The Canadian Media Needs to Grow Up

While talking heads obsess over a pedantic definition of "recession," they are missing three structural realities: volatile data distortions, a decade-long capital strike, and an easy alibi for Ottawa.

It’s getting tiresome, but every week, another talking head from another Canadian media outlet trots out the same narrative: President Donald Trump is to blame for Canada’s problems. The past few weeks, it has taken the form of a boring, useless question that has dominated the national conversation: Is Canada in a recession? Technical or otherwise. As if the answer changes anything.

Just so we understand each other, there is NO precise definition for a recession. According to the NBER’s Business Cycle Dating Committee, the people in charge of deciding such things for the U.S.

“A recession is a significant decline in economic activity that is spread across the economy and that lasts more than a few months,” and it depends on “three criteria—depth, diffusion, and duration.”

In Canada, Q1 GDP came in at -0.1% annualized. Note that this figure is effectively a rounding error and was boosted by a bounce-back in inventories, something we flagged in March. It was a second consecutive quarter of negative growth¹, and well below the Bank of Canada’s forecast of 1.5%. Right on cue, some politicians called it a recession, and the media, desperate as always to protect this government, started quibbling over the definition.

Guess what? It doesn’t matter.

Missing the Point

Why? For two reasons.

The first is, admittedly, speculative. Canada’s Q1 GDP data will very likely be revised upward, negating the ‘technical recession’. The spike in global oil prices has boosted energy exports (in Grey below). Statistics Canada’s own flash estimate is already pointing to a 0.4% gain in April, driven by gains in resource extraction, a cyclical manufacturing bump (PMI below in Red), and transportation. Furthermore, part of the GDP decline was led by a sharp rise in imports, largely driven by gold purchases. This category’s recent volatility distorts the trade balance without telling us much about the real economy.

The second reason recession talk is moot: Canada’s economic problems are STRUCTURAL, and NOT cyclical. A recession is a temporary contraction. What Canada has is something far more pernicious. It faces a productivity emergency, largely a function of a collapse in private-sector investment. This was true long before President Donald Trump was even elected, and has been repeatedly outlined by the Bank of Canada first in March of 2024 and again in November of 2025.

Briefly, Canada’s poor productivity stems from a lack of business investment, limited competition in key sectors, and a poor labour mix, in which workers — particularly immigrants — are underemployed relative to their skills.

In practice, this meant that private capital investment per capita has been declining relative to that of our American counterparts for years, and that Canada’s growth has badly lagged its rich-country peers. These are not the symptoms of a trade war. They are the symptoms of a country that spent a decade making itself inhospitable to private capital through excessive regulation, dysfunctional and childish energy policy, and an uncompetitive tax environment.

To be crystal clear, this in no way absolves America’s renewed protectionist streak or the tone and temperament with which it has been delivered.

But the people telling you Canada’s weak growth is due to tariffs are lying to you. Blaming President Trump for Canada’s woes is not just intellectually lazy. It is dangerous. It gives Ottawa a villain and, by extension, an alibi. Every week spent debating whether we are technically in a recession is a week not spent asking the harder questions. How do we improve Canada’s productivity growth?

Green Shoots, Shallow Roots

To be fair, there are tentative signs that the winds are shifting. The departure of Steve Guilbeault from the environment file and the new government’s tacit acknowledgement that regulatory burden is a real problem are a meaningful shift in tone. More importantly, there is growing recognition in Ottawa that Canada’s commodity wealth is a strategic asset to be developed, not an embarrassment to be managed. That is genuine progress, and I am optimistic, if extremely skeptical.

But tone is not policy. Acknowledgement is not reform. The structural conditions that drove private capital out of Canada remain largely intact. A government that says the right things while leaving the underlying architecture unchanged is not fixing the problem. It is managing the optics.

In our inaugural Loonie Hour Substack on March 11, we warned that Canada’s growth would remain weak for a long time. Nothing has changed that view. With population growth having turned negative, the immigration-driven growth that papered over a decade of poor policy is now gone. What’s left is a productivity crisis that will take years to fix.

The Media Needs to Meet the Moment

My hope is that Canadians keep their eye on the ball. Canada needs major structural reform. My beef today is with the media. The navel-gazing over whether it's a recession or not is distracting from the real issue. This is not just unhelpful; it actively delays the reckoning Canada needs.

Worse yet, by blaming exogenous forces, it absolves the people and policies responsible for Canada’s structural stagnation. The hard truth is that if trade frictions and the war in Iran ended tomorrow, they would not, in any way, solve the underlying cause of weak growth. Why and for how long are questions Canadians deserve answered — and it is the media’s job to ask them.

-rd

1. The term "recession," defined as two consecutive quarters of negative growth, was coined by Julius Shiskin of the New York Times in 1974.