It was called the next Great Depression, then dubbed the Great Recession.
Turns out, in Canada it was more like the Average Recession, according to a paper published Thursday.
Canada's 2008-2009 recession was "less severe and shorter" than in other G7 nations, said Philip Cross, chief economic analyst at Statistics Canada and author of its year-end review.
Between the third quarter of 2008 and the third quarter of last year, the country's real GDP in Canada fell 3.3 per cent, compared with 3.7 per cent in the United States and bigger declines in Europe and Japan.
Read more about Canada's recession and why it was less severe than the contractions in other G7 economies
The recession was also shorter than elsewhere. Statscan tentatively says the recession in Canada lasted three quarters - the last quarter of 2008 and the first two quarters of last year, though those dates could be subject to revision. The downturn in other G7 countries lasted anywhere from four to, in the case of the United Kingdom, six quarters.
In Canada, Mr. Cross refers to it as the average recession. "With the declines in GDP and to a lesser extent jobs, this was a notable recession," he said. "But it was less severe than the previous two and markedly less severe than in most other countries."
Employment, too, didn't take nearly the same beating as it did around the globe, nor were job losses as severe as they were in previous downturns. Canada's unemployment rate rose 2.5 percentage points, peaking at 8.7 per cent last summer - a smaller increase than the 4.2-percentage-point rise in the 1990-1992 recession and the 6-percentage-point spike in 1981-1982.
Part of the reason may stem from companies shortening work-weeks rather than laying people off, the report said.
Why did Canada fare so much better than other countries? Healthier balance sheets going into the recession, the report said. Years of booming growth meant companies cut their debt-to-equity ratios to an all-time low. And big government and trade surpluses also helped, by lowering debt levels and bolstering the country's national savings rate.
While Canadian consumers may be lousy savers, the national savings rate - which includes government and corporate debt, had soared to 14 per cent during the commodities boom from 8 per cent in 2002 - acting as a cushion.
Share your experiences in our forums and we'll post a variety of your responses on ReportonBusiness.com
"To the degree that the 2008-2009 global recession originated in balance sheets, strong balance sheets in Canada stood it in good stead to endure the recession and emerge into recovery," Mr. Cross wrote.
He points to other factors that shielded Canada. The flow of credit wasn't disrupted nearly as much as in other countries. And consumers by and large kept spending.
"The recession was shorter and milder in Canada than in other G7 nations, partly because the flow of credit was not disrupted as it was in other nations, and a large pool of savings was available."
The hardest hit sector of the Canadian economy was trade. Export earnings plunged 22 per cent last year as exports took a nosedive. As profits tumbled, businesses slashed investments - spending fell by a record 14 per cent last year, largely in mining and manufacturing.
By an "average" recession, Mr. Cross means it followed a typical pattern for industries during a downturn - like the previous two recessions, manufacturing accounted for the bulk of the decline, along with construction and goods-handling services.
The finance and government sectors, by contrast, have grown during the past three recessions.
The findings, which suggest a milder recession, provide "further evidence that the Bank of Canada will likely start to hike rates relatively soon, especially since they remain at emergency rate levels," said Bank of Nova Scotia economists in a note. "While this increases the risk of a hike next Tuesday, our official forecast continues to look for the first hike to come on June 1st."
The central bank, which has cut its key lending rate to a record low of 0.25 per cent, will announce its rate decision on Tuesday, and will flesh out its views in a monetary policy report Thursday.
Read more about Canada's recession and why it was less severe than the contractions in other G7 economiesReport Typo/Error