Scotiabank head of capital markets economics Derek Holt set off a Bay Street firestorm earlier this month by writing “I’m deeply worried about public policy in my country.” BMO chief economist Doug Porter and National Bank strategist Stéfane Marion joined the grim chorus over the weekend.
Each economist voiced concerns about domestic productivity – essentially output per worker – as 2023 marked the third annual consecutive decline for the first time in at least 40 years. Mr. Marion cited noble laureate Paul Krugman, who wrote that “A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.” Canadians’ standard of living is at risk as the productivity slump continues.
Rising government payrolls, which are historically correlated with weaker productivity, explain part of the slump. Mr. Porter noted that Canadian public payrolls have increased…
