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

The C.D. Howe Institute’s Business Cycle Council is traditionally viewed as the arbiter on 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 against 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.

Their report noted GDP increased in more than half of the sectors in the Canadian economy in the first quarter of 2026, showing that the economic slowdown was not pervasive. The economists also said recent improvements in the unemployment rate indicate 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 from 6.9 per cent in April.

The C.D. Howe economists 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 what they’re calling a “full-blown recession” at the feet of the Liberal government. Prime Minister Mark Carney has argued growth will be uneven as the government works to pivot the economy away from reliance on the United States.

C.D. Howe’s Business Cycle Council pushed back against using “technical recession” to describe a slowdown marked solely by two contracting quarters of GDP.

“The adjective ‘technical’ is sort of designed to convey the idea that it’s official or scary. But it’s really just a rule of thumb,” said Steve Ambler, co-chair of the think tank’s Business Cycle Council.

When real GDP declined for two consecutive quarters in 2015 in response to tanking oil prices, recession debates raged then as well. But the business council ultimately determined those declines didn’t meet the bar for a recession.

The council’s bare minimum for a recession is actually just one quarter of contraction — but that decline would have to be sharp enough and reach most sectors of the economy.

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.

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