Here's the most simple way to put it: even if those predicting a recession are wrong, all of the economists then agree on a prolonged period of low economic growth. In other words, things aren't going to get better economically. They'll remain more or less the same which is almost just as bad.
It means stagnant wages and with that low revenue growth for governments. That means we'll see higher deficits or cuts to program spending or a mix of both. That's bad.
If you look at the economic growth from the 4th quarter of 2024 and the 1st quarter of 2025 there is nothing to cheer about. The level of growth was anemic. The rate of inflation on necessary items like food was and still is rising far faster than the Bank of Canada's target.
By any objective measure the economy is under performing when compared to most of the G7 and the G8. One only need to look at a comparable economy like Australia to see Canada's continuous stumble into the future.
Okay, so we know the economy is doing poorly. Why?
There are a lot of reasons for that. As Mark Carney said in March, the Federal government itself did a poor job managing the economy for almost a decade. Their attention was on everything but the economy. I'd argue their attention wasn't on the economy, national security, crime, housing, health care, climate change, foreign relations, trade, and interprovincial relations. The Liberals from 2015 to 2024 were a caretaker government at best that showed up to make speeches with little to no useful or competent follow up action.
In 2024 the Liberals, upon realizing just how bad the economy was doing began a blitz of trying to recruit EV companies to setup shop and invest in Ontario and Quebec. Several deals were signed, but as of today some have fallen through, and others have been put on hold. The great EV push has all but failed.
Meanwhile, western and eastern Canada did not see any of that push. They were left to fend for themselves. Even worse, things like US tariffs put on Canadian softwood lumber in 2017 are still in place today and they hamper the economy of British Columbia.
Between 2022 and 2024 the Liberals tried another form of economic stimulus. They opened the flood gates for immigration bringing in almost 550,000 new Canadians per year. This did provide an over all GDP boost, but as the CBC reported per capita GDP plummeted. Once again, even worse, that population surge worsened the housing affordability crisis and put new strain on a health care system that was already on the ropes.
This is why I fall into the camp of predicting a recession, even a minor one, by the end of this year. The economy has been neglected for so long and its fundamentals are so poor today that even without Donald Trump's tariffs, Canada was already sliding into a recession. That said, Donald Trump's tariffs, even when they get knocked down, reduced, put on hold, etc still have created more than enough economic uncertainty that companies have put off major investments and expansions.
The a fore mentioned failed EV projects all came apart due to economic uncertainty created by Trump's tariffs. Automotive production that is slowly scaling back in Canada as it heads to the USA will bleed economic growth from Ontario and Quebec, metaphorically relocating it in Detroit. Current projections show that Ontario's economy could lose tens of thousands of high paying full time jobs over the next two years due to uncertainty in the automotive sector.
What about the other side of the coin? Is there any good news in the economy?
From 1984 till 2015 there was a certain predictability to the economy. We could see that growth was or would be even for several years. We could then see that recessions would strike, they'd bottom out quickly, and then growth would restart. We saw this in 1990/91, 2000, and 2008/09. A minor bump in 2014 followed the same pattern.
Unlike those periods no one is forecasting a quick bottom out and then a return to growth.
Banks like RBC, Scotiabank, CIBC, TD, BMO, and others are all either predicting a recession or very low growth that will persist. That bottom out and bounce back is not going to happen. Tiff Macklem, Governor of the Bank of Canada, said as much when he talked about the impacts of Trump's tariffs.
Even without Trump's tariffs the picture is almost the same.
Some economists and business commentators called the last decade of Liberal government a lost decade. Canada passed up almost every opportunity to advance its economy. Now, we're going to collectively pay the price for this.
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