Emanuella Enenajor likely caused more than a few politicians to choke on their Stampede pancakes last week.

The analyst with Bank of America Merrill Lynch was the first from a major financial institution to utter the dreaded R-word — recession.

Two consecutive quarters of decline are what the textbooks define as a recession.

Stuck in a 'funk'

Statistics Canada has already told us GDP shrank by 0.6 per cent in the first quarter of 2015, and slid a further 0.1 per cent in April.

Enenajor has seen nothing to indicate May or June — the last two months of the second quarter — were any different.

"We're stuck in a bit of a funk," she said in an interview with CBC's The House.

The oil shock has taken its toll on jobs, unemployment, economic development and the like.

From beneath his black Stetson at the annual Calgary Stampede parade last week, Prime Minister Stephen Harper kept his cool and even reckoned he'd seen worse.

"I've been in [Alberta] for 36 years now — I've seen a lot worse dips in the oil sector than this — and I am very confident the city and the province will bounce back quickly," he told reporters.

While for obvious reasons the effects are felt most strongly in Alberta, they are being felt across the country.

Solid growth to come

Finance Minister Joe Oliver also appeared on The House this week, denying a recession has taken hold.

He said he believes there will be "solid growth for the full year," in 2015, but concedes the first half will be rough.

"I think people understand the recent economic data is a result of external events," Oliver said.

There is no denying that despite being a major economic driver in this country, Canada's oil sands did not cause the collapse in global oil prices.

Similarly, while a great many Canadians can trace their roots back to Greece, this country has no influence over the looming Grexit and the uncertainty it brings — but is caught up in the market turmoil nonetheless.

However, that's not to say there's nothing the Conservative government can do but sit back and watch.

"When people are talking about the economy slowing down,  everybody is looking at the Bank of Canada to save the day," said Benjamin Tal, deputy chief economist with CIBC.

Virtually the only tool in the central bank's toolbox to crank up a lagging economy is to cut interest rates.

Tal argues such a move would have limited impact in this environment. 

Been there, done that

In January, Bank of Canada Gov. Stephen Poloz caught many off-guard when his bank's key lending rate was cut by a quarter point.  However, retail banks didn't pass it along, meaning it made no difference for consumers.

Even if the next potential reduction is passed along, with interest rates already so low Tal doubts another 0.25 per cent reduction will bring a flood of new borrowed money into the market.

In the choice between two evils, a narrow deficit or shallow recession, and Tal says the deficit is way to go.

"I believe, when you have the situation where you have this shock ... when you need some help maybe a small deficit is the right thing to do," he said in a recent interview. "Especially when the ability of the Bank of Canada to save the day here is being compromised."

​Economy vs. politics

Of course, Tal is an economist, not a politician. 

The Conservatives have, and will continue, to campaign hard on the claim of being the strongest stewards of the economy.

The proof they hold up? They balanced the budget this year as promised.

Of course we'll find out in August when the GDP numbers for June are released whether in cinching tight the purse strings to preserve the slim projected surplus, the Conservative government stood by and watched as external factors pushed the Canadian economy into recession.


  • The subhead on this story has been edited from an earlier version that attributed the comments of an economist in the story to economists plural.
    Jul 10, 2015 2:50 PM ET