No recession in 2015, C.D. Howe study finds

It looks like Canada’s 2015 recession never actually happened.

The Toronto-based C.D. Howe Institute, which tracks and labels Canadian business cycles, published research Tuesday showing last year’s economic contraction — driven by falling oil prices — wasn’t widespread enough to be considered a recession. The conclusion came in a study by analyst Jeremy Kronick, who developed diffusion indices aimed at capturing true cyclical changes in the economy as opposed to transitory ones.

Although it’s not C.D. Howe’s final word on the matter, the report suggests the non-partisan institute is leaning away from using the recession label, capping a debate that spilled over into the political arena in last year’s election. The R-word was widely bandied about by the opposition during the campaign.

The discussion at the time was centred around GDP data that showed the economy contracted in the first two quarters of last year. Back-to-back quarterly declines, a situation some analysts refer to as “technical recession,” is usually a good indicator of a true recession.

The negative oil price shock ... was not diffuse enough to warrant a recession call.

But it turns out not this time, the C.D. Howe report finds.

“All the methodologies suggest the negative oil price shock that led to a contractionary economy in the first half of 2015 was not diffuse enough to warrant a recession call,” Kronick wrote in the report.