{"id":461327,"date":"2026-02-08T07:51:07","date_gmt":"2026-02-08T07:51:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/461327\/"},"modified":"2026-02-08T07:51:07","modified_gmt":"2026-02-08T07:51:07","slug":"carmichael-the-best-solution-to-the-cost-of-living-challenge-patience","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/461327\/","title":{"rendered":"Carmichael: The best solution to the cost of living challenge? Patience"},"content":{"rendered":"

I take requests. Last month I proposed<\/a> that while affordability was a crisis for low-income households, for most of us it\u2019s a rear-view mirror problem: a thing of the past, but some well-documented tricks of the mind are making that thing appear closer than it really is. Average wage growth caught and passed inflation a while ago. We tend to fixate on nominal prices, but we\u2019ve actually established a new equilibrium.\u00a0<\/p>\n

One self-described fan of The Logic was unconvinced. She shared the story of an \u201colder family friend\u201d who can\u2019t retire because her pension income doesn\u2019t cover basic costs. This person, a caregiver, occasionally visits a food bank. \u201cI would love to see you dig into the degree to which averages distort the painful financial reality for many people,\u201d the fan wrote.<\/p>\n

Higher food and shelter costs are a real thing for too many people. But that was true in 2019, before the inflation shock. The question today is whether affordability is the national crisis so many polls make it out to be. The answer matters because of the polycrisis<\/a>. We have neither the fiscal nor the mental capacity to deal with everything at once. Fighting on one front will mean abandoning another.\u00a0<\/p>\n

One way to triage is to make sure we\u2019re not obsessing over something that\u2019s being magnified by the rear-view mirror. That could mean recognizing that there\u2019s a qualitative difference between an older caregiver who can\u2019t afford groceries and the apocryphal 30-something stuck in his parents\u2019 basement. The former is a crisis. The latter is what David Adams Richards has called<\/a> \u201ccomfortable victimization.\u201d\u00a0<\/p>\n

Pierre Poilievre asked<\/a> the Conservative convention last weekend what has changed since Mark Carney became Liberal leader and prime minister roughly a year ago. One answer to the Conservative leader\u2019s question is that most of us are wealthier. That has little to do with Carney. Free-market economies have a way of correcting for shocks, even if most of their participants fail to notice. Remember all the fear and loathing<\/a> over what would happen when millions of mortgages reset at higher rates? Nothing happened<\/a>. The best answer to the affordability question at this point might be patience.\u00a0\u00a0<\/p>\n

Statistics Canada knows that aggregate numbers obscure individual realities. One of the ways it attempts<\/a> to draw a more complete picture is by dividing its entire sample of households into quintiles. Let\u2019s stick with Poilievre\u2019s 12-month yardstick. Household net worth\u2014assets such as investments and real estate minus liabilities such as mortgages\u2014increased 6.1 per cent in the third quarter of 2025 from a year earlier, compared with a 7.8 per cent increase over the previous 12 months. There\u2019s foam on the runway if things go badly.<\/p>\n

\t\t\"Line\t<\/p>\n

To be sure, that foam isn\u2019t evenly spread. The net worth of the lowest income quintile declined 0.6 per cent, and has been essentially stagnant since 2020 and 2021, when poorer households got a temporary boost from COVID-19 benefits. The net worth of all other quintiles was higher, led by that of the third-highest income group, whose net worth increased 8.1 per cent after advancing a similar 8.3 per cent in the 12 months ending in the third quarter of 2024.\u00a0<\/p>\n

Those higher mortgage payments might have stung, but they continued to finance appreciating assets. The real driver of wealth in recent years has been the stock market. That\u2019s what\u2019s separating the lowest-income households from everyone else. The value of that quintile\u2019s financial assets increased 4.9 per cent over the most recent four quarters, compared with 10.2 per cent for all households. Makes you wonder if we\u2019re sleeping on financial<\/a> literacy<\/a> as a powerful way to address poverty.\u00a0<\/p>\n

Of course, we aren\u2019t thinking about our stock portfolios when we check the price of ground beef or scan the rental listings. Nor do we consider that the cost of gasoline, internet access and child care are significantly cheaper now than they were a couple of years ago.\u00a0<\/p>\n

But given the stakes, do we really want our lizard brains making all the decisions right now? The Liberals and the Conservatives are essentially tied in public opinion polls. The political class has a huge incentive to give us what we think we want. Carney already scrapped the consumer carbon tax in the name of affordability, and Poilievre would sacrifice the revenue from the industrial carbon tax. The Conservative leader insists<\/a> those taxes have added to the cost of food. Maybe a little, but research<\/a> by Bank of Canada economist Olga Bilyk suggests the biggest issue is the cost of imported food items. International exporters don\u2019t care about Canada\u2019s carbon price.\u00a0<\/p>\n

About 80 per cent of the labour force\u2014some 14 million people\u2014works in eight of Statistics Canada\u2019s broad occupation categories: wholesale and retail; health care; manufacturing; education; professional, scientific and technical services; construction; finance and real estate and public administration. The median wage in each of those classifications increased between 5.9 per cent (construction, 1.3 million workers) and 11.4 per cent (finance, 1.2 million workers) over the two years ending in December.\u00a0<\/p>\n

The all-items consumer price index increased 4.5 per cent over that two-year period. Food purchased from stores increased 5.8 per cent and Statistics Canada\u2019s proxy for shelter costs increased 8.9 per cent.\u00a0<\/p>\n

I could be guilty of quantification fixation<\/a>, our tendency to give weight to hard data over softer measures, or confirmation bias, given my hypothesis that the idea of a broad-based affordability crisis is now fuelled by narrative more than anything else. But my assessment of the data is that wage increases have at least offset higher prices, and quite often exceed them. That doesn\u2019t mean affordability isn\u2019t an issue, but it does raise questions about whether it\u2019s the thing that should drive policy right now.\u00a0<\/p>\n

Kevin Carmichael is The Logic\u2019s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief. <\/p>\n","protected":false},"excerpt":{"rendered":"I take requests. Last month I proposed that while affordability was a crisis for low-income households, for most…\n","protected":false},"author":2,"featured_media":461328,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,1673,10262,46],"class_list":["post-461327","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-commentary","tag-cost-of-living","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/461327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=461327"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/461327\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/461328"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=461327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=461327"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=461327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}