Recession or soft landing? Economists divided as economy, labour market prove resilient

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With Canada\u0027s economy and labour markets showing surprising resilience, talk of a soft landing is making a comeback. Find out more.

Is it now possible that North American economies, once thought destined for a stark downturn under pressure from rising interest rates, may avoid tipping into recession altogether?

“Well, now I think it’s flipped,” he said. “It’s more like there’s about a 30 per cent chance of a soft landing and about a 15 per cent chance of a very hard landing with the sort of middle mild recession in between being about 50 to 55 per cent.” To other economists, however, recent optimistic data may be a red herring distracting from the hard reality that the economy cannot emerge unscathed from the most aggressive policy tightening cycle in decades.Article content, founder of Rosenberg Research & Associates, Inc., pushed back on the soft landing narrative during a Breakfast with Dave live event in Toronto on Jan. 19.

Rosenberg pointed to Canada’s overheated housing market and its sensitivity to interest rates in particular, noting that the vulnerabilities in the sector are now worse than before the country was plunged into a recession in the early 1990s.

 

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