Canada's economy has been experiencing a decline in recent months, leading to discussions about whether the country is entering a recession. The determination of a recession is not always straightforward and can take years to reach a definitive conclusion. The National Bureau of Economic Research (NBER) in the United States is the authority that officially determines if the country is in a recession. The NBER's Business Cycle Dating Committee, consisting of eight economists, analyzes various data points to determine if the economy is expanding or receding. They consider factors such as the growth rate of GDP, wholesaler sales, and other measures. The committee assigns start and end dates for each recession retroactively [11900ac3].
In Canada, the C.D. Howe Institute serves as an arbiter of business cycle dates. The term 'technical recession' is sometimes used to describe when real GDP declines for at least two consecutive quarters, but it is not the official definition of a recession. Canada recorded a small decline in real GDP in the second quarter, and early data suggest a potential mild contraction in the third quarter. However, it is difficult to determine if Canada has slipped into a full-fledged recession. A recession is generally accompanied by financial pain for households and businesses, with rising unemployment rates and increased insolvencies. Canada's economy is slowing after the Bank of Canada raised interest rates to control inflation. However, rate-hike campaigns can often tip economies into recession. Some economists suggest that a mild recession may be preferable to a prolonged period of weak growth. Canada's per-person economic output has stagnated for years, and productivity is considered a pressing issue. The federal government expects real GDP growth of just 0.4% next year [303bbad7].
Meanwhile, Sweden's economy has also contracted in the third quarter of 2023, indicating a possible recession. The decline was driven by inventory liquidation and lower household consumption. This is the second consecutive quarter of contraction, meeting the common definition of a recession. The downturn was broad, but partially offset by strong service exports. Household consumption expenditure has decreased for five consecutive quarters. Economists on the eurozone business cycle dating committee use a broader set of data to determine a recession, including employment figures [11900ac3].
In Australia, the rapid increase in interest rates over the past year and a half is causing many consumers to feel less than joyous this festive season. Spending in the lead up to Christmas is likely to remain subdued, with consumers more budget conscious than in previous years. Some economists and media outlets are predicting a possible recession in Australia in 2024. A recession is defined as a significant decline in economic activity that lasts more than a few months. Weak consumption doesn't necessarily mean a decline in local production. The Reserve Bank of Australia defines a recession as a sustained period of weak or negative growth. The National Bureau of Economic Research looks at various measures of economic activity to determine if a recession has occurred. There is an obsession with finding a measure that indicates a recession, such as a per capita GDP recession or a change in the unemployment rate. However, these measures have their limitations. Recessions in Australia have become less frequent due to economic reforms and reduced volatility of shocks. Predicting recessions is difficult and should be taken with caution. The ability to successfully predict when a recession will occur is poor [303bbad7].
Both Canada, Sweden, and Australia are facing economic challenges that raise concerns about the possibility of a recession. While the term 'recession' is not always clearly defined, the declines in GDP and other economic indicators in these countries suggest a significant economic downturn. The impact of these downturns can be felt by households and businesses, with potential consequences such as rising unemployment rates and increased financial difficulties. The governments and central banks of these countries are closely monitoring the situation and implementing measures to mitigate the effects of the economic downturns.
In the United States, the National Bureau of Economic Research (NBER) is the only organization that can officially determine if the country is in a recession. The NBER's Business Cycle Dating Committee analyzes various data points to determine if the economy is expanding or receding. They consider factors such as the growth rate of GDP, wholesaler sales, and other measures. The committee assigns start and end dates for each recession retroactively. Despite the US not meeting the specific criteria of a recession, a majority of people, 56%, believe the United States is experiencing a recession, according to a recent poll. This perception may be influenced by high inflation and affordability challenges that people are facing. The upcoming election may also be influenced by these perceptions, as voters' views of the economy often impact their voting decisions. President Joe Biden's attempts to convince the public that the economy is in good shape may not align with their perceptions. It is important to note that economists argue that the US is not in a recession, as it does not meet the specific criteria of a downturn in economic output and rising unemployment. Recessions can have negative impacts on people, businesses, governments, and organizations, leading to job cuts, declining personal incomes, reduced consumer spending, business closures, decreased tax receipts, and declining investments. Recessions typically last about 17 months on average, but recent recessions have been shorter. Fiscal and monetary policies, such as spending and tax cuts and lowering interest rates, can help stimulate economic activity and end a recession [11900ac3].