Why it feels like we're in a recession (when we're not) | About That

Summary

Despite signs of a recession, Canada isn't officially in one, according to a new consumer survey. Factors like rising unemployment, business bankruptcies, and cost-of-living challenges point to economic struggles. However, GDP hasn't declined for two consecutive quarters, a key recession indicator. High immigration rates boost total spending, masking per capita declines. This unique situation, dubbed a 'per capita recession,' highlights individual financial struggles despite overall economic stability. Economists expect continued interest rate cuts to address these issues.

Takeaways

• 📉 Canada is not currently in a recession, but nearly two-thirds of Canadians believe the country is or will be in one soon.
• 💼 Unemployment is rising, and it's harder for new graduates and immigrants to find jobs.
• 🛍️ People are spending less individually, leading to a feeling of economic strain.
• 🏢 Business investments have slowed, and corporate bankruptcies are at their highest since 2008.
• 📉 Despite these recession-like symptoms, Canada's GDP has remained flat, not meeting the technical definition of a recession.
• 📊 Canada's GDP growth per capita is the lowest in the G7, despite having the third-highest overall GDP growth.
• 🏠 The rapid population growth, mainly through immigration, has increased demand and inflation, particularly in housing.
• 💰 The Bank of Canada has kept interest rates high to combat inflation, making it harder to cut rates to help with the housing crisis.
• 🔍 Experts describe the current situation as a 'per capita recession,' where individual economic circumstances are worsening despite stable GDP.
• 📉 The Bank of Canada is aware of these challenges and has begun cutting rates, with expectations of more cuts to come to alleviate economic pressure.

Q & A

What percentage of Canadians believe the country is in a recession or will be before the end of the year?

Almost two-thirds of Canadians believe the country is currently in a recession or will be before the end of the year.

What are the common symptoms of a recession mentioned in the script?

The common symptoms of a recession mentioned are people cutting back on spending, businesses struggling due to a drop in spending, rising bankruptcies, and increasing unemployment rates.

What is the current unemployment rate in Canada according to the script?

The current unemployment rate in Canada is 6.4%.

Why does the unemployment rate seem significant despite not being very high?

The unemployment rate is significant because it has increased quickly, coming off a very low rate after the pandemic, which indicates a massive correction in the labor market.

How has the job finding rate changed according to the Bank of Canada's July policy report?

The job finding rate has shown a significant drop, meaning fewer unemployed people are finding jobs from one month to the next.

How do recent corporate bankruptcy numbers compare to past recessions?

Corporate bankruptcy numbers are the highest they have been since the recession in 2008.

Why is per capita spending decreasing while total retail spending is rising?

Per capita spending is decreasing while total retail spending is rising because of a significant increase in population, primarily due to immigration. More people are contributing to overall spending, even if individuals are spending less.

What was the population growth in Canada over the last 12 months?

Canada added 1.3 million people to the population over the last 12 months, with more than 95% of that growth coming from immigration.

How does the population growth impact the economy and inflation?

The population growth increases demand, leading to higher prices and inflation. This situation makes it harder for the Bank of Canada to cut interest rates to help with the housing crisis.

What term is used to describe the current economic situation in Canada where GDP is holding steady but individuals are struggling?

The term used to describe the current economic situation is 'per capita recession,' where the overall GDP is increasing, but individual economic conditions are worsening.

What has been the response of the Bank of Canada to the current economic situation?

The Bank of Canada has recognized the struggles on a per capita basis and has started to cut interest rates, with expectations for more cuts to help lift the country out of the current economic situation.