What pandemic? Statistics Canada (Stat Can) recently revised its gross domestic product (GDP) data to show the economy is doing better. Revisions are routine, just not at this scale—which BMO called “re-writing” the pandemic. Now the data shows the hardest hit industries weren’t nearly as impacted as previously believed, and they’ve all recovered at this point. The bank believes this doesn’t really “jibe” with reality, but if taken at face value the economy only experienced minor hiccups.
Canadian Economic Revisions Are Re-Writing The Pandemic’s Impact On The Economy
GDP revisions are common and considering the amount of data, it’s easy to see why. Aggregating and tallying up data for the whole economy, before double checking it for errors, is a big task. Even with the 3-month reporting delay, sometimes data is found that requires minor revisions. What’s different about this one is the size of revision, and how far back it goes. It’s a material change that fundamentally changes our understanding of how the economy is performing, at least on paper.
“History has been kinder to the Canadian economy,” explains a mildly skeptical Douglas Porter, chief economist at BMO.
He adds, “The huge revisions in the latest GDP data boosted the level of output by 1.5% since the end of 2020. For perspective, the economy has expanded by just over 7% since just before the pandemic first broke open in March 2020 (so 1.5% is a big deal).”
To put the revision size in context, output grew 20% more than previously reported. It’s like a fifth of GDP growth was just discovered between the couch cushions at Stat Can, accumulating for half a decade.
The bank previously noted this massive revision is bigger than the output gap. In plain English, the economy isn’t underperforming its theoretical capacity—it’s technically overconsuming, which should be creating inflation.
Not quite buying into that reality? A breakdown of where the revised growth came from makes even less sense, according to the bank.
Canadian Industries Hit Hardest By The Pandemic Revised To Show Recovery
The bank’s breakdown reveals industries hardest hit during the pandemic are now fine. Upward revisions show the hardest hit sectors didn’t see as big of a downturn as previously believed, and they’re either doing better or close to fully recovered.
“… In particular, air travel and hotel & restaurant activity was previously seen to still be well below pre-COVID levels—which didn’t really jibe with witnessed activity in those sectors. And, presto-change-o, those sectors are all now judged to be operating close to, or above, pre-pandemic levels,” explains Porter.
If taking the data revisions at face value, the observed experience isn’t the only thing that doesn’t “jibe” with reality. A host of other data points, from the elevated unemployment rate to the hollowing out of downtown cores, to the contribution of real estate sales to GDP, to inflation—none of these measures make sense in the context of an economy now performing at capacity.
Just confirming but if the data was revised upward, that means there was excess stimulus. If there was excess stimulus, how is it possible inflation and unemployment don’t reflect these factors just a few months later?
Get rid of dem bad vibes and feel the economy, mon.
— Prime Minister Justin Trudeau, an inevitable quote hopefully accompanied by a costume.
The modeling for CPI was changed in 2021 or 2022, I can’t recall. But a lot of unique characteristics in Canada’s CPI measures that the banks warned they were rushing to make changes that will chronically lower CPI.
Has to do with base-year indexing turning into an annual change, which means big increases are followed by excessively large focus on the downturn, and big downturns minimize upturns. All roads lead to lower inflation!
This of course doesn’t help anyone or mean people won’t feel it, but it does mean people will suffer the consequences and the gov can just say, it doesn’t matter how you feel, the
“data” shows you’re wrong.
Gaslighting.
The gov didn’t need a real estate bailout this year since the slowdown in home sales had virtually no impact on the economy? Because that’s the way this sounds.
The last paragraph captures my questions to a tee. How does this data get revised if the rest of the data looks so incredibly bad?
Any stats under the current corrupt regime are fudged to suit an upcoming election. A vibe cession?! It’s in our heads lol. GDP has shrank the last 6 quarters. Bank accounts are empty. Canadians are heavily indebted worse than pre pandemic. Influx of uncontrolled immigration skews facts. Not buying into any of this. Canada needs leadership that doesn’t act like a never ending frat party. Time for adults to take the helm.
Feel so much better now thar they’ve rewritten some made-up numbers. Everything’s OK. Back to spending 2X more than I earn.
so true …:))
It will be interesting to see how the GDP will be improved after Trump slaps tariffs on Canadian imports.
Canada is back!!!!
Now cut rates to 0%