While the trucker protests might’ve captured Canadians’ attention over the past three weeks, prominent economist David Rosenberg said the blockage of one of the most important land transport routes between Canada and the United States will be nothing more than a “speck of dust” for the longer outlook for inflation.

Protesters that were blocking the Ambassador Bridge were forcibly removed by police late Sunday after six days, allowing traffic to start flowing between the two countries again. 

While the halt of commercial trucks further strained supply chains in numerous industries including the auto sector, Rosenberg, chief economist and strategist at Rosenberg Research & Associates, said the impact will be fleeting. 

“In the overall scheme of things, that is really a speck of dust on anybody’s longer economic outlook. We’ll definitely be talking about something different than these demonstrations that have made it to the front page of the papers [for] the grand total of three weeks,” he said in an interview on Monday. “It was big while it lasted and now it’s subsiding.”

Rosenberg said new variants of COVID-19, such as Delta and Omicron, have had a much more pronounced impact on inflation and the supply side of the economy than the blockades, and now, there’s an overriding positive story approaching – the lifting of pandemic restrictions in Canada. 

“That’s going to give a nice push to the service sector over the course of the next few months and quarters,” he said. 

As provinces begin to ease restrictions and central banks gear up to raise interest rates, Rosenberg said that will be a true test of the economy, and give the supply side some “much-needed relief on the inflation front.”

“There are no new [inflation] eras, excesses are never permanent. I think the big risk as central banks start to tighten policy, because there are asset bubbles everywhere – in real estate, in crypto, in the stock market, in the corporate credit market – is central banks are going to stress test the system,” he said. 

“The big risk to me is not consumer inflation, the big risk to me is […] the rug is going to be taken out of the stock market, residential real estate is going to be a similar story. So we’re going to have asset deflation. The question is how big.” 

As the Canadian economy begins to normalize over the next several months, Rosenberg said attention will likely switch from one of supply to that of the potential softening of consumer demand, which would cause the pace of inflation to slow. 

“I think that’s the primary risk – is how would a bear market in equities play into consumer demand and confidence and spending,” he said.