Politics·Analysis

Recession talk looms over federal election campaign plans

The 90 or so days until the election present numerous opportunities for the opposition to remind Canadians the economy appears to be slowing to a crawl. The governing Conservatives wanted to make the election all about the economy, so how would that work if the country is in recession?

New numbers in September will paint clearer picture — but parties will have their own spin

Construction workers build new homes in Ottawa this month. The 90 or so days until election day will be filled with economic news, which the political parties will try to mould to their advantage. (Sean Kilpatrick/Canadian Press)

If you're sitting in the Conservative Party war room right now,the summer's remaining days hold the depressing possibility of one reminder after another that the economy is faltering.

GDP numbers, manufacturing statistics, labour force surveys and, on Sept. 1, the second-quarter Canadian economic accounts. Days of news that risk telling a negative story about threats to Canadian pocketbooks.

On Wednesday, Canadians got another set of those numbers. The parliamentary budget officer updated the 2015 budget outlook based on the decline in GDP and projected a $1-billion deficit for 2015-16. On the surface, that conflicted with the Finance department's announcement earlier in the day of a $3.9 billion surplus for the first three months of the fiscal year, but the PBO was projecting forward while Finance was looking back.

The possibility of a deficit aside, the question for political strategists is whether the second quarter numbers will show Canada is in a recession, and, if so, how a recession would play out during the campaign.

For anyone who's been around for a couple of elections, heading into an October vote with the economy slowing will feel eerily familiar.

In 2008, Canadians went to the polls as a recession was getting underway, though it wasn't official by the time voters cast their ballots that Oct. 14. The party leaders were still able to debate what exactly was happening to the economy.

Conservative Leader Stephen Harper denied it was happening.

"The only way there is going to be a recession is if they're elected, and that's why they're not going to be elected," Harper said of the Liberals at the time.

Economy a liability for Conservatives

Of course, Harper won that election, and then another in 2011, earning a majority government. Now he's got almost 10 years of leading the country behind him, something the Conservatives will argue makes them the only party qualified to lead Canada through the current downturn.

But the New Democrats and Liberals are using the same record to try to convince Canadians that it's time to try something new.

Prime Minister Stephen Harper has sold himself in past elections as the best manager of the economy, including in tough times. That message could be tested this fall. (Clement Allard/Canadian Press)

NDP finance critic Nathan Cullen says a faltering economy means the Conservatives have lost much of what they were counting on to carry them through the election.

"What was a strong card for them is becoming a liability — so they're grasping," Cullen said.

"We were trying six months ago to, as they say, skate to where the puck is going to be, and the numbers that we were getting from economists were showing us that job creation was going to be the big issue and that the economy was likely much weaker than the government was pretending. So every policy we've announced was through that filter."

The Liberals will refer to their record pre-2006, when they first lost to Harper, while the NDP will refer to the various provincial NDP governments that produced balanced budgets.

Liberal deputy leader Ralph Goodale, the last Liberal finance minister, says Harper has the worst record on economic growth of any Canadian prime minister since the 1930s.

"That is just simply a travesty considering the very healthy and buoyant situation that he inherited in 2006," Goodale said.

"[Harper] put the country back on the verge of a deficit again before — not because of — before the recession landed in the fall of 2008."

Economic perception delayed

The Conservatives didn't respond to several requests for comment. But speaking on CBC News Network's Power & Politics this week, the parliamentary secretary to the minister of finance said the government is "still on track to achieve a surplus this year."

"The parliamentary budget officer in his [deficit projection] calculations did not take into consideration the surpluses in April and May, because that information simply wasn't available at that time," Andrew Saxton said.

Pollster David Coletto, CEO of Abacus Data, says the public's perception of the economy is usually delayed, and people have to feel the recession before it starts to affect their views of the political parties.

The Canadian dollar is at its lowest point in almost 11 years. (Mark Blinch/Reuters)

"Even though economists and Stats Canada are saying the economy's contracting one month to the next … there are mixed signals coming out," he said.

"You have to hear a lot about it in the news, and I think you also have to see it on the ground either personally or among colleagues or friends or family."

Thursday brought a sliver of good news, with numbers showing Canadian retail sales hit a record high in May.

Still, with three months to go until voters cast their ballots, bad economic news has time to sink in. And if a turnaround is in the cards for the third quarter, as the government maintains, that news may not permeate in time to keep the Conservatives in office.

Follow @laura_payton on Twitter

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