Is Canada heading into a recession? There has been a lot of speculation recently about a potential economic downturn. Inflation, gas and food prices, higher interest rates, an expensive housing market and an increased cost to live and do business in the country have a lot of people raising concerns about the state of the country over the next few years. Depending on what you read and who you talk to, we may be headed toward a recession, it has already begun, or the economy will have one.
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Below, we’ll talk about what Canadians think about a potential recession and how this could impact the state of the job market in the country.
What are we talking about a potential recession?
There are a lot of social, political, and economic factors that could have a negative effect on the economy and pull Canada into a recession. The most commonly cited today are inflation, the COVID-19 lockdowns in China, the war in Ukraine, and global supply chain issues.
Most of us have experienced delays in receiving goods we’ve ordered or have not been able to get them at all. We’ve also seen the spike in our grocery bill and at the pump. These issues are not only affecting Canadian households, they’re also affecting businesses. Their inability to receive goods, supplies, and stock on time, rising operations costs, and other factors could force them to operate lean – this means reducing their workforce or implementing a hiring freeze.
Majority of Canadians believe a recession is on the way
According to a recent Yahoo Canada/Maru Public Opinion survey, the majority of Canadians believe we are headed to a recession. Here is what the survey uncovered:
- 68% of Canadians believe we’re headed toward a recession
- 17% believe a recession has already started
- 15% say the talk of a recession is an exaggeration
Other findings include:
- 56% believe the central bank interest rate rise will fuel recession
- 56% plan to have stricter priorities and reduce spending
- 56% also believe inflation is causing serious money issues, with 13% being panicked
Canadian small business owners and companies likely share some of the same opinions and concerns.
Will a potential recession affect the job market?
Recruiting in Toronto and all other cities across the country experience ongoing changes. It’s normal for the market to expand and contract as business conditions change over time.
Many have concerns about the current state of the job market. With high inflation and the economy poised to downturn, there have been rumblings of layoffs, so some have asked what our recruiters are seeing in the job market.
What we are seeing in the job market is not as dire as what Canadians are predicting for the economy. There is still a strong job market. It remains competitive, as companies are still pushing to hire. There are a few reasons for this.
- Vacancies still being filled: Many companies are still trying to fill roles that were vacant during the pandemic.
- Demographic factors: Demographics are still playing a major role in our economy. Baby boomers are retiring and there aren’t enough qualified people to fill the roles.
So, we’re not seeing the contraction or layoffs of recessions of the past (yet). However, if a recession begins and lasts longer than a year or two, then we’ll see a contraction.
Jena McGregor from Forbes is reporting similar findings from top companies and recruiters globally:
“Every day seems to bring a tale of two job markets. On the one hand, data, like Friday’s better-than-expected jobs number, shows a labor market where unemployment remains low and the economy continues adding jobs, even beating economists’ forecasts…the Labor Department reported that job openings slipped but hiring demand remained strong, while the turnover rate stayed high.
“Yet on the other hand, the news cycle seems to bring near-daily stories of hiring freezes and layoffs, particularly in the technology sector and among startups.”
What is unique about this situation is there has never been a time when there is potential to enter into a recession with such a competitive job market. Time will tell how things play out.
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