Monday, September 1, 2008

No Recession in Canada

Canada’s Gross Domestic Product (GDP) rose 0.3% in the second quarter of this year, which means that we’re not in a recession. This should be good news, but it’s actually mildly annoying.

We all know that the economy hasn’t been great lately. Even if unemployment is low, we know people who have lost jobs and have been forced into lower paying jobs or part-time work. Stock prices are dropping. Housing prices are dropping. To say that we’re not in a recession is like denying that there are any problems with the economy.

But the numbers don’t lie. GDP shrank in the first quarter and rose in the second quarter. The definition of a recession requires two consecutive quarters of dropping GDP. So, we’re not in a recession.

The emotional response to this news was captured nicely in the headline “Canada skirts recession on a technicality.” The implication is that we all know that things have been rough and we should be calling it a recession, but some number cruncher found some way around it on a technicality.

Curiously, the article going with this headline does not have this tone. It’s as though the article and headline were written by two different people. I’m told that this is fairly common in the newspaper business.

Hopefully, all this is a sign of continuing improvements in the economy, but I’m not making any predictions. I don’t believe other people’s short-term economic predictions, and I definitely know that I have no worthwhile insight.

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