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Posthaste: Don't fall for the head fake, recession still in the cards for Canada


Good morning,

Tomorrow we learn how the Canadian economy is holding up when Statistics Canada releases data on real gross domestic product for the third quarter. Will it be good or bad news?

That question has become more complicated of late. Recession calls have been common for Canada — and most advanced economies for that matter. But recent unexpectedly strong data here at home have thrown observers for a loop.

Earlier this month economists had expected Canada to gain 10,000 jobs in October; it actually gained more than 100,000.

Early estimates for retail, wholesale and factory sales last week also came in stronger than expected, casting doubt over forecasts for a slowdown in the fourth quarter.

Randall Bartlett, senior director of Canadian Economics at Desjardins, said these surprise signs of growth in the second half of 2022 will likely result in economists hiking their estimates for the year.

But that doesn’t mean they are more optimistic on the outlook.

“We suspect this data has largely been a head fake and that the economy is on a downward trajectory,” said Bartlett in a note.

Desjardins doesn’t expect 2023 growth to be stronger than earlier forecasts; in fact it could be even weaker, he said.

They still expect the economy will contract in the first two quarters of 2023 and it is now more likely that it will shrink in the third quarter as well.

“This is because very aggressive monetary tightening in 2022 will hit the economy with a lag, with the slowdown broadening beyond housing and into other segments of the economy,” Bartlett wrote.

Oxford Economics is confident Canada is heading for recession, and while no two are alike, this one will be particularly unique because of the lingering impacts of the pandemic, changes in consumer and corporate behaviour, supply chain disruption and the Ukraine war.

“Canada’s elevated household debt burden and still stretched housing valuations also make the economy more vulnerable to higher interest rates and a looming global recession,” wrote Tony Stillo, Oxford’s director of Canada economics, in a note.

Oxford expects the Bank of Canada to hike its interest rate another 50 basis points next month to 4.25 per cent. This will likely be the peak, but unlike most downturns in the past, the Bank will hold its rate here until early 2024, said Stillo.

Interest-rate-sensitive housing will lead the way into recession, he said. Residential investment has already fallen by about 10 per cent from the first quarter, and Oxford expects another 8 per cent drop during the recession next year.

Meanwhile, higher borrowing costs and falling real incomes because of high inflation will squeeze household budgets, bringing on a 1.8 per cent drop peak to trough in consumer spending, Stillo said.

That’s less than the average 2.9 per cent decline in past recessions, because there is still unsatisfied demand for goods that were in short supply during the pandemic, like cars, and services, like travel, he said.

Overall, Oxford expects Canada’s GDP will fall 2 per cent peak to trough from the fourth quarter of 2022 to the third quarter of 2023, which is longer, but less deep, than the average recession over the past 50 years.



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A head of iceberg for $6.99, $14.99 for a bag of romaine hearts — how did lettuce get so expensive? As today’s chart shows, Canada gets most of its lettuce from the United States, and more than half of that is grown in California’s Salinas Valley, also known as the world’s salad bowl.

Canada spends about half a billion dollars annually on American lettuce imports, by far the most spent of all the vegetables we import, according to the federal department of agriculture. So when a bug-borne disease hit the Californian crop this year, lettuce prices here skyrocketed.

The problem of crop failures in California, which climate change is expected to make worse, is a wake-up call for Canadians, reports the Financial Post’s Jake Edmiston.

If Canada wants to continue to have a stable, affordable supply of lettuce through the winter in years to come, supply chain experts believe we’d better start figuring out how to grow more of it ourselves.



  • Premier Danielle Smith, Seniors, Community and Social Services Minister Jeremy Nixon, Children’s Services Minister Mickey Amery, Affordability and Utilities Minister Matt Jones, and program advocates will announce the reinstatement of indexing for government financial benefit programs

  • Feed on Ontario will release the findings of its 2022 Hunger Report
    Former CannTrust Holdings Inc. leaders court hearing

  • Today’s Data: Canada current account balance (Q3)

  • Earnings: Organigram Holdings





Peter Schiff, CEO and chief global strategist at Euro Pacific Capital, is a long-time skeptic of cryptocurrencies so the recent meltdown came as no surprise to him.

“This is not a #crypto winter,” Schiff tweeted. “That implies spring is coming. This is also not a crypto ice age, as even that came to an end after a couple of million years. This is crypto extinction.”

So where does Euro Pacific Capital put its money? Our content partner MoneyWise looks at notable themes in Schiff’s portfolio.


Today’s Posthaste was written by Pamela Heaven, @pamheaven, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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