By Graeme MacKay, Editorial Cartoonist, The Hamilton Spectator – Tuesday September 1, 2015
Recession confirmed as Canada’s GDP shrank in 2nd quarter
Canada’s economy expanded in June but declined by 0.1 per cent for the second quarter as a whole, meeting the bar of what is legally defined as a recession.
The economy expanded by 0.5 per cent in June, Statistics Canada said.
But that slight monthly uptick wasn’t enough to offset the contraction in the previous two months, which means for the second quarter as a whole, the economy shrank.
The economy also shrank in the first quarter, which means Canada’s economy has met the bare minimum required before a recession is declared — two consecutive quarters of decline.
On an annualized basis, the economy shrank by 0.5 per cent in the April-to-June period, after contracting at an 0.8-per-cent annual pace in the first three months of 2015. For comparison purposes, the U.S. economy expanded by 3.7 per cent during the same period, the data agency noted
The numbers bring an end to what had been a contentious issue during the current federal election campaign.
While most economists would agree that a recession is a more complex beast than merely pegging it to two quarters of negative growth, most agree it’s as good a place to start as any.
Indeed, the federal government’s recent legislation on balanced budgets defines a recession as “a period of at least two consecutive quarters of negative growth in real gross domestic product for Canada, as reported by Statistics Canada.”
“With StatsCan making it official that we did have two consecutive quarters of declining GDP, the recession bugs will be chattering,” Bank of Montreal economist Doug Porter noted.
But while the quarter numbers were down, the data hinted at growth towards the end that may have carried into the current third quarter. (Source: CBC News)