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Should Trump be held accountable in the recession in Canada?
Canada’s economy is slowing ahead of U.S. President Donald Trump’s trade war on “Liberation Day” on April 2. Slower immigration is a key factor that has nothing to do with American politics. Unemployment is rising and average income is falling. Tariffs accelerated a slowdown, increasing unemployment, hurt consumer confidence and wreaking havoc on businesses.
The impact of the impact continues to disappear in the economy, with potential homebuyers worried they will lose their jobs, and businesses suspend expansion plans as they struggle to cope with huge changes in inventory and material costs. Regardless of how long the tariffs last, the uncertainty they create will lead consumers and businesses to rethink their spending plans.
What will happen to the recession housing market?
Although housing prices often fall into recessions, recessions are not always on par with housing collapse. Some economists believe factors such as low housing stocks, limited new supply from builders and strong demand will protect the housing market from the collapse.
Housing prices have fallen in some Canadian markets. Royal Lepage’s Q1 2025 National Housing Market Report found that total home prices in the Greater Toronto area fell 2.7% year-on-year to $1.1 million, while Greater Vancouver homes fell 0.7% to $1.2 million. However, other markets including Quebec City, Montreal, Edmonton and Halifax increased during the same period. Data from RateHub.ca improved in April 2025 in seven major markets including Hamilton, Toronto and Vancouver. (RateHub.ca and Moneysense.ca are both owned by RateHub Inc.) There is no guarantee that these trends will continue, but so far, the recession is good news for potential homebuyers.
Although the United States experienced a housing crash in 2008, the worst situation since the Great Depression, unique factors are still working. The subprime mortgage market has grown significantly, with banks and other financial institutions lending to high-risk borrowers. Lenders are willing to provide loans to almost anyone and popularize such as Ninja loans (“no income, no job or assets”) and “scammers” loans without proof of income. Since then, regulations that prohibit such loans have been implemented in Canada, with the secondary sector still small, and stricter banking regulations have prevented many of the risky behaviors that have led to the collapse of the United States.
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Best investments during recession
A recession in Canada does not necessarily mean a stock market collapse. The economy and the stock market are out of sync. Russell Investment reported that in the past, stock market earnings were positive in 16 U.S. recessions, while earnings in 15 recessions were negative.
Even if a recession triggers a bear market (the market drops 20% or higher), investing is almost always the best strategy because like a recession, a bear market is usually short-lived and can only last 11 months on average.
Investors selling during market volatility will often miss the rise when the market recovers. According to Franklin Templeton, if you invested $10,000 in the S&P 500 in the early 2005, you would have $71,750 by the end of 2024, with an average annual rate of return of 10.35%. But there are 5,033 trading days in these 20 years, if you missed the best day for 10 days, you only have $32,871 with an average annual rate of return of 6.1%, and if you are anxious about the stock market, remember that from 1937 to 2024, the S&P 500 earnings are positive at 67 calendars, or 76% of the time. In the long run, the stock market tends to rise.
