Are we in a recession? ‘Be careful’ with indicators, says Bank of Canada

Even though the most recent GDP reports show a technical recession, the Bank of Canada and several economists aren’t ready to declare one formally just yet.

Senior Deputy Governor Carolyn Rogers at the central bank spoke at a House of Commons committee on Monday, and answered questions about Canada’s economy following Friday’s GDP report.

“I think we need to be careful not to put too much weight in any one indicator,” she said.

Many economists have also challenged the recession label, arguing the recent slump doesn’t have the depth or breadth to meet that bar.

“While there will be plenty of debate over whether this constitutes a recession (we would say ‘no, not really’), there is little debate that the economy has struggled to make any headway over the past year amid the ongoing trade conflict,” said chief economist Doug Porter at the Bank of Montreal in a note to clients sent on Friday.

Conservative Leader Pierre Poilievre spoke in front of the House of Commons on Monday and said Canadians need answers about why Canada has the only shrinking economy in the G7.

Carney was scheduled to tour a construction site in Ottawa Monday and was not present for question period in the House of Commons.

“You would expect him to be there, to be accountable, to show his incredible economic brilliance, but he’s not showing up for question period,” Poilievre said.

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Poilievre then addressed Mr. Carney in saying, “Be accountable for your recession.”

Poilievre also dismissed assessments pushing back on the recession label as coming from “Liberal commentators and economists.”

A recession is defined as two consecutive quarters of negative economic growth, measured by the GDP.

The annualized rate of GDP in the final three months of 2025 was a drop of one per cent, and in the first quarter of 2026, it was down by 0.1 per cent.

But GDP data is one of multiple indicators and ways to analyze economic health, and Rogers says there is much more that needs to be taken into account.

“You need to look at employment, you need to look at some of the more leading indicators.”

This means that a recession can be measured by the technical definition seen in GDP reports, but others say it should take into account the job market and consumer price movements and inflation, as well as import and export data and reports on business investment among others.

Canada’s unemployment rate was measured at 6.9 per cent in the month of April, which was up 0.2 per cent from the month prior, and 18,000 jobs were also lost. This means the job market, seemingly, continues to struggle.

Inflation in April spiked to 2.8 per cent, which Statistics Canada says was largely due to higher gas prices.

In addition, core inflation, which strips away volatile food and energy prices, actually declined from 2.2 per cent in March to two per cent in April. The Bank of Canada’s target range for inflation is between one and three per cent.

Scotiabank chief economist Derek Holt noted that harsh winter weather and tariff-induced trade swings were spurring volatility in the recent economic data. Imports of gold were also sharply higher in the first quarter and dragged GDP lower.

“It would be irresponsible to make a recession call on the basis of surging gold imports that are idiosyncratic in nature versus reflective of underlying activity in the economy,” Holt said.

Rogers said another indicator that a “recession” label may be premature is the outlook for the next GDP report.

“We know, for example, that the flash data for April, which is the early warning GDP for April, it tell us there’s been a bit of a rebound.”

Economists widely expect the Bank of Canada will keep interest rates on hold for the foreseeable future, but if the economy continues to show signs it is struggling, then further cuts could be the result.

–with files from The Canadian Press.