Honest economics: ‘ We just do not know’

In our last forecast memo, at the end of January, we identified the impacts of the coronavirus as a “downside risk” but did not explicitly adjust our Canadian or U. S. economic outlooks to include any significant negative effects. Clearly, developments over the past few weeks have proven that these negative effects will be very significant. Getting a handle on these impacts alone would be extremely difficult, given the rapidly changing landscape …

Producing an economic forecast for Canada in the face a rapidly changing environment of the coronavirus and the drop in oil prices in our minds is untenable. There is no doubt that second quarter GDP will fall, indeed probably quite dramatically … But how long will the downturn last and will there be a significant snapback? We just do not know and to publish point estimates for growth in the coming quarters seems foolhardy. And frankly, not very helpful for ( our) members’ planning purposes since each day might produce information that radically changes our outlook …

We know that many organizations are members in PEAP specifically for our short- term forecasts. However, at this time, the best we can do is say that we really don’t know how bad things are going to get before they get better. We wish we did.

Once we feel the situation has at least stabilized, and have some confidence in our ability to produce a forecast that will have some shelf-life, we will let you know.