Wimpcession

Is Canada broken?

Over the weekend – while my fancy portfolio manager buddy Ryan was writing a blog saying Mark Carney was on the right track – came word Canada was in recession. Maybe. Well, sort of.

There was a slight contraction in the latest quarterly data which meant that over the past three months the GDP shrank by 0.6%. Compare that to the 5.4% the economy withered when Covid hit in 2020. Ort the average recessionary decline of 3% over the last fifty years.

In short, not a recession. As Scotia economist Derk Holt calls it, maybe a ‘Wimpcession’. “An annualized Q1 contraction of -0.1% after a 1% drop in Q4 would be among the wimpiest recessions on record if we were to call it one,” he says.

But wait. Pierre Poilievre had a cow when he heard the news. It was the economic malaise he’d been praying for, and fed his narrative that this nation under Liberals might as well be the Democratic Republic of Congo during an Ebola crisis. We’re all doomed.

“There’s nothing technical about moms with empty stomachs,” he thundered, “rising mortgage delinquencies, or food bank visits.” He ripped Carey a new one for being the only G7 leader who has led his people into this hellish state of wanton economic destruction. He called for an emergency debate and an immediate gutting of federal spending. That, he said, would reduce the deficit (and turn a recession into something worse).

So, who’s right?

Things in Canada may not be great – thanks largely to US tariffs, but when it comes to recession BMO economist Robert Kavcic says simple, “we’re not there yet.” He calls the latest quarterly drop, “barely a scratch in GDP terms” which lacks depth, “and could easily be revised away.”

Weakness, economists say, has not spread through the economy. Yes, real estate has been in recession for two or three years. Yeah, the American tariffs on cars, steel, lumber and other sectors have hurt. But domestic demand is still growing robustly, the job market has held up amazingly well and the unemployment rate is steady.

“Data on the ground don’t have the markings of a true recession in Canada,” he concludes.

Economist Holt concedes the data that ignited Poilievre also “stunned everyone in consensus and at the Bank of Canada.” And while the numbers were lower than people had anticipated, “they don’t tick the recession box.”

Lots of reasons, he told bank clients this morning. Just chill.

The decline is too short, too shallow and too narrow to worry about. Domestic demand has not contracted steadily in terms of consumption, investment or government spending. Besides, businesses have been whipsawed by US trade policy which changes like use Dixie Cups. “This data is too volatile to merit ringing the alarm on the economy as companies are in a repeated cycle of trying to get ahead of expected price increases in the face of serial shocks, only to reverse the moves in subsequent periods.”

Consumer spending continues to expand. Real estate sales data has improved over the last two months. Real wages have been increasing. The Canadian population has been falling after Carney closed the door on generous immigration – and fewer people, means less aggregate demand. Plus, it was a crappy winter so people stayed home and watched America’s Got Talent and Real Housewives of Vancouver.

“Even by Canadian standards, this was a horrible winter and a disappointing Spring,” he says. “Heavy snow and cold may have dented economy activity and, if so, then coming out of hibernation could drive accelerations in categories like consumer spending and construction.”

By the way, it snowed in NS this past weekend.

Holt says it would be irresponsible to call this a recession since, “it risks causing one”

“We need to be careful toward the consequences. I wouldn’t want the Carney administration—along with the provinces—to spring the spigot and rain helicopter money down on households and businesses in reaction to these developments.”

And that – spending more government money to blunt the impact of economic decline – would be the correct and traditional response to tough times. Pierre Poilievre is arguing for exactly the opposite.

Canada’s not broken. Just too many wimps.

About the picture: “Corky came to me recently when his owner died unexpectedly and he needed a new dad,” writes Harman. “His given name was ‘Pork’ which I find stupid so I changed it to ‘Corky’ and he responds well to that name. We bonded almost immediately. He’s a laid back and well behaved 7 year old mutt that farts loudly and snores but he’s very affectionate. His hair was absurdly long so I gave him a trim. I don’t know his lineage and neither he nor I care. He loves car rides and hanging out by my side or in the yard, he shows no inclination to jump the fence or to run away and leash walks perfectly. I think we’re going to get along just fine. Welcome home Corky.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca.’

Source: https://www.greaterfool.ca/2026/06/01/wimpcession/