THUNDER BAY – Economic professor at Lakehead University, Livio Di Matteo, says there is no need to fear a recession.
“That could become a self-fulfilling prophecy if people start to believe they’re in a recession or think they are in one. At this point in time, people should conduct their affairs as they have been, because there’s no clear indicator as to whether or not there is a recession,” he told Newswatch.
Canada’s gross domestic product (GDP), the value of all goods and services produced in the country, saw a very slight decrease in the first three months of the year, following another small decrease in the last quarter of 2025, according to Statistics Canada.
“Basically, those numbers are so small that growth is effectively zero as opposed to negative,” he said.
Di Matteo says those numbers are being touted in the media by economic commentators and politicians as a technical recession.
Di Matteo said locally, Thunder Bay is the least affected and is “definitely not in a recession.”
“It’s actually booming quite substantially. I mean, if you look anywhere around Thunder Bay, there’s substantial construction. There seems to be an awful lot of economic activity, just anecdotally. Employment is certainly not down in Thunder Bay, and so, the unemployment rate is well below the national average,” he said.
Di Matteo describes a technical recession as a convenient mathematical definition that labels an economic downturn if there are two negative quarters of growth.
“Why they didn’t pick three, why they didn’t pick four, why didn’t they pick, you know, GDP dropping more than 2 per cent? Your guess is as good as mine to that effect. It is a convention that has arisen over time. But, if you look at the Bank of Canada’s way of interpreting recessions or, you know, the C.D. Howe Institute or any other think tank, they usually look at a range of indicators,” he said.
He said some key indicators include how quickly the unemployment rate rises or whether consumer confidence is falling.
Di Matteo said Canada’s unemployment rate is 6.9 per cent, which is lower than in 2025 at 7.5 per cent. Employment declined about 17,000 jobs in the last month, but the month before it increased and consumer spending is up in this quarter.
“So, then it becomes more of a subjective judgment call as if the economy is in recession or not. If you just like it quick and dirty, yeah, you have two negative quarters of growth. But next, next quarter when they release the numbers, if they revise the numbers, which has happened actually over the last two years, a number of times, then all of a sudden you don’t have a recession anymore, which is why you have to see if it persists. It has to be prolonged beyond the two quarters, in my opinion,” Di Matteo said.
He said the recession people have been anticipating has been underway for a while due to Canada’s consistent low economic growth.
“There’s sort of the long-term productivity malaise that’s gone on for several decades. Then there’s been the slow growth that’s emerged in the wake of the trade war. So that’s sort of amplified that. And so those are sort of the main drivers of slow growth, and they are pretty serious. But I mean, in order to declare it a recession, you have to look at what the size of the drop is,” he said.
He said in the early 80s the GDP dropped 5 per cent; in the 90s, it dropped 3.4 per cent. And, 4.4 per cent in the late aughts.
“During the pandemic, we had more than a technical recession. I mean, real GDP dropped about 12 per cent. So, I mean, 0.1 is a number that is negative, but on the balance of things, it is definitely slow economic growth. It has been for some time, but the economy does not appear to have plunged into a full-blown recession yet,” Di Matteo said.
“I don’t think you have to worry that there’s going to be a full-blown downturn à la 1981, 1982, or, you know, like the early 1990s or even 2008, 2009. Unless something goes completely off the rails in the negotiations with the Americans, as we sort of try to renew the Canadian-U.S.-Mexico arrangement,” he added.
