When you go around Montreal’s Atwater Market on a weekday morning, you’ll notice that the produce stands are still packed, the coffee is still delicious, and people are still moaning about the prices of things while still making purchases. It is precisely this conflict between economic facts and lived experience that makes the present debate about Canada’s economy so difficult to settle. One thing is clear from the numbers. The atmosphere in the space conveys a different message. And whether economists like it or not, the word “recession” keeps coming up.
Real GDP in the first quarter of 2026 was basically flat, so close to zero that Statistics Canada defined it as statistically no change, according to a study released on May 29. However, the quarterly statistic becomes a 0.1% fall when it is annualized, which is how economists usually frame it for comparison. This came after a 1% decline in the previous year’s fourth quarter. Most people equate a technical recession with two consecutive quarters of negative annualized GDP growth, and Canada has already passed that threshold. It is a different, really debatable topic whether passing that bar truly means anything.
Last Friday, the Business Cycle Council of the C.D. Howe Institute, which has historically acted as Canada’s unofficial recession referee and functions similarly to the National Bureau of Economic Research in the US, chimed in and declared that it was premature to use the term. A recession must be severe, widespread, and long-lasting in order to be classified as one. The council contended that the existing data does not entirely satisfy that need. Then, a week after the GDP data was released, Statistics Canada revealed an unexpected increase of 88,000 jobs in May. The majority of economists stated unequivocally that this figure significantly complicates the recession story.
Less modest has been the political response. Pierre Poilievre, the leader of the Conservative Party, has referred to it as a full-blown recession, citing not just the GDP data but also an increase in the number of people using food banks, an increase in consumer insolvencies, and job losses during the first four months of the year. While avoiding the r-word, Prime Minister Mark Carney has acknowledged “weakness” in the economy, claiming that government spending and immigration cuts are creating a temporary drag and that the ongoing effort to lessen Canada’s economic reliance on the United States will take time to show up in the data. There is truth in both framings. Both leaders seem to be aware that neither is the complete picture.
Moshe Lander, an economics professor at Concordia University, brought up a more disquieting issue that gets missed in the political back and forth: despite all of its shortcomings, GDP has always been a poor indicator of how people truly feel about their situation.
The term “recession” becomes more contentious and, for many households, practically irrelevant as inequality increases and the discrepancy between aggregate data and personal experience increases. Whether the second quarter will provide the recovery that early April data indicates is still up in the air. However, the formal decision may seem academic in either case to someone who has been reducing grocery lists and foregoing meals at restaurants for the past two years.
