David Rosenberg<\/a>, president of Rosenberg Research & Associates Inc., said in a note on Friday.<\/p>\nRecessions typically arrive alongside year-over-year negative growth, he said, and job losses and rising unemployment are adding to the economic headwinds.<\/p>\n
\u201cIt was particularly disappointing to have seen that negative headline given the consensus forecast was 1.5 per cent annualized (GDP),\u201d he said.<\/p>\n
Rosenberg singled out the big declines in business investment, the housing sector and consumer spending on durable goods. Government of Canada spending fell 2.4 per cent.<\/p>\n
The \u201conly silver lining,\u201d he said, was an increase in business capital expenditures and Statistics Canada\u2019s forecast for GDP in April to rebound from March.<\/p>\n
\u201cInterest rate cuts and not hikes should be foremost on the Bank of Canada\u2019s mind,\u201d he said. \u201cFrom a demand standpoint, there was nothing at all inflationary about this broad economic report.\u201d<\/p>\n
\u2018Sour result\u2019: BMO <\/p>\n
\u201cWhile there will be plenty of debate over whether this constitutes a recession (we would say \u2018no, not really\u2019), there is little debate that the economy has struggled to make any headway over the past year amid the ongoing trade conflict,\u201d Douglas Porter, chief economist at BMO Economics, said in a note.<\/p>\n
He said much of the first-quarter decline was due to a 2.4 per cent drop in federal government spending, which is something he doesn\u2019t expect to continue.<\/p>\n
He said consumer spending rose 1.5 per cent quarter over quarter and was up two per cent quarter over quarter, but it\u2019s hard to say if that will hold up in the second quarter given the elevated price of gasoline.<\/p>\n
Porter also said much of the GDP weakness can be traced to a 4.1 per cent drop in exports, a 3.6 per cent decrease in business investment in manufacturing and equipment and a 3.3 per cent decline in housing, with the first two areas feeling the effects of the trade war with the United States the most.<\/p>\n
He said he is looking for a rebound in business investment if Canada gains some clarity on the trade.<\/p>\n
\u201cThere\u2019s no sense sugar-coating this sour result, as the economy has clearly been struggling to grow since the start of the trade war,\u201d he said. \u201cOverall, this should really throw a wet blanket on rate-hike talk, as the economy is in no condition to deal with higher rates.\u201d<\/p>\n
Little consumer \u2018ammunition\u2019 left: CIBC <\/p>\n
Canada\u2019s economic growth was downgraded from the second quarter of 2025 through the fourth quarter, signalling it \u201cwas worse off in the post-tariff environment than thought,\u201d Katherine Judge, an economist at CIBC Capital Markets, said in a note.<\/p>\n
For example, annualized GDP was revised down in the final quarter of last year to minus one per cent from minus 0.6 per cent.<\/p>\n
She said the sharp fall in spending on services can be attributed to higher gasoline prices and a weak job market. Spending on durable goods such as appliances and furniture also fell, as did spending on vehicles.<\/p>\n
Furthermore, the household savings rate dropped to its lowest level in two years, Judge said, \u201cwhich doesn\u2019t bode well for consumption in the coming quarter, along with no growth in real disposable incomes for the quarter.\u201d<\/p>\n
She said Canada\u2019s GDP was \u201cvery weak from most angles\u201d and showed consumers have little \u201cammunition\u201d left for future spending.<\/p>\n
However, she expects the Bank of Canada to hold rates at its June 10 meeting given Statistics Canada\u2019s estimate for a rebound in GDP in April.<\/p>\n
\u201cOur base case also assumes progress towards reducing some tariffs (namely, aluminum and possibly steel) in the coming months, and if the oil price shock starts to fade over that period as well, GDP will return to sustainable growth for the rest of the year,\u201d she said.<\/p>\n
\u2022 Email: gmvsuhanic@postmedia.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Despite the negative GDP surprise, markets are still pricing in a Bank of Canada rate cut in 2026.…\n","protected":false},"author":2,"featured_media":451776,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[5490,138,45258,275,13826,21341,5491,219,229944,34737,111,139,69,123755,4068],"class_list":["post-451775","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bank-of-canada","tag-business","tag-business-investment","tag-canada","tag-consumer-spending","tag-david-rosenberg","tag-douglas-porter","tag-economy","tag-federal-government-spending","tag-government-of-canada","tag-new-zealand","tag-newzealand","tag-nz","tag-rosenberg-research","tag-statistics-canada"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/451775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=451775"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/451775\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/451776"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=451775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=451775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=451775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"bank-of-canada-0529-ph\"](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/05\/7742a027f560d94ad76c2d409ba571c1.jpeg\")
Despite the negative GDP surprise, markets are still pricing in a Bank of Canada rate cut in 2026. (Credit: HYUNGCHEOL PARK\/Postmedia) <\/p>\n