Too soon to call recession, rules Canadian authority on economic downturns

OTTAWA — The unofficial authority on recession calls in Canada says it’s too soon to use that word to describe the sluggish economy.

Debate has raged on Parliament Hill over whether the country is in a recession since Statistics Canada reported last week that the economy shrank for two quarters in a row.

The C.D. Howe Institute’s Business Cycle Council is traditionally viewed as the arbiter for calling a recession in Canada.

The council said in a bulletin Friday that two quarters of declining GDP in a row are not sufficient to call a recession and urged caution over reading too much into the recent data.

The group of economists argued weakness in Canada’s economy is not yet widespread or persistent enough to warrant the recession label, and the marginal decline in the first quarter of the year will be subject to revisions in the months ahead.

The report noted GDP increased in more than half the sectors in the Canadian economy in the first quarter of 2026, showing that the economic slowdown was not pervasive. The economists also pointed to two consecutive quarters of declining unemployment as indicators Canada is not in a recession.

Statistics Canada reported Friday the Canadian economy added 88,000 jobs in May, while the unemployment rate fell to 6.6 per cent compared with 6.9 per cent in April.

However, the business cycle council said the upcoming review of the Canada-United States-Mexico Agreement, or CUSMA, will continue to cause worries about economic growth for the next few quarters.

They said they are ready to meet again to discuss a possible recession call if broad-based economic strain emerges in both GDP and employment figures.

Over the past week, the Conservatives have laid the blame for a “full-blown recession” at the feet of the Liberal government, while Prime Minister Mark Carney has argued growth will be uneven as the government tries to pivot the economy away from reliance on the United States.

This report by The Canadian Press was first published June 5, 2026.