The recession debate occurring now on airwaves and among armchair economy watchers isn’t a debate at all, according to the Bank of Montreal’s Doug Porter.
“If you are just returning from Kazakhstan, you may have missed that Canada officially reported two consecutive quarters of declining GDP in the first half of the year, which nearly everyone promptly labelled ‘Recession,’” BMO’s chief economist quipped in a note Friday afternoon.
“Everyone except for the majority of economists, that is.”
Two major forces have Porter and other experts dismissing the current downturn as something far less troublesome than a true recession: the country’s resilient job market and the seemingly indefatigable Canadian consumer.
“Canada’s economy just keeps on adding jobs, mostly of the full-time variety,” Porter said after the release of Statscan data that showed a gain of 54,400 full-time positions last month.
The jump has brought this year’s increase in full-time positions to a “massive” 174,000, the BMO economist said. “Hardly consistent with a true recession.”
Overall job growth has held up well since last summer when oil and other commodity prices first started to slide, Scotiabank economists said shortly ahead of the release.
“Whatever this morning’s volatile print brings us, over 180,000 jobs have been created so far over the period since June 2014 when oil and other commodity prices really began to tumble,” the Scotiabank economists said. “This statistic — among others — makes it rather foolish to call it a recession.”
Best. Recession. Ever.
On the consumer front, much like their U.S. counterparts, Canadians are making big-ticket purchases like it’s their job, snapping up homes and cars in record numbers.
Outside of Alberta, home sales are posting strong — and in some cases such as Vancouver downright torrid — gains. And auto sales are “still rolling,” Porter said.
“On the recession debate, we will simply note that Porsche sales are up a tidy 30 per cent so far this year in Canada,” the BMO economist said. “Yes, times are tough.”
Statistics Canada will report next Friday household balance sheet data that is expected to show consumer debt levels hitting a new high.
Far from pulling back, Canadian households have plowed deeper into debt despite the economic slowdown. Total debts owed by Canadians jumped 4.9 per cent in June compared to the same month last year, to $1.84 trillion. That’s the fastest pace of debt growth in more than two years, a new report from RBC Economics said Wednesday.
“Despite the weak economic performance in Canada … households continue to ramp up their reliance on borrowing,” Laura Cooper, an economist at RBC, said.