The big, and well, only real news yesterday in Canada were the release of the job numbers from Statistics Canada, and they blew past expectations. Far beyond them. Analysts forecast somewhere between five and eight thousand new jobs in December, and instead there were 104,000, the vast majority of them full-time, and almost all in the private sector. The unemployment rate edged down further to five percent, which is just barely off of the record low of 4.9% we saw over the summer. This shows that the labour market is still incredibly tight, and the Bank of Canada’s estimation that this level is unsustainable and a sign there is still too much demand in the economy that it’s driving inflation, and it requires some rebalancing to ensure that those job numbers are more sustainable. There have been a lot of fairly torqued readings of Tiff Macklem’s comments, that unemployment needs to be higher to slow inflation, but I’m not sure that captures enough nuance in what he’s trying to say.

Huge increase in job numbers in December: +104k (forecast was 8k), unemployment rate down to 5% (which is 3.9% in American terms).
Also, record high employment for core-aged women, particularly those with young children. https://t.co/ZGuE8Xa1O5 pic.twitter.com/P5mQQ8p4eP

— Dale Smith (@journo_dale) January 6, 2023

The point in the report about record high employment levels for core-aged women, particularly those with small children, is particularly important because of this government’s focus on child care deals with provinces. This is one of the points of it—getting more women into the workforce, and the programme pays for itself with all of the additional revenue generated by those women in the workforce. It may be too soon to draw the straight line between the child care deals and those women going back to work, because in most provinces, the fees have only just started falling, but it does point to why early learning and child care is important, because the tight labour market needs those core-aged women right now.

And then there is all of the talk of the “looming recession.” It still may not happen, and there could be a “soft landing” of slower growth while the labour market rebalances itself, but not negative growth or a significant increase in unemployment. And if there is a recession, it’s not likely to be one with too many job losses because of the tight labour market, and that could reduce some of the pressure, again, while the economy starts to rebalance itself to a more sustainable place. We’re not in the same place we were in previous economic downturns, so things could be very different this time around.

1) Commodity prices are high, and the relaxing of China's covid measures will likely add another boost. Our terms of trade have fallen recently, but are still in the stratosphere. Canada doesn't go into recession when commodity prices are high.

2/

— Stephen Gordon (@stephenfgordon) January 6, 2023

3) The economy is running ahead of potential. Slowing economic activity to bring inflationary pressures back in line may well produce 2 consecutive quarters of declining GDP, but a return to balance is not a recession IMNSHO.

4/4

— Stephen Gordon (@stephenfgordon) January 6, 2023

Ukraine Dispatch, Day 318:

In spite of Russia saying they were going to enact a thirty-six hour ceasefire for Orthodox Christmas, they nevertheless carried on shelling parts of Ukraine, because that’s who they are. They then said Ukraine was shelling them, but Ukraine didn’t agree to the ceasefire, so…

https://twitter.com/Podolyak_M/status/1611345077871284227

https://twitter.com/KyivIndependent/status/1611339196391882752

Good reads:

• Justin Trudeau hopes that next week’s Three Amigos summit can resolve energy policy tensions with Mexico; he’ll have a bilateral meeting with Biden beforehand.
• Trudeau is also calling on Alberta to use its surplus on carbon capture and storage incentives, and took a swipe at Poilievre for not proposing any solutions.
• Trudeau also had a call with the King, and they talked about the COP15 biodiversity summit and other issues related to climate change.
• Surprising nobody, the price tag for the Navy’s slushbreakers and new Coast Guard vessels continues to escalate, with Irving blaming the pandemic.
• Here’s a look at the nomination race shaping up for the upcoming vacancy in the Conservative safe seat of Oxford, where the retiring MP’s daughter plans to run.
• It looks like the body found near Roxham Road was someone trying to illegally cross into the US, and not the other way around.
• The OPP is determining whether to launch an investigation into whether the Ford government leaked their decision to open up the Greenbelt to development.
• Kevin Carmichael puts the jobs numbers into context around what it means for the Bank of Canada’s next moves.
• Heather Scoffield tries to square the job numbers with the talk of a possible looming recession, and what that could mean.
• Justin Ling has a deep dive into McKinsey’s consulting record, and why there are some questionable contracts by Canadian departments.
• Paul Wells gets a preview of Bill Morneau’s upcoming book, and reflects on some of what Morneau has to say about Trudeau’s style of government.
• My weekend column looks at the problem of trying to blame Omar Alghabra and the prime minister for the holiday travel chaos, but what the government can do next.

Odds and ends:

The only other concerns I saw were:

1. Jordan Peterson is alleged to be touting his credentials while speaking outside his expertise on topics like climate change, white supremacy and COVID-19

2. Complaints alleging JP is engaging in harassment or abuse of people on Twitter

🤔

— Rachel Gilmore (@atRachelGilmore) January 6, 2023

I’m pretty sure it just rolls into the next one, which rolls into the one after that, and so on. https://t.co/TeSTDN920n

— Dale Smith (@journo_dale) January 6, 2023

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