Stephen Harper avoids recession label on eve of GDP numbers

If the GDP numbers to be unveiled Tuesday do indeed indicate that Canada is in a technical recession, one could hear Conservative Leader Stephen Harper just dismiss it as a "modest recession, a tiny recession," a "so small you can hardly see" it recession.

It would be the same language he used, minus the mocking tone and the word recession replacing the word deficit, when he sneered at Justin Trudeau's plan to go in the red in order to spend money on infrastructure.

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Back in May, Statistics Canada recorded that Canada's economy had shrunk by an annualized rate of 0.6 per cent in the first three months of 2015. It was the first time the economy had contracted on a quarterly basis since 2011.   According to Thomson Reuters, economists expect StatsCan to report Tuesday that the economy contracted at an annualized rate of 1.0 per cent in the second quarter. 

With two consecutive quarters recording negative GDP, that would, at least by some definitions, indicate a technical recession. 

Where Harper seemed to be a big fan of repeatedly pounding home the politically charged D-word with Trudeau, he now has become label averse when it comes to describing Canada's overall economy and negative GDP growth.

'Haven't got into that debate'

On Monday, while campaigning in Ottawa, Harper said it was more important to describe the realities of the economic situation, rather than using labels or definitions.

"I haven't got into that debate," Harper said.

Harper instead explained this downturn is really all about one sector of the economy (oil), while other sectors of the economy are growing. Canada's fiscal position, he said, remains very strong, proof of which can be found in the $5-billion surplus recorded in the three months of the fiscal year — although the Finance Department said a big chunk of that was due to the selling of Ottawa's GM shares.

While Harper wasn't delving into the "what is a recession" debate, he seemed to be more than happy, or at least amenable, to allow Conservative candidate Jason Kenney to wade in on the issue. Kenney delved into the minds of economists when he appeared on CBC's Power & Politics on Sunday, explaining what they really mean by a technical recession.

"I'm suggesting a recession is typically defined as a widespread downturn, not a discrete sectoral downturn," he told host Rosemary Barton.

Unfortunately, for the Tories, and as Barton pointed out in a recent column, the government's own anti-deficit legislation states that "recession means a period of at least two consecutive quarters of negative growth in real gross domestic product for Canada, as reported by Statistics Canada."

Interestingly, NDP Leader Tom Mulcair, in Saskatchewan on Monday pledging millions in new funding for women's shelters, didn't seem to get too hung up on the recession label.

Asked about the definition, Mulcair simply declared that it means two consecutive quarters of negative growth and that "we're talking about a technical definition."

More importantly, he stressed, was that 400,000 good manufacturing jobs have been lost, unemployment is up since the last recession in 2008, all because, he said, Harper's plan isn't working.

Trudeau wasn't out campaigning today, but the Liberals, so far, also seem to be somewhat muted on the whole "recession" thing. Writing for Maclean's, Mike Moffatt, an assistant economics professor at Western University's Richard Ivey School of  Business and economic adviser to Trudeau, noted the different definitions of the word and the complexities of identifying a recession.

'Economy was quite weak'

As Moffatt says, in real terms, "it matters little if the economy grows by a tenth of a per cent in the second quarter or shrinks by a tenth of a per cent. Regardless of which side of the line we end up on, the economy was quite weak."

It may mean little to the Tories that some economists say that any kind of contraction would be short-lived. Words, definitions and labels matter in politics, which is why the Tories seem intent on broadening the definition of the R-word or avoiding the label altogether.

On Monday, Harper was invited behind the counter of a Tim Hortons in Gananoque, Ont., where he told the staff, "Tell me what to do, just don't let me handle the cash." Said as a joke certainly, but that last bit may not have been the best-timed quip for a leader who is seeking to boost his government's economic credentials on the eve of the GDP report.