Canadian Quarterly Economic Forecast 2009

One of my objectives in starting this blog was to keep a record of my own economic forecasts (with the recognition that economists have a fairly pitiful forecasting record). Moreover, I haven't been quite satisfied with my initial crack at forecasting the Canadian economy in 2009. Here I present a revised quarterly forecast (though I'll stand by my original numbers for the contest).

As shown in the table, I am forecasting that the economy will be in recession for at least 3 quarters, from 2008Q4 to 2009Q2 with a real possibility of the recession extending into 2009Q3. Importantly, this forecast assumes government stimulus of 0.5% of GDP in 2009Q3 and 0.5% in 2009Q4 - that is, a stimulus package proposed in the January budget will take several months to impact the economy. This is an entirely arbitrary assumption, but one I can live with. Based on the most common number thrown around in the media I've assumed total stimulus of 2% of GDP, spread equally across four quarters (this is almost certainly wrong but maybe close enough). Without this stimulus, I would project that the recession would last through 2009Q4.

Without further ado, I present the inaugural Shock Minus Control forecast:












So how does my projected 2009 recession compare with past Canadian recessions? If my forecast is close, it should be fairly deep but perhaps not as drawn out as 1981 or 1990: