This highlights the flaw in the concept. There are lags from fiscal and monetary policy stimulus and the economy and the labour market, especially measures such as the unemployment rate, so when a guardrail is hit, policy stimulus has almost certainly been too much for too long,” Prof. Drummond said.

“What happens when the economy crashes into the ‘guardrails’ the government was using to guide policy stimulus? There is nothing in this type of guardrail to prevent the economy going over the cliff.”

To arrange an interview, please contact Media Relations Officer Victoria Klassen (victoria.klassen@queensu.ca) at Queen’s University News and Media Services Department in Kingston, Ont., Canada. Follow Queen’s News and Media Services on Twitter: http://twitter.com/QueensuMedia.

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