Mike Moffatt, an assistant professor at the University of Western Ontario’s Ivey School of Business and a fellowCanadian Business columnist, has taken it upon himself to popularize “statutory recession.”
It is a dig at the Federal Balanced Budget Act, which Prime Minister Stephen Harper made law weeks before triggering this year’s forever election campaign. Harper’s fiscal straightjacket threatens cabinet ministers and senior bureaucrats with a pay cut if they oversee a deficit. One of the few escape clauses is a recession, which the statute defines as “a period of at least two consecutive quarters of negative growth in real gross domestic product as reported by Statistics Canada under the Statistics Act.” Canada’s GDP contracted at an annual rate of 0.5% in the first quarter, and shrunk 0.8% in the second quarter, according to StatsCan. Voila, “statutory recession.”
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