We now have one of the major banks predicting Canada is headed into a recession.
RBC’s latest forecast is calling for a ‘mild’ recession but a recession nonetheless and we might already be in it.
All the banks have talked about it being a possibility as higher interest rates designed to fight inflation create a drag on economic growth and activity.
Consumers are spending more on servicing debt rather than buying things while investors are setting aside projects that are marginal when the cost of money is rising.
But this is the first bank to say: it’s coming. RBC does, though, note Saskatchewan and Alberta will avoid a contraction as we are enjoying the benefit of strong commodity prices while BC and Ontario are coping with a challenging housing market.
In fact, the bank says there is a chance of those big provinces individually falling into recession themselves as unemployment rates drift higher and consumers fight with rising mortgage costs.
The bank foresees a mild, bumpy downturn but warns that if central banks keep raising rates, it could resemble a crash landing.
