Canada GDP: still moving ahead

Statistics Canada's monthly GDP report for November provided an upside surprise this morning. GDP rose an estimated 0.7 percent in the month, easily beating the analysts' consensus estimate of 0.4 percent. Perhaps even more surprising, StatsCan's preliminary estimate for December suggests another 0.3 percent rise. This would leave GDP for all of 2020 more than 5 percent below the 2019 level, a markedly worse performance than in the United States, which recently reported a 3.5 percent fall for the full year.

We may note in passing the inability or unwillingness of the news media to employ reporters who can put these numbers in context for their readers. Check out this report from the CBC website. The sub-headline states that the pace of growth "is slowing to a crawl".  Are they referring to the November data, which annualizes to something not far short of double-digit growth? Or maybe they mean the estimated December gain of 0.3 percent, which equates to an annualized gain of about 4 percent, about twice the Bank of Canada's estimate of the economy's potential growth rate. Either way, it's not surprising that surveys routinely show that the public believes the economy is "in recession".

Presumably the analysts' consensus was significantly lower than the actual outcome because it was assumed that the return of COVID lockdowns would quickly make an impact on economic activity.  That was a reasonable assumption, and it seems quite possible that activity in some sectors was "pulled  forward" into November in anticipation of even stricter lockdowns. If that turns out to have been the case, the preliminary estimate for December may turn out to be overstated: we shall find out when StatsCan releases the final figures, together with full annual data, in early March.

Regardless of how December turns out, January (and the entire first quarter of 2021) is likely to see very weak growth, with lockdowns across the country and the vaccine rollout encountering fresh problems almost every day. One wonders what gloomy terminology the CBC will wheel out if GDP starts to fall again, which seems more than likely.