Canada's economy unexpectedly entered a technical recession after Statistics Canada reported that gross domestic product was flat in the first quarter. This marks the second consecutive quarter of contraction, following a downwardly revised 1.0% decline in the fourth quarter of 2025.
The result significantly missed economists' consensus expectations for 1.5% annualized growth. The stall in economic activity was attributed to weakness in government spending and housing, as well as higher imports of gold dragging on the headline figure. Despite meeting the technical definition of a recession, some economists noted the underlying details suggest the slowdown is not severe, pointing to it as a "trade-induced" event that may already be reversing.
Market Impact: The event's direct impact was centered on Canadian markets. U.S. equity futures remained positive, with S&P 500 Futures up 0.19%, Nasdaq Futures up 0.34%, and Dow Futures up 0.62%. Bitcoin and Ethereum were little changed.