As economic signals flash red, a leading economist warns of turbulent months ahead — and thousands at risk of unemployment.
Toronto, May 26, 2025 — A storm may be brewing for the Canadian economy. According to recent warnings from David Rosenberg, a prominent economist and former chief strategist at Merrill Lynch, Canada is heading toward a recession that could result in the loss of over 100,000 jobs in the coming year.
In comments covered by The Economic Times (source), Rosenberg highlighted several key indicators that suggest a downturn is already underway.
“The country is not entering a recession — it’s already in one,” Rosenberg told media outlets, noting that early signs have been visible since late 2024.
What’s Driving the Recession Fears?
The main culprits? High interest rates, falling consumer spending, and declining business investment.
The Bank of Canada’s aggressive rate hikes aimed at taming inflation appear to have come at a cost. Higher borrowing costs are straining households and businesses alike. Mortgage defaults are creeping upward, and companies are beginning to freeze hiring or reduce headcounts.
Recent data from Statistics Canada supports Rosenberg’s outlook. The economy shrank by 0.3% in Q1 2025, and unemployment ticked up from 5.8% to 6.1% in April.
“The labour market is starting to show cracks,” said economist Dana Ferguson from the University of Ottawa. “Retail, construction, and tech sectors are particularly vulnerable.”
What 100,000 Job Losses Would Look Like
Losing 100,000 jobs in a country of just under 40 million would represent a significant economic shock. That’s the equivalent of wiping out the entire workforce of a mid-sized Canadian city like Kelowna or St. John’s.
Such job losses could have ripple effects — lower consumer spending, rising demand for social services, and increased mortgage stress — all of which would feed back into the broader slowdown.
“This isn’t just a correction. It’s a structural recalibration,” said Rosenberg.
Who’s at Risk?
Not all sectors will be hit equally. Economists warn that:
- Retail and hospitality are typically first to feel the pinch.
- Construction and real estate are suffering from delayed projects and falling home sales.
- Technology companies, especially startups, are struggling to secure funding as investors grow more risk-averse.
- Public sector jobs may also be affected if government revenues decline sharply.
Is There Any Relief on the Horizon?
There are calls for the Bank of Canada to pause or reverse interest rate hikes, especially if inflation continues to cool. But for now, the central bank appears cautious.
The federal government, meanwhile, may need to consider targeted stimulus or employment support programs if layoffs accelerate.
Conclusion: Prepare, Don’t Panic
While the word “recession” often triggers fear, not all recessions are equal. Canada has strong financial institutions and a diversified economy. The key, analysts suggest, is preparation — both for individuals and policymakers.
“This isn’t the time to ignore the signs,” Rosenberg warned. “It’s time to plan ahead.”
Sources:
Bank of Canada. Monetary Policy Report – Q2 2025
The Economic Times. “Crisis coming: Top economist says Canada is entering a recession that could cost 100,000 people their jobs”
Statistics Canada. Labour Force Survey, April 2025
