Last Updated on January 24, 2019
According to a group of economists who study business cycles, Canada is not in a recession. Members of the Toronto- based C.D. Howe Institute’s Business Cycle Council said a “resilient” labour market is offsetting falling gross domestic product and energy investment.
“The council defines a recession as a pronounced, pervasive and persistent decline in aggregate economic activity,” the group said in a statement drafted after a July 22 meeting. The figures available to that date “didn’t provide evidence that Canada had entered an economic downturn.”
The stakes around using the word recession to describe the drop in output linked to an oil shock are higher now because Prime Minister Stephen Harper and his political opponents are gearing up for an Oct. 19 election.
Bank of Canada Governor Stephen Poloz cut interest rates for the second time this year and declined to comment on whether the economy had entered a recession in the first half of the year.
According to Toronto-Dominion Bank and Bank of America Merrill Lynch, the weakness looks like a recession.
The group, which published its first paper in October 2012, aims to be “an arbiter of business cycle dates in Canada,” according to its website.
Interim Chairman Finn Poschmann likened the work to the U.S. National Bureau of Economic Research’s business cycle dating committee. The panel members also include Philip Cross, Statistics Canada’s former chief economic analyst, Eric Lascelles, chief economist at Royal Bank of Canada Global Asset Management and Stefane Marion, chief economist at National Bank of Canada.
The council isn’t waiting for Statistics Canada’s next report on gross domestic product report, due July 31, because the monthly indicator will not change anything,
Labour market indicators have countered poor GDP and trade data. Canada’s unemployment rate has remained at 6.8 percent in the five months through June, and is down from 8.7 percent in 2009 during the last recession.