00:00Is there reason to be concerned about inflation and an inflationary spiral in the year ahead?
00:07Well, you know, I think central banks have to be careful because we are coming off of a post-pandemic
00:12period of elevated inflation.
00:15And so when you have those those kinds of periods, even if they were a series of of what should
00:20be temporary shocks,
00:21of course, the central bank is going to worry about inflation expectations adjusting higher and some of those higher price
00:27prices filtering into wage negotiations,
00:30which think which makes things more persistent. But absolutely, as you suggested, the labor market here is, you know,
00:38is coming into this shock, you know, in a much different position, in a weaker position than when we had
00:44the Russia, Ukraine shock.
00:46And you had, you know, shortages of labor. We had vacancies over unemployed workers, you know, at two vacancies for
00:54unemployed.
00:54That's a very different labor market right now. You know, so we think going into this, the second round effects,
00:59the risks of that are more moderate.
01:02So, Tiffany, when you look at the growth outlook, is there reason to take down the outlook for growth, given
01:06what you just said?
01:08Yeah, I mean, because, you know, the flip side of, you know, that we absolutely, you know, this is going
01:12to impact headline inflation.
01:14You know, if we just look at retail gasoline prices, you know, they're already up 20 percent, you know, versus,
01:20you know, there's a bit of a lag versus when the episode in Ukraine started.
01:25You know, so that is a real income shock. We will get headline inflation that's higher.
01:29We think headline inflation could accelerate by a percentage point as a result of this.
01:34And that means real incomes will decelerate by a percentage point.
01:39Now, usually consumers have enough savings to where they can smooth over these kinds of things, you know, again, assuming
01:45this is temporary.
01:47But but, you know, the the savings rate has actually dropped quite a bit.
01:50We've seen labor incomes that have fallen that have have the growth of labor incomes that have fallen.
01:55So, again, we're kind of in a weaker position in terms of the consumer.
01:59You know, and we do think there's a potential for this to, you know, to take off some from growth.
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