Wednesday, September 2, 2015

Is Canada in Recession?(continued)

For a second time, quarterly gross domestic product (GDP) fell in Canada. Its growth rate was -.1% the first quarter and -.3% the second quarter of this year. Does it mean Canada is in recession since, basically, a recession is defined as a period of  at least  two consecutive falls in quarterly GDP? I still doubt it! [here]

A look at monthly data shows that GDP grew by .5% in June. This is well above its average monthly growth rate, which is .21%. This high growth rate was actually expected since, as we knew in advance, unemployment rate in June, 6.5%, was below its seasonal average.

GDP, seasonally adjusted, Canada, 1997:M1-2015:M6
GDP, seasonally adjusted, Canada, 1997:M1-2015:M6

What the third quarter of the year will be like? Information available now to make predictions is: unemployment and inflation rates. Unemployment rate rose to 7.1% in July. But there is nothing worrying about this since it is still below its seasonal average and it will probably fall again by September.   Consumer prices also rose by .2% in July, which is a sign that the final domestic demand is increasing. 

The data used are available here.