Soft, hard or ‘bumpy’ landing? Gauging Canada’s odds of a recession

Ottawa’s 2023 budget — will Canada’s previously roaring economy coast into a so-called “soft landing” as it slows, or tumble sharply into a recession?Ongoing calls from a chorus of economists predicting a recession to hit Canada in 2023 have come up against surprisingly strong economic data in the early part of the year, making the tea leaves of an economic downturn especially hard to read.A recession is a widespread decline in economic activity over a certain period of time – usually defined as two straight quarters of negative growth.Ottawa’s 2023 budget bases its economic forecast on a consensus of private sector economists.That document, released March 28, showed that economists’ place the odds of a recession higher than when they were last polled for the 2022 fall economic update.But if the economy is supposed to be slowing down right now, someone might want to tell the economy.January’s gross domestic product (GDP) figures outpaced initial estimates from Statistics Canada with 0.6 per cent growth, rebounding from the flat reading in the final quarter of 2022.Canada’s labour market meanwhile held tight with a 5.0 per cent unemployment rate through the first quarter of 2023.

The country’s employers have been in a hiring mood as of late, with net 383,000 positions added since last September. Read more: What is a recession?

Here’s how a hit to Canada’s economy might impact you James Orlando, senior economist at TD Bank, called Canada’s jobs market a “juggernaut” in a note to clients earlier this week.A tight labour market is boosting Canadian incomes, he said, which in turn fuels household spending.