Is the Canadian economy booming or in recession? A newly released employment report once again leaves people confused.

The adjusted February wage employment data released by Statistics Canada on Thursday (April 24) presents a "Schrödinger" phenomenon - showing an increase of nearly 80,000 jobs, setting a record in years; but the unadjusted data shows a decrease of 370,000 positions.

Is this a recovery of the job market or a recession signal triggered by trade wars?

Strong Surface: Nearly 80,000 New Jobs, the Largest Employment Increase in a Decade

Let's first look at the encouraging side.

According to Statistics Canada's seasonally adjusted data, the national wage employment increased by 79,900 people in February 2024, a growth rate of 0.5%, reaching a total of 17.4 million people. This is not only a rare strong growth since the pandemic but also the largest increase in February in nearly ten years.

This impressive number seems to completely refute various concerns about the impact of the trade war, economic slowdown, and public hardship at first glance.

But is it really like that?

Unadjusted Data: A Reduction of 370,000 Jobs, Is the Data Closer to Reality?

If we look at it from another perspective - that is, unadjusted data - it paints a completely different picture.

The unadjusted data reveals that the national wage employment decreased by about 370,000 people in February, a decline of 2.1%, with the total number falling to around 17.1 million.

Compared to last year, the decline was larger - reaching 2.6%, and even 2.8% in 2023. This means that although there appears to be job losses, from a historical perspective, February this year "didn't fall much," making it an unexpectedly strong month.

"Over-seasonal adjustment"? Why is there such a huge gap between employment data and public perception?

This inevitably raises a question: Is it "the data problem" or "our understanding of reality problem"?

As we all know, Statistics Canada usually adjusts employment data for "seasonality" - because a certain scale of job losses occurs every winter, while summer is the peak hiring season. Through adjustments, long-term trends can be seen more clearly.

However, problems arise when economic recessions, monetary stimulus policies, and atypical consumer behaviors (such as buying houses in winter) are difficult to predict accurately seasonally, leading to the so-called "over-seasonalization" phenomenon. In other words, adjusted data may amplify some unusual fluctuations.

In February this year, seasonal adjustments increased employment numbers by 1.9%. Although this growth rate is slightly smaller than 2.0% last year and 2.1% the previous year, it is still a significant figure.

Has the "Crisis" Not Arrived Yet? Or Does It Not Exist?

From a macro trend perspective, Canada's economy does face challenges. The sluggish housing sales, slowdown in the construction industry, and layoffs in the automotive manufacturing sector do exist.

However, these negative signals are still within "controllable limits" and have not significantly exceeded fluctuations in previous years. This has left many professional economists puzzled - are the media and politicians exaggerating the crisis, or are the employment data failing to reflect real issues?

Schrödinger Economy: Both "Prosperous" and "Collapsed"?

Some commentators point out that Canada's political scene is currently in a peculiar "Schrödinger economy" state - politicians promote both the bright economic data and their outstanding achievements, while simultaneously pushing for new economic stimulus and fiscal spending under the guise of an "emergency crisis."

More ironically, the general public's actual feelings are often based more on "emotional expectations" rather than actual data. That is to say, without overwhelming "recession warnings" from the media, many people might feel satisfied with the current employment situation.

But once negative emotions dominate, they could in turn affect consumption, investment, and market confidence, thus forming an "self-fulfilling" economic downturn.

Canada's employment market data is both a strong rebound and a "illusion of adjustment."

Looking at the numbers alone, it seems to show hope for steady economic recovery; but if we consider actual feelings, the shadow of crisis still hasn't dissipated.

For ordinary people, what truly matters are prices, job opportunities, and stable income, regardless of how complex the numbers may be. We may not be able to control the direction of the macro-economy, but we can stay clear-headed amidst confusing information and see the logic and trends behind it.

Original Source: https://www.toutiao.com/article/7497035338491101731/

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