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Douglas Porter: New job numbers are another alarm bell for Canada’s economy

Commentary

This excerpt was originally published at BMO.

We have been going on, and on, for nearly a year about the growing divergence between the North American economies—a surprising/amazingly resilient U.S. set against a struggling Canada. Just as there were some indications the gap may be narrowing in early 2024, the March employment reports put an exclamation point on the wedge. Last month saw the U.S. churn out yet another chart-topping payroll gain of 303,000, clipping the unemployment rate to 3.8 percent.

In the meantime, Canada saw a full eclipse of the jobs, with a 2,200 drop, sending the unemployment rate up 3 ticks to 6.1 percent. That 2.3 percentage point divide between the jobless rates is at the very upper end of the range over the past twenty years, aside from the madness of the pandemic. This simply reinforces our conviction that the Bank of Canada will be leading the Fed on the rate-cut front, just as it led on the way up the hill two years ago.

Markets have been steadily reeling back expectations of Fed rate cuts almost since the year began, and recent events pulled the string a bit further. While Chair Powell sent soothing tones in a speech last week, suggesting the bigger picture had not changed, the freshly converted uber-hawk Kashkari opined that perhaps no rate cuts were needed at all this year. With job growth still chugging along, GDP on track for at least a 2 percent advance in Q1, the factory PMI pushing back above 50, and now oil prices at $87 threatening to lift headline inflation again, it’s not obvious that he’s out of line. We remain entirely comfortable with our call that the Fed will wait until July to start the rate cuts. After bravely staring down fading prospects of rate relief through Q1, equities showed a flicker of concern this week, with the S&P 500 dropping roughly 1 percent from the recent record high.

It is a very different post-jobs conversation in Canada. Full disclosure, there has been some wavering on our call for a June cut by the Bank of Canada, especially in light of a run of surprisingly sturdy GDP growth to start 2024, as well as solid financial markets, a stabilizing housing market, and fading Fed rate cut prospects. Standing against that, the two main pillars of support for our relatively dovish call on the BoC were low inflation and rising unemployment. The past two CPI reports have been stunningly helpful, with ex-shelter inflation dropping to a mere 1.3 percent y/y. But the snapback in oil and sticky wage growth of around 5 percent could frustrate further progress, and threaten to keep inflation expectations firm.

Against that backdrop, the steep rise in the unemployment rate last month is an important development, as it suggests that wage trends will eventually ebb. In fact, with the jobless rate pushing above 6 percent, one can make the case that the labour market is no longer tight in Canada. One rule of thumb we watch is the year-over-year change in the number of unemployed people. Over the past 40 years, in both Canada and the U.S., any time it has risen by 25 percent or more, the economy has been in recession (Chart 1). (Note that Canada didn’t quite get there in the 2000/01 cycle, and that period was not judged to be a recession by the semi-official arbiters of such.) The back-up in March left the number of unemployed Canadians up 23 percent year-over-year, right at the edge. In stark contrast, the same metric shows a rise of less than 10 percent for the U.S. economy, reinforcing North America’s wide divergence. A rather obvious rejoinder is that the surge in Canada is driven by smoking population trends, and can’t be readily compared with the past.

Graphic credit: Janice Nelson.

We won’t need to wait long to find out exactly how the Bank of Canada views these conflicting trends, with the rate decision and MPR on Wednesday. While there’s not much debate that the Bank will hold rates steady again at 5 percent, there’s a lot of debate over just how dovish they will sound. Even with a moderate upgrade in the 2024 growth outlook (the BoC was previously at 0.8 percent, we’re now at 1.2 percent), inflation is nicely tracking below their estimate of 3.2 percent for Q1 (likely 2.9 percent), so we look for the Bank to open the door a crack for coming rate cuts.

Just prior to the BoC announcement, the U.S. CPI is likely to flag a small warning on the impact of higher oil prices, with headline inflation rising a couple ticks to 3.4 percent, even as core is expected to dip to 3.7 percent (both on monthly increases of 0.3 percent). That energy-led uptick could be mirrored in Canada’s CPI the following week, albeit holding below 3 percent. For both the job market and inflation, Canada is showing some separation from the U.S., and we suspect that will drive a small separation between BoC and Fed rate policy in coming months.

This excerpt was originally published at BMO.

Patrick Luciani: How the Irish saved womanhood

Commentary

In the latest Hub book review, Patrick Luciani takes a look at Judith Butler’s Who’s Afraid of Gender? (Knopf Canada 2024), and connects the book’s radical ideas on gender to two referendums recently held in Ireland concerning amendments to expand and replace current gender and family definitions in the constitution—both of which failed over social and cultural concerns about what changing the traditional language would mean.

In early March, Ireland held a referendum to amend two provisions of its constitution. The first was to change the definition of the traditional family and instead replace it to recognize “durable relationships.” The second would remove references to “women” and “mothers” and broaden the definition of care in the welfare of a family. Both amendments lost by a wide margin, which dealt the progressives and major political parties supporting the amendments a shocking blow, thwarting their attempts to bring the language of gender into the 21st century while giving victory to those concerned about encroachments on the traditional language. 

The Irish aren’t immune to reform. In 1995, they approved gay marriage and later allowed for divorce. In 2018, they approved legalized abortions. Ireland is only one of four nations that approve of medical sex-change operations based on self-determination. But the question of eliminating the ancient idea of family and especially the concept of motherhood in a once deeply Catholic country where the cult of the Virgin Mary still lingers was asking too much. This despite the insistence of Ireland’s elite, including the National Women’s Council of Ireland, who fought hard for the changes, even placing the referendum on March 8, International Women’s Day. 

In the same month, Judith Butler, the American philosopher and arguably the most acclaimed gender studies teacher worldwide, was promoting her new book Who’s Afraid of Gender? The Irish elite who pushed to reform Ireland’s constitution was no doubt influenced by Butler’s work on queer and gender theory. Butler wants to eliminate the very idea of motherhood and women, arguing instead that biological sex, like gender, is nothing but a social deception. Butler, who uses the pronouns they and them, goes further and claims that the body’s genitalia is itself socially constructed. Sex isn’t an obvious fact simply “based on observation.” We are born as a blank slate without the influence of biological connection. That’s why gender studies advocates refer to assigned sexes at birth, meaning that we are not rooted to them in our behaviour if we so choose. 

What we believe about the differences between men and women isn’t based on any eternal concept of nature but on social power dynamics and customs, is the claim. Philosopher Martha Nussbaum reminds us this is nothing new. John Stuart Mill said the same thing in his The Subjection of Women: “What is now called the nature of women is an eminently artificial thing.” Where Mill understood that women were kept in subjugation by hierarchies of power, Butler teaches that “nature is not the ground upon which construction of gender happens.” This is an extraordinary admission even though our species, as writer and podcaster Andrew Sullivan says, existed “before we even achieved the intelligence to call it a sex binary.” 

Butler demands that only an understanding of culture, history, languages, and anthropology can answer the question of what a woman is. We must see the changing nature of women and their roles through time. In other words, the privilege of knowing what a woman is belongs to a select few gender studies scholars. The idea of gender is a continuum with countless definitions of gender behaviour, ever-expanding preferences akin to identifying new chemical elements on a Periodic Table. And the only reason we define women as we do today is through the social demands of the patriarchy, heterosexuality, and, finally, white supremacy. 

In Who’s Afraid of Gender? Butler continues the assault on our misguided perception of gender by widening the door that defines what a woman is to the point that any man can claim membership. Transwomen are now allowed membership and the special honour of accessing women’s spaces. Suppose a man wishes to exhibit their preferences to take on feminine attributes. But why can’t the definition of manhood expand rather than intrude on the definition of women and their spaces? 

Ireland’s Taoiseach Leo Varadkar speaks during a Friends of Ireland Caucus St. Patrick’s Day luncheon in the U.S. Capitol, Friday, March 17, 2023, in Washington. Alex Brandon/AP Photo.

Butler’s book wasn’t written to answer questions but to attack critics of the very notion of gender and transwomen, including trans-exclusionary feminists such as J.K. Rowling and Unherd writer Kathleen Stock. They are accused of “fascism”—a word Butler uses liberally—to attack Evangelicals, Christian Orthodox, Catholics, or any organization in favour of traditional families. The author even accuses defenders of families of using “junk science” to defend their case—a curious claim given that gender studies is hardly a field based on established science. Butler lives in a Manichean world of good and evil where enemies must be destroyed. But who are these enemies when a growing number of liberals and leftists are resisting the move to diminish the rights of girls and young women? 

Butler claims that attacks on gender are a “phantasm” or an illusion invented by the enemies of gender to hide behind the world’s real problems of capitalism, neoliberalism, destruction of the environment, attacks on immigrants, poverty, Indigenous Peoples, and the oppression of Black and brown people. And any resistance to Butler’s idea of gender is seen as an attack on liberal democracy. 

The Irish referendum wasn’t only about rights, tolerance, or one’s right to choose a preferred gender identity but about the nature of language. When the Irish were asked to vote, they knew intrinsically that words matter, and changing the constitution by abandoning the phrase “mother” or “woman” to satisfy the political trends of progressive gender advocates would have a deep and lasting effect on their culture and identity. That was a step the Irish weren’t willing to take.