I have zero knowledge of economics, so maybe someone can help me with the question that's been bothering me lately. Why is being in recession or not decided based on figures not adjusted for inflation? I mean, a large part of Europe is technically not in recession, but growing at a rate that's much lower than inflation is no real growth at all, is it? How does it work?
There is very little opportunity right now in Canada so I am not surprised the GDP growth has come in negative. It will probably be positive next quarter due to the oil price spike.
I’m surprised it’s taken this long to get here. Talking to a few friends up there, the country has been feeling economically depressed for the last couple of years.
The formal and traditional definition of a recession means a regression in GDP growth.
Economic malaise is orthogonal to the technical definition of a recession, though it is often correlated. And conversely, economic growth isn't always correlated with positive feelings (eg. South Korea and Canada in the 2010s)
This is not really true. Consumer confidence has a direct impact on GDP in terms of consumption. Lower confidence = lower consumption. Other components of GDP (Investment, Government spending, Net exports) can increase at the same time which can result in no net change, or even positive growth despite decreases in consumer spending. But saying consumer confidence (ie consumption) has no correlation with GDP is incorrect. This is basic macroeconomics.
I don't think this is dissimilar to the US to be honest. We just happen to have inflated and questionable revenue being reported at levels that gloss over the true underpinnings of the economy. I think this may be a leading indicator.
I really liked how Cory Doctorow framed what Canada could be doing with respect to digital sovereignty in his book ("Enshittification"). Doctorow argues that if Canada repealed its anti-circumvention law (Bill C-11), Canadian companies could legally jailbreak American tech products (John Deere tractors, the Apple App Store, etc) and sell those fixes worldwide, turning the right to tinker into a massive export industry and a form of digital sovereignty.
I wonder to what extent the clamp down on immigration is related to this. Feels like a factor that gets lost with everyone blaming trump (which dont get me wrong, he deserves)
The oil price jump had little impact on Q1; the war started at the end of February and it took a while for markets to realize that it wouldn't be quick.
I don't know if "masking" is the correct term for engaging in a policy that would cause an increase in gdp. The immigrants contribution to the economy was still real.
> I wonder to what extent the clamp down on immigration is related to this
It doesn't hurt but it doesn't really help either.
According to a buddy of mine from my policy days, GAC has always known there were issues with how immigration was managed in Canada but their diplomatic posts tend to severely lack intel and law enforcement attaches unlike most other foreign services, which made background checking difficult. There was also a recognition internally that the kinds of immigrants Canada wanted would be poached via an O-1 anyhow, so there was a perverse incentive around how skilled immigration was managed. And add to that the fact that the provinces themselves also managed immigration to a certain degree. All that led to a bureaucratic breakdown.
Additionally, when even Canadian policymakers are actively targeting American finance, VC, and lobbying jobs (like my friend), it shows you that there are deeper, fundamental issues. Heck, Carney only came back to Canada because his door to 10 Downing Street was effectively shut due to BoJo.
Canada has been in a recession for years if you consider per-capita GDP. But the government has been importing millions of people to artificially boost GDP, and as soon as they started decreasing immigration targets GDP dropped.
But Canadians have been feeling the squeeze for years. Especially the youth, who have a ~15% unemployment rate and are the unhappiest demographic of all developed nations :(
Also kind of weird how little coverage this is getting in national media. It's not on the front page of CBC.com, it's tucked away in a sidebar on a subpage.
Considering all of Trump’s shenanigans it’s impressive it’s just that. With Hormuz, tariffs, and America first, this is the equivalent of a fender dent after spinning out on black ice.
We are of course still spinning, so I'm not overly confident we haven't just glanced off a guardrail on the way to the ditch (to belabour your analogy).
Given canada has so much oil,is the hormuz situation really a net negative for canada ecconomically? Like obviously its terrible in general, but id expect higher oil prices to help starve off a recesion.
Global market for oil. If the oil intensity of your economy is high, higher oil prices impacting all goods/services will outweigh increased oilel revenues.
Only if you insist on passing on global prices into your domestic economy. Not doing this is very difficult if you're a net importer but very much possible if you're a producer. This "leaves money on the table" but it is very much a choice (with different consequences), just one that rarely occurs to people who have grown up in highly capitalist economies.
This is also why historically companies have preferred being vertically integrated to avoid having their supply chains exposed until American economists and brokerages started pushing the cult of specialization. Outside of the US, big conglomerates still operate this way.
> Only if you insist on passing on global prices into your domestic economy. Not doing this is very difficult if you're a net importer but very much possible if you're a producer. This "leaves money on the table" but it is very much a choice (with different consequences), just one that rarely occurs to people who have grown up in highly capitalist economies.
They tried this before [0], and calling it controversial would be an understatement. Probably not a great idea to try it again right before the Alberta succession referendum [1].
Do Canadian industries use a large percentage of petroleum products refined from Canadian oil or is it refined from blends produced in other areas of the world, such as the United States and the Middle East?
What’s funny is that Q1 per capita GDP growth in the U.S. was about 1.4% annualized (within the normal range) while Canada was only at 0.1%. Trump is the bull in the china shop but it’s not his China he’s breaking.
Much of the capex that was invested thanks to IRA and CHIPS subsidizes is starting to go operational and trade barriers enacted during both Trump 1 and the Biden admin remain in action, so it wasn't that surprising that much of the output that was unlocked from that era is continuing.
That said, tariffs and trade barriers did help. Heck, I'm a Dem but even I argued that we needed to build trade and non-trade barriers to protect capex that was unlocked via industrial policy.
Yep. That said, much of the stimulus and industrial support packages that were pushed thru in the Obama admin were thanks to the political cover Biden provided as Veep - he was Obama's senate whisperer.
That said, industrial policy has bipartisan support at this point now. As you know working DC BigLaw, professional networks are stronger than partisan biases.
Even without Trump, US-Canada trade was on track to hit choppy waters. Even in the Biden admin (whose alums would have ended up in a Harris admin) there was an openness to armtwist Canada [0] into acquiescing [1]. China did the same [2] with Canada [3][4] until they acquiesced [5]. Heck, even the EU has been slowrolling the ratification of the EU-Canada CETA [6] to protect their (primarily French and Italian) industry.
Sadly, it's difficult for a country that is Canada's size to push back when faced against these sized economies.
I have zero knowledge of economics, so maybe someone can help me with the question that's been bothering me lately. Why is being in recession or not decided based on figures not adjusted for inflation? I mean, a large part of Europe is technically not in recession, but growing at a rate that's much lower than inflation is no real growth at all, is it? How does it work?
Real GDP is adjusted for inflation, nominal GDP is not.
Being in recession is typically defined as negative gdp growth.
So to answer your question, being in recession does account for inflation.
“Real GDP” accounts for inflation already.
Economics is not a science but it sure likes to pretend that it is with lots of technical jargon. https://www.thecrimson.com/article/2013/12/13/economics-scie...
There is very little opportunity right now in Canada so I am not surprised the GDP growth has come in negative. It will probably be positive next quarter due to the oil price spike.
I’m surprised it’s taken this long to get here. Talking to a few friends up there, the country has been feeling economically depressed for the last couple of years.
The formal and traditional definition of a recession means a regression in GDP growth.
Economic malaise is orthogonal to the technical definition of a recession, though it is often correlated. And conversely, economic growth isn't always correlated with positive feelings (eg. South Korea and Canada in the 2010s)
This is not really true. Consumer confidence has a direct impact on GDP in terms of consumption. Lower confidence = lower consumption. Other components of GDP (Investment, Government spending, Net exports) can increase at the same time which can result in no net change, or even positive growth despite decreases in consumer spending. But saying consumer confidence (ie consumption) has no correlation with GDP is incorrect. This is basic macroeconomics.
https://www.investopedia.com/articles/fundamental/103002.asp
I don't think this is dissimilar to the US to be honest. We just happen to have inflated and questionable revenue being reported at levels that gloss over the true underpinnings of the economy. I think this may be a leading indicator.
I really liked how Cory Doctorow framed what Canada could be doing with respect to digital sovereignty in his book ("Enshittification"). Doctorow argues that if Canada repealed its anti-circumvention law (Bill C-11), Canadian companies could legally jailbreak American tech products (John Deere tractors, the Apple App Store, etc) and sell those fixes worldwide, turning the right to tinker into a massive export industry and a form of digital sovereignty.
One can dream.
I wonder to what extent the clamp down on immigration is related to this. Feels like a factor that gets lost with everyone blaming trump (which dont get me wrong, he deserves)
Yes, Canada has been in a recession for years if you used per-capita GDP, high immigration masked this.
And this quarter is the opposite. per-capita GDP growth was positive 0.2%.
Yes because of Alberta and oil due to the ongoing crisis. Single handedly carrying the Canadian economy rn.
The oil price jump had little impact on Q1; the war started at the end of February and it took a while for markets to realize that it wouldn't be quick.
I don't know if "masking" is the correct term for engaging in a policy that would cause an increase in gdp. The immigrants contribution to the economy was still real.
> I wonder to what extent the clamp down on immigration is related to this
It doesn't hurt but it doesn't really help either.
According to a buddy of mine from my policy days, GAC has always known there were issues with how immigration was managed in Canada but their diplomatic posts tend to severely lack intel and law enforcement attaches unlike most other foreign services, which made background checking difficult. There was also a recognition internally that the kinds of immigrants Canada wanted would be poached via an O-1 anyhow, so there was a perverse incentive around how skilled immigration was managed. And add to that the fact that the provinces themselves also managed immigration to a certain degree. All that led to a bureaucratic breakdown.
Additionally, when even Canadian policymakers are actively targeting American finance, VC, and lobbying jobs (like my friend), it shows you that there are deeper, fundamental issues. Heck, Carney only came back to Canada because his door to 10 Downing Street was effectively shut due to BoJo.
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Elect a carney, get a circus...
Canada has been in a recession for years if you consider per-capita GDP. But the government has been importing millions of people to artificially boost GDP, and as soon as they started decreasing immigration targets GDP dropped.
But Canadians have been feeling the squeeze for years. Especially the youth, who have a ~15% unemployment rate and are the unhappiest demographic of all developed nations :(
Also kind of weird how little coverage this is getting in national media. It's not on the front page of CBC.com, it's tucked away in a sidebar on a subpage.
It’s the 6 the story from the top of cbc.ca/news as I write this.
Is it true? I think unemployment rate for youth in Italy is around 18%. Are they more happy to not work?
Considering all of Trump’s shenanigans it’s impressive it’s just that. With Hormuz, tariffs, and America first, this is the equivalent of a fender dent after spinning out on black ice.
We are of course still spinning, so I'm not overly confident we haven't just glanced off a guardrail on the way to the ditch (to belabour your analogy).
Given canada has so much oil,is the hormuz situation really a net negative for canada ecconomically? Like obviously its terrible in general, but id expect higher oil prices to help starve off a recesion.
Global market for oil. If the oil intensity of your economy is high, higher oil prices impacting all goods/services will outweigh increased oilel revenues.
Only if you insist on passing on global prices into your domestic economy. Not doing this is very difficult if you're a net importer but very much possible if you're a producer. This "leaves money on the table" but it is very much a choice (with different consequences), just one that rarely occurs to people who have grown up in highly capitalist economies.
This is also why historically companies have preferred being vertically integrated to avoid having their supply chains exposed until American economists and brokerages started pushing the cult of specialization. Outside of the US, big conglomerates still operate this way.
> Only if you insist on passing on global prices into your domestic economy. Not doing this is very difficult if you're a net importer but very much possible if you're a producer. This "leaves money on the table" but it is very much a choice (with different consequences), just one that rarely occurs to people who have grown up in highly capitalist economies.
They tried this before [0], and calling it controversial would be an understatement. Probably not a great idea to try it again right before the Alberta succession referendum [1].
[0]: https://en.wikipedia.org/wiki/National_Energy_Program
[1]: https://www.cbc.ca/news/canada/edmonton/alberta-separation-r...
Do Canadian industries use a large percentage of petroleum products refined from Canadian oil or is it refined from blends produced in other areas of the world, such as the United States and the Middle East?
Canada has minimal refining capacity.
What’s funny is that Q1 per capita GDP growth in the U.S. was about 1.4% annualized (within the normal range) while Canada was only at 0.1%. Trump is the bull in the china shop but it’s not his China he’s breaking.
Much of the capex that was invested thanks to IRA and CHIPS subsidizes is starting to go operational and trade barriers enacted during both Trump 1 and the Biden admin remain in action, so it wasn't that surprising that much of the output that was unlocked from that era is continuing.
That said, tariffs and trade barriers did help. Heck, I'm a Dem but even I argued that we needed to build trade and non-trade barriers to protect capex that was unlocked via industrial policy.
I think Biden was an industrial policy guy at heart and it’s a shame he was so old by the time he got a chance to execute on his ideas.
Yep. That said, much of the stimulus and industrial support packages that were pushed thru in the Obama admin were thanks to the political cover Biden provided as Veep - he was Obama's senate whisperer.
That said, industrial policy has bipartisan support at this point now. As you know working DC BigLaw, professional networks are stronger than partisan biases.
Well population grew significantly so it’s a bigger decline in per capita terms.
Notably this was even though AI systems got decent enough, supposedly, to do simple tasks and answer simple questions correctly.
That's not true. The population shrunk in the first quarter, so the GDP actually grew by 0.2% on a per capita basis.
Oh yes once you include non permanent residents the total number has gone down.
Even without Trump, US-Canada trade was on track to hit choppy waters. Even in the Biden admin (whose alums would have ended up in a Harris admin) there was an openness to armtwist Canada [0] into acquiescing [1]. China did the same [2] with Canada [3][4] until they acquiesced [5]. Heck, even the EU has been slowrolling the ratification of the EU-Canada CETA [6] to protect their (primarily French and Italian) industry.
Sadly, it's difficult for a country that is Canada's size to push back when faced against these sized economies.
[0] - https://ustr.gov/about-us/policy-offices/press-office/press-...
[1] - https://www.canada.ca/en/department-finance/news/2025/06/can...
[2] - https://www.reuters.com/markets/commodities/china-commerce-m...
[3] - https://www.reuters.com/business/autos-transportation/trudea...
[4] - https://www.reuters.com/world/china-tells-canada-it-should-c...
[5] - https://www.reuters.com/world/china/canada-china-set-make-hi...
[6] - https://carleton.ca/tradenetwork/research-publications/ceta-...
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