economy
TECHNICALLY NOT A TECHNICAL RECESSION Would we experience a recession in 2023? That was a frequently asked question for the better part of the past 18 months and it turns out the answer was ‘no’. That certainly sounds like a positive development, and to an extent it is. Canada avoided two consecutive quarters of negative real GDP growth. Of course, your authors are on the record in the past saying this isn’t really all that telling in terms of what’s happening in an economy and how it relates to housing, which is why we start this publication with a discussion on the labour market. That said, there are some noteworthy trends to explore in the GDP data from last year. The difference between being in a recession and not being in one last year was incredibly close. In fact, it was only after a revision of the Q2 GDP data from marginally negative to marginally positive (revisions are a normal
part of these data releases) that a recession was avoided in Q3, where real GDP declined by -0.13% that quarter. And with 0.25% real GDP growth in Q4, the Canadian economy, per real GDP, grew by just 0.6% overall in 2023. So while not a technical recession, last year saw almost no growth whatsoever. But there’s another important consideration, and stop me if you’ve heard this one before: this happened against the backdrop of record- setting population growth. And sure enough, if we adjust these metrics on a per-capita basis a different story emerges, one of an economy in decline as per-capita adjusted real GDP decreased by -2.0% in 2023. Where Canadian GDP goes in 2024, in per-capita terms or otherwise, will depend largely on the Bank of Canada and when it starts to loosen monetary policy.
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