Canada likely in 'rounding error recession,' more trouble looming: economist

Statistics Canada has released new data about how the economy started off the third quarter, saying the country's GDP remains essentially unchanged. One economist says it highlights an ongoing trend of weak performance.

Statistics Canada has released new data about how the economy started off the third quarter, saying the country's GDP remains essentially unchanged. One economist says it highlights an ongoing trend of weak performance.

"The economy is flat-lining… we are not seeing any indications of strong growth," David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, told CTV News Channel's Akshay Tandon on Friday. "If we do end up in a recession, which is very plausible… (it) would be a rounding error recession at this point."

AN ONGOING TREND

As Canadian growth remains stuck in neutral for a second consecutive month, Macdonald explains it's becoming part of an "ongoing trend" for the country's economy.

"We've been going through this very weak growth… but at the same time, the interest rate has been rising," Macdonald said. "Usually we'd see the opposite… we'd see rates go down."

That's leading to a "very unusual" situation, warns Macdonald, because consumers aren't seeing any relief, even as growth slows.

MORTGAGE RISK