Despite an economy that has shrunk for the first four months of the year, Canada is not in a recession, the unofficial arbiter of business cycles says.
The Business Cycle Council, an arm of think-tank the C.D. Howe Institute, said Tuesday that there's no evidence that Canada's economy has slipped into recession in any of the ways that people typically associate with the term.
Although it falls under the umbrella of C.D. Howe, the council's "views collectively expressed do not represent those of any institution or client," the group said in a release Tuesday.
The council is made up of seven private sector economists tasked with understanding how the economy evolves and providing guidance to policymakers. The group calls itself "the arbiter of business cycle dates in Canada" and in that role, is similar to the U.S. National Bureau of Economic Research, which looks retroactively at economic data to help guide policy moving forward.
It's a common belief that a recession is defined as two quarters in a row of declining GDP. On that front, Canada is two-thirds of the way towards what's being called a "technical recession" because official Statistics Canada shows the economy contracted in every month between January and April. Data for May is due out on Friday and it too, is expected to show another decline.
But that's an overly narrow view and not a real gauge of how the economy is doing, the group of economists said Tuesday.
They aren't alone in that view. The standard of two quarters of shrinking GDP seems to have been created by an observation by the U.S. NBER that recessions in America tend to last for at least six months.
Indeed, according to the NBER, the last major recession in the U.S. started in early 2008, but according to official data the economy hadn't technically had two consecutive quarters of negative GDP by that point.
