"It's a recession when your neighbour loses his job; it's a depression when you lose yours." Many of you will recognize this popular quote from Harry Truman, which aptly speaks to our collective aloofness in the face of new economic data or updates on the state of our economy.
Indeed, this may be how many of us felt when, just this week, Statistics Canada informed us that the country is, in fact, in a recession. Because a recession is technically defined as two consecutive quarters of GDP declines--regardless of how moderate the declines, or what the underlying causes, are--the mere acknowledgement of a recession does not imply that a specific, or significant, proportion of our economy or population is being impacted. To wit, despite a 0.1% dip in Canada's GDP in the second quarter (April to June) of 2015, which followed on the heels of a 0.2% drop in Q1 (January to March), Canadian employment has actually continued to grow, rising by a total of 0.5% over the first six months of this year.
The current recession is our first since the Great Recession of late-2008 and early-2009, when the collapse of the US housing market and the general chaos in international credit markets lead to recessions in most developed countries around the world. Here in Canada, we experienced three consecutive quarters of GDP declines during that time, with our economy shrinking by a total of 4.2% over nine months. Unlike the current recession, employment took a significant hit during that period, falling by 2.3% and not recovering to pre-recession levels until Q4 2010.
We have to go much further back in time if we want to consider earlier recessions: prior to the credit crunch-induced recession of 2008/9, Canada's previous recession lasted from late-1990 through to early-1991, during which time employment fell by 2.5%. Before this, Canada's economy was in a prolonged recession from mid-1981 through the end of 1982, with GDP shrinking by 5.1% and employment contracting by 5.3% during that period.
What do these experiences tell us about the impact that Canada's current recession is having/will have on Canadians generally, and on employment levels more specifically? The short answer is that they don't tell us much--yet. While many economists are predicting Canadian GDP will return to growth in Q3, it remains to be seen how employment levels across the country will be impacted throughout the remainder of the year. For that, you'll have to stay tuned!
You can view our latest viz that shows quarterly GDP and employment levels in Canada back to 1981 here.