Canada is in uncharted economic territory

Why a broken market cycle mechanism is making the means of a recession unknown

Andrew Willis 9 April, 2019 | 2:00PM

Both Canada and the U.S. are experiencing economic trends that are changing the game. A tight labour market while wages aren’t rising, a fruitless pursuit of inflation and some odd yield curve behavior has investors wondering if, how and when a recession will arise.

Previously, we made the case that Canada was not headed for a recession. This remains true, for the near term at least, according to economists, but they caution that the established indicators around market cycles and recessionary signals are being broken.

As a result, we’re headed into uncharted territory. The outlook in the short term looks weak, yet stable, depending on answers to atypical questions. In the long term, it’s uncertain and policy-sensitive in unusual ways that are worth watching out for.

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Andrew Willis

Andrew Willis  Andrew Willis is a content editor for Morningstar.ca.