The R-word, as in recession
There is one word that the Trudeau government does not yet dare to utter.
We touch it, but we do not breathe the word in question yet: recession.
good cop bad cop
Justin Trudeau and Finance Minister Chrystia Freeland are playing good cop bad cop on this subject.
Mme Freeland is increasingly pessimistic about the economic outlook, while the prime minister still has one foot in his sunny ways.
Asked yesterday whether he foresees a recession, Mr. Trudeau replied that his government will continue to help those in need, unlike the Conservatives.
His Minister of Finance, the day before, made much darker remarks.
The next few months will be difficult, the unemployment rate is likely to increase, we will not be able to help everyone, because it would only make the problem worse, said Mme Freeland.
An unnatural change of course for a government that has prided itself for seven years on having its heart on its sleeve.
The Liberals have always wanted to have the butter and the money for the butter. The structural deficits predate the pandemic.
They are now faced with an impossible choice, between recession and inflation. Between the high cost of living and an economic slowdown, hoping for a return to normal.
All of this is very bad politics.
Especially for an aging government whose leader’s economic credibility is far from established.
The Poilievre Oracle
For the Liberals, from the point of view of the message, the arrival on the scene of Pierre Poilievre complicates things.
Mr. Poilievre has been talking about controlling spending and the risk of inflation since long before it got out of hand.
He has the fine role today of presenting himself as a kind of oracle who saw everything coming.
This saves him from explaining how he would have helped workers and businesses to keep their heads above water during the pandemic.
Still, the Bank of Canada has given him ammunition by admitting that the pandemic economic stimulus measures have gone on too long, contributing to inflation.
Lessons from 2008
Canada is not alone in blowing hot and cold on what lies ahead.
« I think the bosses of international institutions, central banks and finance ministries are struggling to be sincere about the prospects of a recession next year, » said economist Kevin Page.
The last time Canada entered a recession was in 2008.
Are there lessons to be learned from this crisis?
Mr. Page, who was the Parliamentary Budget Officer at the time, sees some of that.
One, recognize that there is a problem. It’s simple, but against nature for a government.
« If I recognize that things are going badly, I have the reflex to tell myself that my plan is going badly, » Yan Plante, a curator who was behind the scenes of the 2018 crisis, told me.
Two, transparency. Report regularly to Parliament and the population on the state of the situation.
In short, speak frankly to Canadians as if they were adults, to make a change.