Stephen Johnston joined GlassTalk to explore the growing risk of stagflation in Canada’s construction sector, where inflation outpaces productivity and policy responses are limited. He argues that inflation pressures, if left unchecked, could entrench low productivity, leading to a dangerous mix reminiscent of the 1970s—high inflation with stagnant growth and elevated unemployment
Johnston emphasizes that public sector interventions—such as wage hikes, union expansions, and increased regulations—can inadvertently suppress productivity, pushing up costs further. In the construction industry, this dynamic is already manifesting through rising material costs, labour shortages, and project delays .
He also underscores the limitations of monetary policy in addressing this scenario; raising interest rates may curb inflation but risks undermining productivity and employment, locking in stagflation conditions.
Listen to interview here.