David Rosenberg said it's growing increasingly likely Canada will fall into a period of recession in the near-term as the headwinds against the economy continue to stack up.

“Compounding all the other issues on the supply side globally is this energy squeeze we’re seeing,” said Rosenberg, chief economist and strategist at Rosenberg Research, in an interview Thursday.

“This is a huge margin squeeze for most producers, and it’s a huge hit to the purchasing power for the 70 per cent of the economy, otherwise known as the consumer.”

Those other issues he’s referring to include global supply chain disruptions, concerns about inflation running too hot, and labour shortages, not to mention the still present threat of COVID-19 outbreaks and business restrictions.

His comments come in a volatile week for energy prices, amid robust oil inventories in the U.S., and as Russia offered to help ease Europe’s natural gas crisis.


Globally, the big issue is Europe’s ongoing energy crisis, marked by natural gas futures falling more than 23 per cent early Thursday.

These factors all add up to elevated, albeit volatile energy prices for the foreseeable future, said Rosenberg.

“Energy price run-ups that we’re seeing right now is being led by a major supply squeeze,” he said, dismissing a two-day retreat in prices as temporary. “All the past seven recessions that we saw were followed by a surge in energy prices which we’re seeing right now.”

“At a minimum it’s going to drive economic growth down to levels that are around one per cent, that’s going to feel like a recession.”


In addition to the current energy situation, consumer price appreciation continues to be a subject of great concern for economists. Rosenberg said he remains in the transitory camp, in other words, he thinks price pressures will be short-lived, but admits it’s been an issue longer than he expected.

“It’s certainly evident that transitory is not weeks, it's not even months,” he said. “It’s going to last so long as the pandemic is still with us. The two are hitched together.”

Looking south of the border, Rosenberg said the U.S. economy also has some serious hurdles to clear in the coming months, adding that if Friday’s non-farm payroll numbers from the U.S. Bureau of Labor Statistics are decent, the U.S. Federal Reserve will begin tapering asset purchases.

“Markets are going to start realizing you no longer have the Fed as an investor,” said Rosenberg. “We’re going to have some significant fiscal withdrawals in the United States. I think the infrastructure bill is going to be much smaller than previously advertised, and the era of stimulus cheques is behind us.”

Looking ahead to 2022, Rosenberg said it’s going to be a challenging year. 

His fellow economists are predicting Canadian GDP growth of three to four per cent, he said. Rosenberg, meanwhile, is predicting economic growth somewhere in the one to two per cent range.