Canada's economy just went backward two quarters in a row, and the last time that happened the world was shutting down for a pandemic. This time the cause is not a virus but a trade fight.
A technical recession is the simple version, where the economy shrinks two quarters in a row. Canada cleared that bar, with output falling at an annual rate of 0.1% in the first quarter after dropping about 1% the quarter before.
The drag came from weak spending by businesses and the government, while U.S. tariffs hit Canadian exports too, especially cars and trucks. Business investment also fell for the fifth straight quarter, which is companies pulling back on new projects and usually a sign they expect tougher times.
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The headline looks scary, but the details are softer, since the drop was tiny and households kept spending with consumer spending up 0.4%. There is an odd wrinkle too, because per person the economy actually grew as Canada's population shrank for a second straight quarter.
Some economists are not even sold on the recession label, especially with early data showing growth bounced back in the spring on stronger oil and gas activity.
This is the kind of recession you might not feel on the street, where the numbers dipped but jobs and household spending mostly held up. For investors, the bigger story is the trade fight behind it, with tariffs now showing up directly in a major economy's growth figures.
Early spring data already points to a rebound.
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