The Bank of Canada’s efforts to tamp down on persistent inflation are increasing the odds of pushing the economy into a recession in the next year, according to some economists.
Consumers should start preparing for a contraction now, experts say, as the threat of layoffs and leaner days looms on the horizon.
Armine Yalnizyan, economist and fellow with the Atkinson Institute, tells Global News that the odds of a recession “are nearing more than 50 per cent in the next six to 12 months.” Canadian economic output has mostly shown signs of growth so far this year.
But Yalnizyan points to the United States’ shrinking economy in the first quarter of 2022 and an increase in applications for jobless benefits south of the border as signs the economic cooling could come north sooner than later. “I think it’s very difficult for Canada to duck a recession when the United States has one quarter of contraction,” she says.