A stark warning has been issued by a former Bank of Canada governor, who cautioned that both Canada and the United States are on a path toward recession if current economic trends continue unchecked.
Speaking at a financial forum, the former governor pointed to persistent inflation, high interest rates, and slowing consumer demand as key factors straining North America’s economic outlook. He stressed that while central banks in both countries have tightened monetary policy to curb inflation, the side effects are beginning to take a visible toll on households and businesses.
“The risks are building on both sides of the border,” he noted, highlighting falling investment in housing markets, weaker manufacturing output, and declining consumer confidence as clear signals of trouble ahead.
Canada, in particular, faces additional vulnerabilities due to high household debt levels and its dependence on U.S. trade. With the U.S. economy also showing signs of cooling, any downturn there is expected to ripple across Canadian industries.
The warning comes at a time when policymakers in Ottawa and Washington are grappling with balancing inflation control against the need to sustain growth. Economists say a mild recession could begin as early as next year unless fiscal and monetary strategies adjust to changing realities.
Financial markets have already begun reacting cautiously, with investors weighing the risks of prolonged stagnation against the possibility of recovery if inflation continues to ease.
The remarks serve as a reminder that both Canada and the U.S. remain tightly interconnected, and any economic shock in one country will inevitably affect the other.