If U.S. recession is at hand, history suggests Canada won't be far behind US Canada recession inflation
year-over-year in the second quarter, following a 1.6 per cent decline in the first quarter, according to data released Thursday. Two straight quarters of decline are the rule of thumb for determining a recession, though an official ruling won’t be made for several months.
“If the U.S. does officially contract, it would be very difficult for Canada to avoid a recession,” said Sal Gautieri, senior economist at the Bank of Montreal. “We’re not officially calling for a recession in either country, but it’s basically a coin flip at this stage and both economies are very vulnerable.”Article contenthigh inflation
“We do expect the Fed and Bank of Canada to raise rates further in the second half of this year before moving to the sidelines,” Gautieri added, noting these rate hikes are weighing on mortgage and other loan demand. “So, there’s still more economic pain to come.” “The American economy contracted for a second consecutive quarter, but don’t call it a recession,” wrote managing director and head of macro strategy Royce Mendes in a note to clients shortly after the data was released. “Without weakness in employment or consumer spending, it’s difficult to justify calling this a recession. Still, it does seem like businesses are setting up for a tougher second half, which could begin to affect hiring plans and by extension consumer spending.
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