The Bank of Canada is set to release data in September confirming whether the country was in a recession for the first half of 2015, but one economist has already made that call.
“Currently, Canada is in recession. Most pundits are predicting that it is a mild recession, and that Canada will fully recover in the third and fourth quarters of 2015,” Louis-Philippe Rochon, associate professor of economics at Laurentian University wrote in an opinion piece for CBC. “But those predictions are surely wrong and are based on faulty economic logic.
In short, argues the economist, the macroeconomics are just not adding up for a recovery in the third quarter of this year.
So what does this mean for the housing market?
Unemployment will certainly contribute to a slowdown in the market, which means brokers likely won’t enjoy the same level of business next year as they did in 2015.
Rochon points out that job creation is being driven by part-time and self-employed work, and not full-time work. That will certainly affect Canadians’ ability to purchase homes.
CREA has forecast moderate growth for the market next year, but that prediction could very well be revised following the Bank of Canada’s next economic policy report.
“In 2016, national sales activity is forecast to reach 491,200 units, a further annual gain of 0.8 per cent,” CREA wrote in its report, released mid-June. “The increase reflects an anticipated rise in sales activity in Alberta and Saskatchewan, in line with a gradual improvement in their economic outlook.”
According to Rochon, we’re currently in a serious recession despite arguments to the contrary, citing decreases in manufacturing, a faltering oil industry, and an overall uptick in unemployment as major contributors.
He gives a number of reasons why the economy won’t recover this year.
Rochon argues not enough is being done to pull the economy out of the recession and that policies further to rate reductions are needed. He also believes the U.S. economy is softer than previously believed and that the oil industry will continue to struggle.
A Canadian economics professor is sounding the alarm, arguing Canada is, in fact, in a recession and that it will last longer than expected.