There was only a single word on the lips of many Canadian economists and politicians, besides journalists, during the past week: recession.
Recent economic data reflected a mixed picture of Canada’s economy. There were some interpretations that were siding with the argument for a recession.
Why are people talking of a recession?
On Friday, 29 May ’26, Statistics Canada reported real gross domestic product (GDP) figures for the first 3 months of the year.
The quarter-over-quarter change was so insignificant that StatCan considered it statistically flat, or no change in real GDP.
When economists are analysing the economy’s health for a given quarter, they often annualise quarterly figures. Such calculations may magnify small positive or negative changes in the values.
That data triggered discussions about a potential recession.
Technical recession
2 consecutive quarters of declining GDP is a bar used by some analysts to define a ‘technical’ recession. However, several economists consider the term unhelpful.
Economists claim that Canada is currently experiencing a technical recession. This is what it means.
Appearing before a parliamentary committee on Monday, 1 June ’26, Bank of Canada (BoC) senior deputy governor Carolyn Rogers warned MPs against putting too much emphasis on that definition.
Rogers added that the necessity of inserting the term ‘technical’ before the definition implies that one should look beyond that single indicator.
The more widely accepted but nebulous definition of a recession refers to a downturn where Canada’s economy’s not merely shrinking on a technical basis. This weakness is widespread throughout the economy.
Employment losses mark recessions. Additionally, households are reducing their spending due to the challenging operating conditions faced by businesses throughout the economy.
Randall Bartlett, the deputy chief economist at Desjardins, stated that two consecutive quarters of negative growth or contracted GDP may be necessary. However, such data may not be sufficient to call a recession in Canada or anywhere else.
