When the GDP numbers came out late last week it showed the Canadian economy is not doing especially well these days. Sure, consumer spending was up a bit – 3.5% – but, given that there are more of us living in Canada these days, the enthusiasm that generates has to be tempered a bit.
That is doubly true given that business investment was down by a comparable 3.5-percent as well.
So, the only thing that kept the GDP in positive territory – it went up a tenth-of-a-point so just barely in positive territory – was government spending.
In short, the private sector nationally is pretty much on the verge of recession.
That has the economists trying to figure out how the Bank of Canada will respond to this news. Now, there is one bit of consistency among them: they all believe interest rates will fall again in December. But they are not unified in their view of how much they will fall.
Some say we should expect a quarter point reduction because, after all, GDP was still in the black. Others are projecting a half point cut because, well, we’re verging on recession.
