Centre for Future Work

The Centre for Future Work recently hosted a webinar presenting results from its new report, A Sequel We Don’t Want: What the 2026 Oil Price Shock Will Cost Canadians.

The webinar featured presentations from Jim Stanford (Centre for Future Work Director, and author of the report), Atila Jaffar (Canada Country Manager from 350.org, sponsor of a campaign for an excess profit tax on petroleum companies), and DT Cochrane (Senior Economist at the Canadian Labour Congress).

It explains the likely effects of the new global oil price shock on Canadian consumers, inflation, and interest rates. It predicts at least $50 billion in higher direct and indirect costs for consumers (including the flow-through effects of higher oil prices on prices of other products, ranging from transportation to food to housing). It also warned of the possibility of higher interest rates and even slower economic growth.

Please view the entire one-hour webinar on the Centre’s You Tube channel.

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Centre for Future Work Economist and Director Jim Stanford was recently interviewed on CBC News Channel regarding the outlook for Canada’s economy. He stressed that growth has been near-zero since U.S. president Donald Trump launched his trade war through big tariffs on Canadian exports. He also explained how high oil prices resulting from Trump’s attacks on Iran and the resulting disruption in global oil supplies would affect inflation in Canada, citing findings from the Centre’s recent report on the inflationary impacts of the war.

Please see the full interview here.

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Centre for Future Work Economist and Director Jim Stanford was recently invited to testify before the Senate of Canada’s National Finance committee, regarding the economic and fiscal outlook for the country. The testimony was part of the committee’s hearings regarding certain aspects of budget implementation (including measures announced in the recent Spring Economics and Fiscal Update).

Below are Stanford’s opening remarks. He touched on several issues, including the need to diversify the product composition of Canada’s exports in the wake of Donald Trump’s tariffs, issues related to the proposed new Sovereign Wealth Fund announced by Prime Minister Carney, and the macroeconomic and distributional impacts of the latest spike in global oil prices (resulting from the U.S. attacks on Iran). Questions to Stanford from committee members included the sovereign wealth fund, the risks of privatizing airports and other public assets, and the challenges facing the auto industry. A Hansard record of the full hearing is available here.

Opening Remarks Senate Standing Committee on National Finance Bill C-30 Hearings, May 27, 2026 By Jim Stanford, Economist and Director Centre for Future Work

Thank you very much, Senators, for the opportunity to meet and share my views on Canada’s economic and fiscal situation as you discuss issues related to the federal budget.

The Centre for Future Work is a labour economics research institute, founded in Canada in 2020. We conduct research on the full range of economic issues facing working people: including the future of jobs, wages and income distribution, skills and training, sector and industry policies, globalization, the role of government, public services, and more. The Centre also develops timely and practical policy proposals to help make the world of work better for working people and their families.  The Centre is independent and non-partisan.

Today I will present short comments on three economic issues of relevance to implementation of measures announced in the spring fiscal update, and related processes:

Diversifying Trade, Composition as Well as Destination: Donald Trump’s tariff policies and other trade attacks have posed a historic threat to Canada’s export industries. Most vulnerable are the higher-tech value-added industries that have been deliberately targeted by his Section 232 sectoral tariffs: including auto, steel, aluminum, and forestry. Further sectoral tariffs are possible given other investigations he has launched, including on aerospace, industrial machinery, semiconductors, and pharmaceuticals. Diversifying the end destination of our exports is a logical response to this challenge, and the federal government has pursued several opportunities in this regard. But there is another, equally important priority that must also be kept in mind as we traverse this challenge: diversifying the composition of our exports. In other words, what we sell is just as important as where we sell it. Canada has had some initial success in growing exports to other markets. By the fourth quarter of 2025, only two-thirds of our merchandise exports were to the U.S., down from three-quarters only a few years ago. That progress is fragile, however, dependent on cyclically high prices for gold, oil, and some other resource projects. At the same time, Canada’s dependence on exports of unprocessed or barely processed resource products – or ‘staples’, as they are often known in Canadian economic history – has been growing. Basic resources accounted for half of Canada’s merchandise exports last year, up from one-fifth at the turn of the century. Revering to a pure resource supplier – a ‘hewer of wood, drawer of water’ in the classic phrase – will not protect Canada’s economic sovereignty. We must preserve the capability to produce a full range of goods and services, including higher-technology value-added products. This goal should be front and centre in Canada’s emerging industrial policy strategy for responding to the threat from the U.S.

Sovereign Wealth and the Public Interest: Concurrent with the spring fiscal update, Prime Minister Carney recently announced his government’s intention to create a new sovereign wealth fund, that would invest in various projects with the intent of stimulating desired new economic activity, strengthening the structure of Canada’s economy, and accumulating public wealth over time. This is an interesting proposal with both opportunities and risks. Successful examples of sovereign wealth funds exist around the world. In general, the goal is not solely to accumulate and invest budgetary surpluses; most sovereign funds have a mandate to wield public capital in the interests of economic diversification or the qualitative development of the domestic economy. On that score, the fact that Canada’s fund is likely to be initially endowed with borrowed funds (rather than accumulated budget surpluses, which do not exist right now at the federal level) is not the critical issue. However, it will be important to correctly specify the mandate and governance structure of the new fund. In my judgment, the goal should be to foster investment and growth in strategic value-added industries that add to the breadth of capabilities of the Canadian economy, and help to address the composition challenge I mentioned above. I am worried by Mr. Carney’s reference to ‘asset recycling’ in his initial discussion of the idea, through which the government would potentially sell of existing public assets (reportedly including airports and ports) in order to subsidize other projects. This is a dangerous model that risks undermining the public interest in continued ownership of those vital assets. The goal is not to ‘recycle’ public wealth, but to build it over time (and enhance our economic capacities in so doing), and the new sovereign fund should be structured and managed with those public interests as its top priority.

The Latest Oil Price Shock: An already uncertain macroeconomic environment has been further disrupted by Donald Trump’s attack on Iran, the resulting closure of the Strait of Hormuz, and a global shock in oil prices. This will have negative effects on Canada, even though we are a major net exporter of oil and import virtually no oil from the Persian Gulf. Our Centre recently published a report estimating the impact of this oil shock on consumer costs and future inflation, based in part on the documented experience of the last oil shock (in 2022, after the Russian invasion of Ukraine). We considered three broad scenarios: one in which the Strait reopens immediately, one in which it remains closed for three more months, and one in which it remains closed for six more months. In any of these cases, supply disruptions and high prices will last for months after the Strait reopens, due to delays in loading and transporting shipments from the Persian Gulf, damage to export infrastructure from the war, and lasting shifts in expectations and risk premiums built into world prices. Even with immediate reopening, Canadian consumers would pay an additional $50 billion in direct and indirect costs over a 12-month period starting with the outbreak of the war at the end of February. The inflation rate would rise above 4 percent. If the Strait remains closed for longer, those costs escalate, and inflation could rise to 6 percent or higher. In turn, that will lead to higher interest rates and slower growth – on top of the existing weakness in Canada’s economy from the trade war. This disruption is the last thing Canada needs right now, and in my view it highlights important policy considerations. Having core energy prices in Canada set on the basis of volatile fluctuations in global futures markets, with no connection to Canadian production, supply, and demand conditions, exposes us to unnecessary risks. We should have a conversation in Canada about other ways to manage petroleum prices (noting that we already regulate electricity prices and gas distribution charges, which have remained stable despite the global oil chaos), and other ways to manage inflation (rather than relying solely on across-the-board interest rate hikes to suppress inflation of any kind, no matter its cause). I would also support fiscal measures to redistribute some of the record revenues that are now flowing to the petroleum industry as a result of this latest price shock – and which partly reflect excess costs paid by Canadian consumers. An excess profit tax, modeled on the one applied to Canadian banks and insurance companies during the pandemic, could recapture some of that revenue windfall, and use it to finance rebates to Canadian consumers and investments in renewable energy infrastructure (which are ultimately the best way to disengage from the volatility of world oil fluctuations). Bill C-30 includes measures to reduce federal excise taxes on gasoline and diesel in response to this price shock; asking the petroleum industry to contribute to the cost of that relief seems both fair and efficient. The full report which I reference, titled ‘A Sequel We Don’t Want: What the 2026 Oil Price Shock Will Cost Canadians,’ is available at www.centreforfuturework.ca.

Thank you again for your attention, and I look forward to any questions or discussion.

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Canada’s economy has been growing very slowly for the last year, since Donald Trump launched his trade war against Canada’s exports. The side-effects of Trump’s attacks against Iran (including high oil prices and accelerating inflation) have further undermined growth in Canada.

Recent Statistics Canada data indicate that real GDP in Canada (adjusted for inflation) declined very slightly (by 0.036%) in the first quarter of 2026. Coming on the heels of a larger decline in real GDP in the final quarter of 2025, this signifies that Canada is experiencing a ‘technical recession” – traditionally defined as two consecutive quarters of contraction in real GDP.

There is no doubt that Canada’s economy faces serious headwinds, primarily the decline in exports to the U.S. and weak business capital spending (hurt by the uncertainty surrounding the trade environment and the economic outlook). As Centre for Future Work Director says in this commentary, originally published in the Toronto Star, whether the resulting growth is slightly above or slightly zero is not meaningful for economic policy decisions.

A technical recession is more about politics than economics By Jim Stanford

Statistics Canada recently released its quarterly report on Canadian GDP, covering the first three months of 2026. Most economists had expected a modest increase in GDP, but the final number came in slightly below zero.

Coming on top of a small decline in the last quarter of 2025, this means Canada has experienced what is commonly called a ‘technical recession’: two consecutive quarters of shrinking real GDP (adjusted for inflation).

Opposition politicians jumped on this report as evidence that Canada’s economy is being mismanaged. They were joined by Pete Hoekstra, the famously undiplomatic U.S. ambassador to Canada, who cited the data to renew his call for Canada to become the 51st state.

‘Technical recession’ is a very rough-and-ready benchmark commonly used to determine whether the economy is shrinking. One-quarter declines in real GDP often occur, without signalling serious economy-wide trouble.

The two-quarter rule is only slightly more robust. But it is still arbitrary and subjective, and doesn’t necessarily say much about what’s actually happening in the economy.

The U.S. follows a much stricter definition. A technical committee at the National Bureau of Economic Research (NBER) monitors dozens of indicators, including employment, consumer spending, and business investment. Only when there is widespread evidence of significant contraction “spread across the economy and last[ing] more than a few months,” will it declare a recession.

Even as technical recessions go, this one is as ‘technical’ as they can get. Both of the quarters in question registered tiny declines in measured real GDP. And both of those declines reflected unusual statistical quirks, more than evidence of broader economic contraction.

In the fourth quarter of 2025, GDP declined solely because businesses sharply reduced excess inventories accumulated earlier in the year, after Donald Trump started his trade war. Statistics Canada accounts for inventory reductions as a charge against GDP. Excluding that $13 billion drawdown, GDP would have grown a modest 0.3 percent.

Then in the first quarter of 2026, GDP shrank because of an unusual surge in gold imports, which rose (coincidentally also by $13 billion) as industrial users and financial investors took advantage of softer gold prices. Without that temporary inflow of gold, GDP would have grown 0.5 percent.

So in neither case was the broader economy genuinely shrinking. Canada’s economy is not in recession, in any economically meaningful sense. This week’s strong labour force report, showing Canada created 88,000 jobs in May, confirms the economy is still growing, albeit too slowly.

Opposition politicians see the technical recession as great fodder for memes and sound bites. Indeed, Conservative leader Pierre Poilievre talked of virtually nothing else last week. Politicians should be careful, however, about putting too much emphasis on this single, arbitrary metric.

Statistics Canada regularly revises its GDP data on the basis of new information. The decline in first-quarter GDP was so tiny (just $900 million out of a $3 trillion economy, or 0.036%) it could easily switch positive with the next revision. In fact, that decline was so small Statistics Canada’s official release stated that GDP was “unchanged” – a nuance lost in the histrionics of Question Period.

Just such a revision occurred back in the third quarter of 2023. A much larger initial decline in GDP (reported as -0.4% at the time) was later changed to a small increase. If that happens again, the whole pseudo-recession will be revised right out of existence, and these politicians will rightfully look silly.

There’s no doubt Canada’s economy is facing tough times. Donald Trump’s tariffs, now followed by his war in the Persian Gulf, are the clear culprits behind weak exports and investment uncertainty. Whether GDP growth is slightly above zero, or slightly below, is irrelevant. The critical priority is to boost spending, investment, and job-creation in all sectors (including public services) fast enough to offset that shock and enhance Canada’s economic independence.

Theatrics over whether an arbitrary line has been crossed are an unhelpful distraction from that task.

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Millions of Canadians continue to struggle to pay the bills for the necessities of life, and with Donald Trump’s trade war and his new conflict in the Middle East, things are getting worse. Meanwhile, the stock market sets record highs and financial wealth become increasingly concentrated in the hands of a small minority. Based on income tax data, the richest 1.5% of Canadians own over half of all net financial wealth (based on distribution of capital gains).

The striking gap in economic trajectory between a lucky elite at the top, and the challenges faced by the majority of society, has given rise to the term ‘K-shaped economy.’ The term first became popular in describing the growing gap in U.S. society, but it is increasingly applicable in Canada, as well.

In this 25 minute podcast for CityNews’ In This Economy program, Centre for Future Work Director Jim Stanford spoke with host Kris McCusker about the K-shaped economy, its causes and consequences.

Narrowing the gap between the two parts of the ‘K’ requires addressing both the ‘predistribution’ of income (empowering workers to capture a larger share of value-added in the first place) and the ‘redistribution’ of income (using government taxes and transfer programs to achieve greater equality in after-tax incomes).

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