Lessons from Past Recessions to Inform Present Trends
With many economists predicting a soft landing for Canada instead of a full recession, this report compares the current socio-economic climate to that of the 1980s, and predicts that some segments of the Canadian economy will recover quickly and be spared from harsh economic outcomes, but that others will suffer through a more extended decline.
The report goes through a number of similarities between the early 1980s and today, namely:
- Interstate conflict
- Weapons of mass destruction
- Oil price shock
- Inflation
- Increased interest rates
However, it also highlights significant differences between the 1980s and today that point to the possibility of an uneven distribution of the negative impacts of a recession, including:
- The spread of viral disease
- Increased debt levels (sovereign, corporate and personal)
- Shifting demographics (median age of 21 vs. 62)
- Low unemployment levels
- Gaps in supply and demand of housing
- Power shifts from the G7 to the BRICS countries
- Increased cyber dependency and cyber breaches
- Climate change-induced extreme weather events
- Increased wealth and digital disparity
According to the author, some sectors, industries, or groups of people may experience strong growth while others continue to decline. This is commonly known as a K-recession, which is not all bad for Canada’s financial sector, but does carry certain risks.
Related report: A Global Risks and Trends Framework (GRAFT): Overview