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Canada’s economy is gathering momentum heading into 2024. Unfortunately, it’s in the wrong direction.

With the Bank of Canada holding interest rates at the highest levels since 2001 and inflation still running slightly ahead of the central bank’s target range, squeezed households and businesses have pulled back their spending, slowing the economy to stall speed. In October, real gross domestic product was unchanged, Statistics Canada reported just before Christmas, falling short of the 0.2-per-cent growth economists had expected.

October marked the fifth month in a row that the Canadian economy failed to post positive month-over-month growth, economists at National Bank of Canada NA-T noted in a report this week. Going back to 1997, that has only happened twice before: During the 2008-2009 financial crisis and in 2015, after the collapse in oil prices brought Alberta’s economy to a halt.

“The reality is that the Canadian economy is in the doldrums,” the report said. “This is a bitter setback as population growth remains staggering.”

The report found another cause for concern in the latest economic numbers. What growth did occur was concentrated in government-related sectors such as public administration, health and education. When those are stripped away to focus on the private sector, more than two-thirds of sectors posted stagnant or negative growth over the previous six months, something that has only happened during the past two recessions.

For its part, National Bank is the only one of the Big Six banks that foresees two quarters of back-to-back negative real GDP growth next year – the definition of a technical recession – starting in the first quarter.

Decoder is a weekly feature that unpacks an important economic chart.

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