Notice that I don\u2019t say in or out of recession. Nonetheless, with slow growth (and per capita growth negative), there\u2019s plenty of discussion (e.g., here<\/a> today). And Trump\u2019s threats of tariffs \u2014 even if they don\u2019t come through \u2014 could impart enough uncertainty to throw the country into recession.<\/p>\n Q3 q\/q growth was 1.5% (annualized). Here\u2019s m\/m GDP growth through October:<\/p>\n It\u2019s still positive, but there have been months of near zero growth, and all these measures are subject to revision.<\/p>\n Why the concerns about recession? As noted in Chinn and Ferrara (2024)<\/a>, the term spread plus financial conditions index and foreign term spread has a pretty good track record of predicting recessions as identified by ECRI; over a sample starting in 1971, the term spread alone has a pseudo-R2 of 0.36. (The arbiter of recessions in Canada, the Business Cycle Council at the C.D Howe Institute<\/a> has a slightly different identification of peak and trough for the last cycle, so our results would not necessarily translate.) The 10yr-3mo spread over the past two years looks like the following:<\/p>\n Figure 1:<\/strong> Canadian 10yr-3mo spread, % (blue). December value is 19 December. Source: OECD and Reuters.<\/em><\/p>\n Using the ECRI dates, and assuming no recession had occurred by December 2022, I obtain the following estimates for the term spread (only) model, estimated for interest rates 1971M01 to 2021M12.<\/p>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/12\/CA_Monthly_GDP_MoM_19dec24.png\")
<\/a><\/p>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/12\/canada_ts_dec24.png\")
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![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/12\/canada_recessionprob.png\")
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