Tom Mulcair: “Back in 2008, Mr. Harper was misleading. He said that we were not in a recession and in fact it turned out we were in the worst recession since the 1920s.”
By: Dana Wagner on
Tom Mulcair, NDP Leader and candidate for Outremont, in the leaders debate on August 6, 2015
Stephen Harper said Canada was not in recession as late as October 2008, but changed his outlook by the end of November 2008. The start date of the 2008 global recession in Canada is pegged at sometime between October 2008 and March 2009. Depending on the analysis, the denial came just before or right at the start of the recession.FactsCan Score: Misleading
Recessions were a popular topic in the first leaders debate of the election. If Canada is currently experiencing a recession, that would make the second one during Stephen Harper’s time in office, and his opponents were quick to draw parallels between the outlook today and the downturn in 2008.
Tom Mulcair, the NDP leader, said, “back in 2008, Mr. Harper was misleading. He said that we were not in a recession and in fact it turned out we were in the worst recession since the 1920s.”
Did Harper deny a recession? If so, did the denial happen before, during, or after Canada’s economy was in recession?
Harper denied that Canada’s economy was in recession as late as October 2008, but changed his outlook before the end of November. Here’s a timeline of some of the Prime Minister’s statements at the end of 2008:
September 15: American bank Lehman Brothers files for bankruptcy.
September 15: “My own belief is if we were going to have some kind of crash or recession, we probably would have had it by now.”
September 25: “The only way there is going to be a recession is if they’re [the Liberals] elected, and that’s why they’re not going to be elected.”
October 10: “This country will not go into recession next year and will lead the G7 countries.”
October 14: Election day in Canada.
October 30: “The fundamentals of Canada’s economy remain stronger, more stable and more durable than those of many other nations. At the same time, we cannot be completely protected from what happens outside of our borders.” Harper also called the state of the world economy a “global crisis.”
November 13: “We will have to be both tough and pragmatic, not unrealistic or ideological, in dealing with the complex economic challenges before us.”
November 20: “It has been clear since the election that the economy of the industrialized world is in recession. Canada is in a much better position than the great majority of these countries.”
November 23: “The most recent private sector forecasts suggest the strong possibility of a technical recession the end of this year, the beginning of next.”
November 29: “The financial crisis has become an economic crisis, and the world is entering an economic period unlike, and potentially as dangerous as, anything we have faced since 1929.”
Pinpointing if the denial falls before, during, or after the start of the recession is problematic.
The problem with naming the start of the 2008 recession in Canada – or any recession – is that there’s no single, official way to define one. A common understanding is that two quarters, or six months, of consecutive GDP contraction equals recession. But other economists reject the simplicity of this method, preferring instead to look at broader economic indicators, for example, what’s happening to incomes. In an earlier check on the start date of the last recession in Canada, we found a broad estimate to be between October 1, 2008 and March 31, 2009. Lehman Brothers declared bankruptcy in September, escalating the market meltdown in the United States, but the effects spread unevenly throughout the rest of the world after that. According to the C.D. Howe Institute, the recession began in November 2008. A government report estimated it began in the fourth quarter that year, or January to March 2009.
It wasn’t until June 2009 that Toronto Star ran a headline, “It’s official: Canada’s in a recession.” Though tongue-in-cheek, it highlighted how these things are only officially declared several months later. Statistics Canada reported the recession in March 2009.
Although the global economy faltered following the meltdown in the United States, Canada’s economy still grew from September to October. It contracted from October to November, but no one would have known that in October. Consider this outlook from the Bank of Canada, released on October 23, 2008: “economic activity in Canada is projected to remain sluggish through the first quarter of next year, then to pick up over the rest of 2009 and to accelerate to above potential growth in 2010.” That’s not exactly a prediction of a Canadian recession. Things changed quickly within a few months, and in January 2009, the bank reported, “the major advanced economies, including Canada, are now in recession.”
If a prime minister should be better at forecasting, that’s a matter of opinion and not what we’re checking. And there may be cynicism around the timing of the denial, which was before the federal election when there was an obvious political stake in painting a rosy economy. But it remains true that the election fell before the start of six months-plus of consecutive decline.
It is misleading to suggest Harper’s denial occurred during the recession. It occurred before or right at the start, and it was before the Bank of Canada’s outlook changed. Harper did deny Canada’s economy was in recession in October 2008, but he was remarking on the “global crisis” by the end of October, and called a Canadian recession a “strong possibility” in November when the technical recession began.