Most people probably think of the debate over whether Canada is in a recession as one of those glass-half-full versus glass-half-empty things. Pessimists look at five months of declining GDP and call it a “recession,” while optimists look at increasing employment and say that we’re not in a recession. Yet, the real pessimists are the ones saying we’re not in recession.
Making the case that we’re in a recession is basically optimistic: the problems we’re currently experiencing in the economy will be over soon (if it’s not already) and all that is needed it for policymakers to employ the usual array of countercyclical policies. The “no recession” camp is the home of the pessimists: saying that we’re not in recession is the same thing as saying that what we’re seeing now is about as good as we’re likely to see for many years. According to this view, low growth rates are not a passing phase; they’re the new normal.
As it happens, I subscribe to the view that we’re not in a recession, at least based on available data. To the extent that recessions represent a significant, prolonged and generalized reduction of economic activity, the current situation does not meet the criteria. Recessions lasting six months are not unknown, but I don’t find the decline in activity to be significant or generalized.
mo'
Stephen Gordon: Canada is not in a recession, and that’s a bad thing | National Post
Making the case that we’re in a recession is basically optimistic: the problems we’re currently experiencing in the economy will be over soon (if it’s not already) and all that is needed it for policymakers to employ the usual array of countercyclical policies. The “no recession” camp is the home of the pessimists: saying that we’re not in recession is the same thing as saying that what we’re seeing now is about as good as we’re likely to see for many years. According to this view, low growth rates are not a passing phase; they’re the new normal.
As it happens, I subscribe to the view that we’re not in a recession, at least based on available data. To the extent that recessions represent a significant, prolonged and generalized reduction of economic activity, the current situation does not meet the criteria. Recessions lasting six months are not unknown, but I don’t find the decline in activity to be significant or generalized.
mo'
Stephen Gordon: Canada is not in a recession, and that’s a bad thing | National Post