It looks like Canada’s 2015 recession never actually happened.
The Toronto-based C.D. Howe Institute, which tracks and labels Canadian business cycles, published research Tuesday showing last year’s economic contraction — driven by falling oil prices — wasn’t widespread enough to be considered a recession. The conclusion came in a study which developed diffusion indices aimed at capturing true cyclical changes in the economy as opposed to transitory ones.
Although it’s not the think-tank's final word on the matter, the report suggests the non-partisan institute is leaning away from using the recession label, capping a debate that spilled over into last year’s election. The R-word was widely bandied about by the opposition during the campaign to attack the economic record of then Prime Minister Stephen Harper, who went on to lose the vote.
The discussion at the time was centered around gross domestic product data showing the economy contracted in the first two quarters of last year. Back-to-back quarterly declines, a situation some analysts refer to as "technical recession," is usually a good indicator of a true recession. But it turns out not this time, the C.D. Howe report finds.
The study calculated diffusion indexes using various methodologies to convey "in a single number the extent to which the downs or ups of an economy are widespread in any given period." It found that in the first two quarters of last year, a majority of industries continued to expand even as aggregate output fell, inconsistent with an economy in a recession. That conclusion is also in line with data showing employment was growing at the time, another sign the economy wasn’t in recession.
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