The technical definition of a “recession” is two consecutive quarters of negative GDP growth. The 4th quarter of 2025 and 1st quarter of 2026 have identified exactly that problem, negative GDP growth in Canada. [-1% and -0.1% respectively] The pretending is fierce, and again CTH warns everyone to be careful about exposure to the Canadian sector in their investment holdings.

As customary, whenever the economic policy of a political leftist delivers a bad outcome, the media contort themselves in order to avoid defining the situation accurately.  Instead, the financial media project -without merit- that the current situation is more positive.  Unfortunately, the data doesn’t provide much room to arbitrarily change the definitions.

Keep in mind this announcement today comes on the heels of the Bank of Canada warning that a “cascading series of events could cause a sharp loss of investor confidence and lead to a spike in demand for liquidity or rapid asset sales.”  This is a particularly pertinent phrase given one of the common reasons being attributed to the negative GDP, increased import values – specifically Canadians purchasing gold.

Several financial outlets have noted the increase in the value of Canadian imports, a negative in the GDP calculation, is being driven by Canadians (institutions and individuals) purchasing gold as a hedge.  The Canadians are buying gold as a hedge against both inflation and currency devaluation.

This activity puts additional context onto the statements from the Bank of Canada, who would likely have advanced notice of this issue.  Hence, the Bank of Canada also saying, “In normal times, hedge fund activity helps keep markets running smoothly. But if conditions become strained, this activity could amplify stress and disrupt core funding markets.”  The Wall Street Journal:

WSJ – OTTAWA — Canada’s economy unexpectedly shrank for a second consecutive quarter as activity stalled at the start of the year, raising the likelihood the country dipped into a recession.

Gross domestic product, a broad measure of goods and services produced across Canada, edged down 0.1% in seasonally adjusted annualized terms in the January-to-March period, Statistics Canada said Friday.

The economy also contracted a larger-than-previously-estimated 1% in the final quarter of last year. Back-to-back quarterly declines typically define a technical recession.

The CD Howe think tank’s Business Cycle Council is the closest Canada has to an official arbiter on declaring a recession, though economists suggest the surprise pullback could prove fleeting thanks to government stimulus and a tailwind for energy exports from high oil prices.

The country’s economy has struggled to gain momentum since the Trump administration began imposing tariffs and resulting uncertainty hit manufacturers in Canada hard. The economy has now contracted in three of the last five quarters. The last time Canada’s economy compressed in consecutive quarters, outside of the first year of the Covid-19 pandemic, was early in 2015, when oil prices slumped.

The weakness in the first quarter reflected a jump in volatile gold imports, ongoing weakness in business investment and a pullback in government spending on weapons systems after big outlays at the end of 2025. (read more)

Prime Minister Mark Carney may be an insufferable leftist politician, but he is also not stupid; he can see what the reality is before him.

While Carney has spent well over a year being antagonistic to the Trump administration, climbing his high horse and making proclamations about Canada joining with Europe and China to develop a new world order, the reality is that Canada cannot survive economically without the dependency model that has been created for decades with the United States.

The U.S subsidizes the Canadian economy, pull that away and things start to get really ugly very fast.  Hence, Carney was in New York with a completely different message than his previous “elbow’s up.”

Appearing at the Economic Club in New York, Carney tried to moderate his previous domestic political statements about the era of close economic and trade relations between the USA and Canada being over (the ‘elbow’s up message).  Now Carney is talking to investors about a modified North American alliance, with the United States just adding a new set of trade discussions.  Funny how that happens.

The Canadians are noticing the duplicity of the message and wondering exactly what Prime Minister Mark Carney is trying to achieve by telling his domestic political audience they must fight against President Trump, while traveling to the USA and telling an investor audience of his willingness to partner a stronger economic relationship with President Trump.  WATCH:

Posted in Banking and Finance, Big Stupid Government, Canada, Economy, media bias, Uncategorized, USMCA
Share
more