![\"Governor](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/02\/04f653f591028fc8ed37dfe982442f26.jpeg\")
Governor of the Bank of Canada Tiff Macklem at the 2022 European Central Bank Forum on Central Banking. <\/p>\n Governor of the Bank of Canada Tiff Macklem at the 2022 European Central Bank Forum on Central Banking. <\/p>\n
Canada is entering a period of economic change that won\u2019t fade with the next interest-rate decision or budget cycle.<\/p>\n
In a major speech delivered in Toronto this week, Tiff Macklem, governor of the Bank of Canada, warned that the country is navigating deep structural shifts \u2014 from U.S. protectionism to artificial intelligence (AI) and slowing population growth \u2014 that will permanently reshape growth, jobs and affordability.<\/p>\n
\u201cThis is not a temporary cyclical fluctuation,\u201d Macklem said (1). \u201cThese are deep structural changes that are transforming the economic landscape.\u201d<\/p>\n
While much of the speech focused on macroeconomic forces, its implications for everyday Canadians are significant \u2014 and in some cases, uncomfortable.<\/p>\n
Canada\u2019s economy is changing in ways that won\u2019t reverse. U.S. protectionism, artificial intelligence and slower population growth are permanent shifts \u2014 not a short-term slowdown.<\/p>\n
Economic growth will be modest for years, not months. The Bank of Canada expects GDP growth of about 1.25% through 2027 as the economy restructures.<\/p>\n
Inflation may stay near 2%, but affordability pressures will linger. Tariffs and trade disruptions are raising costs even as weak demand keeps headline inflation in check.<\/p>\n
Job risks will be uneven, not widespread. Workers in export-heavy sectors and entry-level roles face more pressure, while overall unemployment may stay relatively stable.<\/p>\n
AI is already affecting hiring \u2014 especially for young workers. Early evidence shows fewer entry-level jobs in occupations exposed to automation.<\/p>\n
Interest rates can\u2019t fix structural problems. Monetary policy can smooth the transition, but it can\u2019t restore lost trade efficiency or protect specific industries.<\/p>\n
Households and workers will need to adapt. Skill development, financial flexibility and realistic expectations about growth will matter more in this new economic phase.<\/p>\n
Macklem\u2019s presentation to the Economic Club of Canada focused on the current and potential impact of these macroeconomic shifts \u2014 changes that will have real and measurable effects on the budgets of Canadians.<\/p>\n
The Bank expects steady but slow economic expansion with average GDP growth of about 1.25% over the next two years. It\u2019s an economic pace that Governor Macklem described as \u201csoft.\u201d Yet unemployment is not expected to surge. Why? In part because population and labour-force growth have slowed sharply.<\/p>\n
\u201cWith little growth in the labour force, we are not expecting the unemployment rate to trend higher,\u201d Macklem said (2).<\/p>\n
This doesn\u2019t mean Canadians shouldn\u2019t expect job losses. Macklem pointed out that job conditions will diverge sharply by sector. For instance, workers in industries tied closely to U.S. exports \u2014 including manufacturing, transportation, energy and forestry \u2014 are already seeing weaker employment, while domestically oriented sectors remain more stable.<\/p>\n
Impact on households: Economic pain will be concentrated, not evenly shared.<\/p>\n
The Bank continues to project inflation near its 2% target, even as tariffs and supply-chain reconfiguration push costs higher.<\/p>\n
As Macklem explained: Tariffs are \u201craising costs and reducing efficiency,\u201d but weak demand is offsetting some of that pressure.<\/p>\n
For Canadians, this explains a frustrating reality: inflation can look \u201cunder control\u201d on paper while essentials still feel expensive. Structural changes lower the economy\u2019s productive capacity \u2014 meaning slower income growth even when prices stabilize.<\/p>\n
Impact on households: The cost of living will remain high with little to no reprieve in the near future.<\/p>\n
While AI\u2019s productivity boost may take years to materialize, the labour-market effects are emerging now.<\/p>\n
\u201cIt\u2019s getting more difficult to find a job in occupations with a larger proportion of tasks that can be performed by AI,\u201d Macklem said, citing early evidence of falling job-finding rates in AI-exposed roles (3).<\/p>\n
Macklem also pointed out what BoC analysts have flagged:<\/p>\n
A decline in entry-level job vacancies<\/p>\n
Elevated long-term youth unemployment<\/p>\n
Growing demand for workers with AI-specific skills<\/p>\n
For students and new graduates, this means traditional career on-ramps may be narrower \u2014 even if overall employment looks stable.<\/p>\n
Impact on households: More competition for entry-level jobs, making it harder for younger generations to gain work experience.<\/p>\n
Canadian businesses are importing less from the United States and exporting slightly more to overseas markets, but the transition is slow and incomplete.<\/p>\n
\u201cSo far, the increase is largely limited to existing clients \u2014 businesses have not found many new clients just yet,\u201d Macklem said.<\/p>\n
With the Canada\u2013U.S.\u2013Mexico Agreement (CUSMA) under review this year, trade uncertainty is expected to persist \u2014 weighing on investment and long-term planning for both businesses and workers.<\/p>\n
Impact on households: With uncertainty in the macro economy, businesses are unlikely to invest in growth and this limits wage increases and job growth.<\/p>\n
Read more: Canadians spent $183B on dining and clothes in 2024. Prioritize these 4 critical investments instead<\/a> and watch your net worth skyrocket<\/p>\n At its core, Macklem\u2019s message was a warning against expecting quick fixes.<\/p>\n Structural change, he said (4), is \u201cthe transition between one steady state and the next \u2014 between Canada\u2019s old economy and the new one taking shape.\u201d<\/p>\n Monetary policy can help smooth that transition, but it cannot:<\/p>\n Undo the efficiency losses caused by tariffs<\/p>\n Force businesses to adopt AI<\/p>\n Reverse demographic trends<\/p>\n Protect specific sectors or occupations<\/p>\n \u201cMonetary policy can\u2019t change the destination,\u201d Macklem said. \u201cBut it can help smooth the journey.\u201d<\/p>\n Impact on households: Don\u2019t expect a sudden change in budgetary constraints due to rate reductions or wage increases. Instead, focus on what you can control: where you spend your money.<\/p>\n While many forces are beyond individual control, the Bank\u2019s analysis illustrates that Canadian households can take action to help themselves.<\/p>\n With productivity gains years away and population growth slowing, wage growth may remain modest. Conservative budgeting and emergency savings matter more in a low-growth economy, so focus on where to cut costs and build savings.<\/p>\n Workers in trade-exposed sectors should assume ongoing volatility. Diversifying skills \u2014 particularly digital and AI-adjacent ones \u2014 can improve resilience.<\/p>\n Lower rates can support demand, but they cannot restore lost economic efficiency. Housing, groceries and services may remain costly even if inflation stays near target.<\/p>\n AI is already reshaping entry-level work. Education and training decisions that emphasize adaptability, technical literacy and problem-solving may offer better long-term returns.<\/p>\n Macklem stressed that governments \u2014 not central banks \u2014 are central to how Canada navigates this shift, through infrastructure, skills training and internal trade reform.<\/p>\n \u201cHow Canadian households, businesses and governments respond to these structural breaks will determine our future prosperity,\u201d he said (5).<\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our[ editorial ethics and guidelines*<\/a>](https:\/\/money.ca\/editorial-ethics-and-guidelines)<\/a>).<\/p>\n Bank of Canada (1, 2, 3, 5<\/a>); Bank of Canada (4<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Governor of the Bank of Canada Tiff Macklem at the 2022 European Central Bank Forum on Central Banking.…\n","protected":false},"author":2,"featured_media":463771,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[52,49,48,23726,189449,78994,44,60357,25902],"class_list":["post-463770","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-bank-of-canada","tag-ca","tag-canada","tag-gdp-growth","tag-governor-macklem","tag-headline-inflation","tag-news","tag-population-growth","tag-tiff-macklem"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/463770","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=463770"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/463770\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/463771"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=463770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=463770"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=463770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}