Is Canada heading for recession? One economist says it may lack ‘severity'
If Canada is heading for a recession, how severe could it be?
That's the question being debated by many economists and financial experts who warn that the main driving force is the trade war brought on by U.S. President Donald Trump's tariff policies.
The labour market has already been shedding jobs as tariffs take hold and companies brace for higher costs, and at least one economist is forecasting the loss of thousands of jobs in the coming months.
In an interview with The Globe and Mail, TD Group's chief economist and vice-president Beata Caranci said the bank is 'worried' Canada will enter a recession, in addition to potential job losses heading towards the third quarter of the year.
'We can see perhaps another 100,000 jobs lost,' Caranci said in that interview. 'We've already had over 70,000 lost in the private sector in two months.'
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In a statement to Global News about that forecast, Caranci said much depends on how effective the federal government is at implementing promises to 'stabilize jobs, particularly in manufacturing.'
'The 100,000 jobs looks like a big number but it amounts to 0.4% of the labour force,' Caranci said in an email to Global News.
'Past recessions have corresponded with job losses in a range of 1-5% of the labour force. This speaks to the belief that there will be a front-loaded adjustment to the tariff environment, but it'll likely lack severity.'
She added: 'But for now, there's immediate transparency in jobs at risk of being lost, rather than what can be gained.'
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Ontario tables tariff-era budget with bigger deficit and bleak economic outlook
How is a recession determined?
There are several ways to gauge a recession, and the formal definition by most economists and central bankers is when Gross Domestic Product (GDP) shows a decline for two consecutive quarters, or a six-month period.
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This means that the total value of goods and services produced within Canada in that period would be less than the same period one year prior.
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Rising unemployment and inflation trends can also be used to determine a recession.
If Canadian businesses continue to pull back on producing goods and services due to the heightened cost of tariffs, that will be shown in economic data including GDP.
The trade war has also been impacting Canada's labour market with unemployment rising as companies lay off workers, and that is reflected in monthly jobs reports from Statistics Canada.
Economic gauges like GDP and jobs reports come sometimes weeks or months after the start of a recession, which is only defined after the fact since it is based on data looking back at the previous two quarters of economic growth.
There are several anecdotal theories that have been proposed to try and gauge whether a recession is happening in real time, but for the most part are considered inaccurate or outdated compared to what economists use.
2:36
Business News: Bank of Canada Financial Stability Report
How severe might a recession be?
Any recession that could arrive imminently is not expected to be as severe as the economic impact of the COVID-19 pandemic in 2020 or the Great Recession from 2007-2009.
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However, the severity of this recession may depend on how the federal government responds to Trump's tariffs.
Caranci pointed to proposals such as the federal government's plan to spend $2 billion on an 'all in Canada' manufacturing network.
The next GDP report from Statistics Canada will be released on May 30, and represent economic growth by industry for the month of March.
This would also give the full GDP report for the first quarter, or three months of the year.
According to TD Economics, the first quarter of 2025 is forecast to show the economy grew by 1.8 per cent, while the second quarter is expected to show a decline of one per cent, and the third quarter will decline by 0.2 per cent. That projected third-quarter decline would meet the definition of a recession, but is projected to trend back up in the fourth quarter.
However, that all depends on the data — and that's just not clear yet.
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Winnipeg Free Press
43 minutes ago
- Winnipeg Free Press
‘Hard to look at the bright side'
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'There's customers I supply in the U.S. that, when he does things like this, they just stop buying and wait six weeks.'– Richard Bobrowski, Imperial Steel owner Meantime, Imperial Steel hasn't laid off staff, despite recording a 25 per cent drop in sales year-over-year. The Winnipeg company, which makes thin-wall steel tubing, exported roughly 70 per cent of its products to the U.S. in 2024. 'You get going for a few weeks, and all of a sudden the president of the United States makes a statement,' said Richard Bobrowski, Imperial Steel owner. 'There's customers I supply in the U.S. that, when he does things like this, they just stop buying and wait six weeks.' American clients are sourcing within their home country more, Bobrowski added. Imperial Steel struggles to give consistent pricing — between tariff changes and recent steel price fluctuations — and U.S. customers are hesitant to sign on, wondering what change could occur before a shipment arrives. 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'You're … fighting for scraps on what's available in the market right now.' 'Companies … are just buying up huge amounts of stock, and there's no supply,' Hird said. 'You're … fighting for scraps on what's available in the market right now.'– Evolution Wheel owner Derek Hird Supply chain issues have resulted in lost sales, Hird added. Meantime, he's paying more for the steel he purchases. So, too, is Northern Steel Buildings, a steel shop enterprise in Morden. It gets steel from Canada and the United States, and it pays Canada's 25 per cent reciprocal tariff. The tariffed products can be cheaper than Canadian steel, said general manager Rick Friesen. That won't be the case if a 50 per cent fee comes online on Canada's side. 'If the Canadian government decides to retaliate … I think that will hinder the Canadian economy and growth,' Friesen said. The economic uncertainty is damaging, said Chuck Davidson, president of the Manitoba Chambers of Commerce. 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'I think the best idea is to … wait and see what the president actually does first.' Monday Mornings The latest local business news and a lookahead to the coming week. He believes Americans will push back against tariffs as they feel pain in their pocketbooks. The impact hasn't reached its peak, Mar stated, noting hundreds of U.S. politicians will run for office again next year. Meantime, Manitoba companies are attempting to dodge tariffs. Northern Steel Buildings is consulting agencies about a reciprocal tariff exemption. It's heard of other companies being successful, Friesen said. Eascan Automation in Winnipeg, which creates robots, is tapping Canadian companies to bulk order aluminum goods from Europe for direct shipment into Canada. The goal is tricky because Eascan orders custom parts and its supplier distribution centres are in the United States, said chief executive Camila Bellon. Canada exported $20 billion worth of steel and iron to the U.S. last year and $4.1 billion in aluminum, per Natural Resources Canada data. Gabrielle PichéReporter Gabrielle Piché reports on business for the Free Press. She interned at the Free Press and worked for its sister outlet, Canstar Community News, before entering the business beat in 2021. Read more about Gabrielle. Every piece of reporting Gabrielle produces is reviewed by an editing team before it is posted online or published in print — part of the Free Press's tradition, since 1872, of producing reliable independent journalism. Read more about Free Press's history and mandate, and learn how our newsroom operates. Our newsroom depends on a growing audience of readers to power our journalism. If you are not a paid reader, please consider becoming a subscriber. Our newsroom depends on its audience of readers to power our journalism. Thank you for your support.
Global News
an hour ago
- Global News
Pipeline policy divides B.C., Alberta as premiers meet with Carney in Saskatoon
British Columbia is pushing back against Alberta Premier Danielle Smith's proposal for a bitumen pipeline to B.C.'s northern coast. It was among the topics of Prime Minister Mark Carney's meeting Monday with premiers in Saskatoon, where the assembled leaders are discussing a draft list of 'national interest' projects to be fast-tracked through the approval process. Smith said any project list that doesn't include new pipelines would send a bad message to Alberta as separatist sentiment flares up in that province. Smith said she wants to see a bitumen pipeline built to ship oil to the Port of Prince Rupert on B.C.'s northern coast. 2:17 Danielle Smith's pipeline push at premier's meeting gets support from Carney B.C. deputy premier Niki Sharma pointed out Monday that Smith's pipeline proposal has 'no proponent at this stage' and said her province is pursuing 'shovel-ready' projects. Story continues below advertisement 'Although we have differences of opinion with respect to that, we're focused on where we can find alignment,' Sharma said on her way into Monday's meeting. 'We're going to be focused on shovel-ready projects in B.C. that we can bring forward and we know will have a really solid impact on the economy.' B.C. Premier David Eby was not at the meeting. He is in Asia for a preplanned trade mission. Smith said that nine federal policies, including the oil and gas emissions cap and the tanker ban on B.C.'s northern coast, discourage companies from proposing pipeline projects in Canada. She wants the Carney government to eliminate those polices. 'The problem is unless we address the nine terrible policies that have damaged investor confidence, we're not going to get the proponents coming forward with major investments,' she said. Carney vowed during the election campaign to slash federal approval times on major infrastructure projects in the 'national interest' to help make the country an 'energy superpower' as the country adjusts to ever-changing tariffs imposed by the U.S. Legislation to make that infrastructure push a reality is expected to be introduced in the House of Commons as early as this week. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy 'We're in the process of redefining our relationship with the United States,' Carney said at the beginning of Monday's meeting. Story continues below advertisement 'That's what this meeting is about, building a stronger Canadian economy, a one Canadian economy.' 3:54 Decarbonized oil in Canada's 'best interest': Carney talks pipelines after meeting with premiers The prime minister and the premiers are keeping the full list of projects under discussion a secret because they don't want to send negative signals about anything that doesn't make the short list. On his way into the meeting Monday, Ontario Premier Doug Ford said the idea of a pipeline to B.C.'s northern coast would be discussed. 'Hopefully we can get it out west, so we can get to the Asian market, but we have to get it north and we have to get it east as well,' Ford said. Ford said it's 'absolutely critical' that Canada expand its export markets. The Ring of Fire mining project in northern Ontario is among Ford's main priorities heading into the meeting. 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'Out in the East and in New Brunswick, we know a lot about this because we're looking to connect our electricity infrastructure to build the connections that we need … to Nova Scotia and P.E.I. and Quebec and the U.S., so that the kind of energy that we're developing can reach the rest of the country.' 4:30 Carney, Canadian premiers united on 'nation-building' projects, but do not list them Quebec has opposed pipelines in the past and Premier François Legault said that any new pipeline projects that would run through the province need to be examined closely. Story continues below advertisement 'So we need to see what's the economic impact for Quebec, what is the impact on the environment. So what I say is that if there is a project going through Quebec, we'll study it,' Legault said. When asked about Smith's demands, Legault said he was invited to the meeting by Carney, not Smith, and he hadn't seen any concrete proposal for a new pipeline. With differing demands from the 13 premiers, there will have to be compromises if Carney's vision of building a 'one Canada economy' is going to work out. Northwest Territories Premier R.J. Simpson said that, with so many competing agendas around the table, not all premiers are going to get 'everything they want.' 'But there's opportunity, there's a lot to do in Canada,' he said. 'A lot of these projects, they might not start on day one, maybe they're going to start down the road.' The first ministers are also expected to discuss breaking down interprovincial trade barriers, which would make it easier to purchase Canadian-made goods from other provinces and territories. 0:31 Alberta's demand for pipelines not 'ideological,' Smith says Many provinces, including Quebec and Ontario, are coming to the table with legislation that would eliminate some of these longstanding obstacles to internal trade. Story continues below advertisement Reporters and TV cameras were allowed into the meeting room to watch opening remarks Monday. Ford walked into the room chatting with Smith and then told reporters that 'love is in the air' just before the premiers gathered for the roundtable. Internal Trade Minister Chrystia Freeland and Carney's outgoing chief of staff Marco Mendicino shook hands with Moe on the margins of the room just before the meeting's start. Intergovernmental Affairs Minister Dominic LeBlanc took a seat at the table with the premiers next to Holt, while Natural Resources Minister Tim Hodgson sat at another table at the very back of the room near Mendicino and Freeland. — With files from David Baxter in Ottawa.
Canada Standard
an hour ago
- Canada Standard
What are Canada's governing Liberals going to do about AI?
Fresh off his election victory, Prime Minister Mark Carney has been focused on standing up to Donald Trump's claims on Canada as the 51st state and American tariffs. But while that political drama unfolds, one topic that seems to have quietly slipped under the radar is the rise of artificial intelligence. Despite its transformative impact on everything from jobs to national security, AI received surprisingly little attention during the campaign and in the first weeks following Carney's victory. The consequences of that lack of attention are already starting to show, as emissions and electricity costs continue unabated without a clear vision of where AI fits in. Read more: Anxious over AI? One way to cope is by building your uniquely human skills Although Carney has appointed former journalist Evan Solomon as Canada's first-ever AI minister, it's not yet clear what action the Liberal government plans to take on AI. The Liberals' "Canada Strong" plan outlining the prime minister's proposals is scarce on details. Still, it provides some clues on how the Liberals see AI and what they believe it offers to the Canadian economy - and also what they seem to have misunderstood. First, the plan includes some robust initiatives for improving Canada's digital infrastructure, which lags behind other leading countries, especially in terms of rural broadband and reliable cell service. To accomplish these goals, the Liberals say they'll incentivize investment by "introducing flow-through shares to our Canadian startup raise money faster" for AI and other technologies. In other words, they will reuse the model of mining and oil companies whereby investors can claim a tax deduction for the same amount as their investment. A major question is whether Canada's investment ecosystem has enough big players willing to take these risks. The plan gets less promising as it comes to the implementation of AI within "the economy of tomorrow." The Liberals say they plan to build more data centres, improve computing capacity and create digital supply chain solutions "to improve efficiency and reduce costs for Canadians." All that that sounds OK - so far. But how will they do this? The Liberals plan to establish the Bureau of Research, Engineering and Advanced Leadership in Science (BOREALIS), linking AI development directly to the Canadian Armed Forces and the Communications Security Establishment Canada, which provides the federal government with information technology security and foreign signals intelligence. This approach to AI is focused on what it offers to Canada's defence, whether by manufacturing semiconductors or improving intelligence gathering, so that it can rely less on the U.S. Similarly, Canadian defence tech firms will access funding to help reduce dependence on American suppliers and networks. The Liberals are pledging sovereignty and autonomy for Canada's defence and security, all enabled by "the construction and development of AI infrastructure." What goes unsaid is the intense power needs of data centres, and the consequences for emissions and climate action of "building the next generation of data centres" in Canada. New data centres cannot be built without also constructing more renewable energy infrastructure, and none of this addresses emissions or climate change. If the centres crop up in big numbers as planned, Canadians could also see their electricity costs go up or become less reliable. That's because finding space within the existing grid is not as easy as it may sound when AI data centres require over 100 megawatts (MW) of electricity demand versus five to 10 MW for a regular centre. With the rapidly evolving market for AI-based data centres, Canadian policymakers need to provide clear guidance to utilities in terms of their current decisions on competing industrial-scale demands. As the Canadian Climate Institute points out: "Anything less risks higher rates, increased emissions, missed economic opportunities - or all of the above." So far, the Liberal plan fails to address any of these concerns. What else does the "economy of tomorrow" hold? Apparently, it means more efficient government. According to the Liberal plan, AI "is how government improves service delivery, it is how government keeps up with the speed of business, and it is how government maximizes efficiency and reduces cost." Despite otherwise clashing with the Trump administration, this language is reminiscent of Elon Musk's Department of Government Efficiency (DOGE), which has also centred its use of AI. Read more: DOGE's AI surveillance risks silencing whistleblowers and weakening democracy The Liberals will open an Office of Digital Transformation, which aims to get rid of red tape and "reduce barriers for businesses to operate in Canada." They don't seem to really know what this would actually look like, however. They say: "This could mean using AI to address government service backlogs and improve service delivery times, so that Canadians get better services, faster." Their fiscal plan points out that this frame of thinking applies to every single expenditure: "We will look at every new dollar being spent through the lens of how AI and technology can improve service and reduce costs." The economy will also benefit, the government argues, from AI commercialization, with $46 million pegged over the next four years to connect AI researchers with businesses. This would work alongside a tax credit for small and medium-sized businesses to "leverage AI to boost their bottom lines, create jobs, and support existing employees." But a new report by Orgvue, the organizational design and planning software platform, shows that over half of businesses that rushed to impose AI just ended up making their employees redundant without clear gains in productivity. Creating a tax credit for smaller companies to introduce AI seems like a recipe for repeating the same mistake. Much of the Liberal plan seems to involve taking risks. There's a shortsightedness on this rapidly advancing technology that requires significant guardrails. The government seem to view AI as a solutions machine, buying into the hype around it without taking the time to understand it. As policy is properly hashed out in the weeks and months to come, the Liberals' feet will have to be held to the fire on the issue of AI. Canadians must benefit from its limited uses and be protected from its abuses.
