If you rely on information from the traditional media or hellsites like Twitter/X, you can easily get the impression that the Canadian economy is spiralling into oblivion. Private sector debt is unmanageable, fiscal policy is out of control, a wave of mortgage defaults is just about to break....a recession (or worse) is coming -- and that's even before we listen to the more extreme voices that proclaim the data are all fixed and the economy is already in depression.
Thing is, nobody seems to have told the economy, which still seems to act as if it's not dead yet, This morning Statistics Canada reported that real GDP rose 0.2 percent month-on-month in May, following on from the 0.3 percent gain seen in April. Preliminary data suggests a further 0.1 percent rise in June. Growth in May was broad-based, with a 1.0 percent monthly rise in manufacturing output particularly noteworthy. The data imply that for Q2 as a whole, GDP rose 0.5 percent, or just over 2 percent at an annualized rate, which is more or less in line with most estimates of the economy's long-term potential growth rate.
None of this is to suggest that the Canadian economy is problem-free. In no particular order: private sector debt is indeed way too high (though falling interest rates may help prevent major problems); the country's productivity performance is abysmal; immigration levels are far too high for the country to absorb, with the result that GDP per capita -- i.e., living standards -- is falling despite the continuing growth in aggregate GDP; and the US Presidential election adds a high degree of uncertainty to the outlook, regardless of which party emerges as the winner.
It's a daunting, but perhaps the folks in traditional and social media who have been talking up a recession for more than two years might take a hint from the Sermon on the Mount: "sufficient unto the day is the evil thereof" (Matthew 6:34).
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