How NDP, Liberals are helping Stephen Harper exceed expectations on the economy

Conservatives appear to be gearing up to celebrate news the economy is stagnant, because that would be considered good tidings compared with the picture their opponents have painted.

NDP Leader Tom Mulcair has a line he's fond of saying: "Stephen Harper is the only prime minister in Canadian history who, when asked about the recession during his mandate, gets to say, 'Which one?'"

The line plays well with the Conservative leader's detractors. It's short, punchy, easily grasped — however, there's increasing evidence it may not be true.

• Recession confirmed as Canada's GDP shrank in 2nd quarter
• How a recession would shake up the election campaign
• Canada wasn't in a recession before and still isn't now, Joe Oliver says

"I don't believe we were ever in a recession," Harper said in an interview this week.

His now rarely seen finance minister made similar comments on the same day in an interview with The Associated Press.

"We don't believe that the economy was, in fact, in a recession," Joe Oliver said.

Rewriting history

Liberals were quick to pounce on the comments.

They attacked Oliver in a media release, saying he "can't rewrite history."

Here's the odd thing though about economics: history is rewritten all the time.

Statistics Canada regularly revises its economic reports.

It's normal practice as more information becomes available and survey participants revise their own numbers originally provided to the agency.

In fact, Statistics Canada revised its own figures on Sept. 1 when it "confirmed," as the NDP and Liberals put it, a technical recession for the first half of the year.

"Real gross domestic product (GDP) declined 0.1 per cent in the second quarter, following a 0.2 per cent decline in the first quarter," the report states.

No mention of the fact it had just subtly doubled the decline for the first quarter. Why? Because this is normal.

For those who really, really like to delve into the numbers, Statistics Canada recently introduced a new feature: "vintage data."

In one handy table the agency provides each of the revisions it has made to certain data points.

This one shows the GDP numbers originally reported going back to August 2014 and the revisions since.

The second quarter of that year, for example, was revised up by 0.8 per cent over the course of a couple of months before settling on a revision 0.7 per cent. 

Sound like a small difference? 

The definition of a technical recession was met because Statistics Canada reported the second quarter of 2015 shrank by 0.1 per cent.

If in the report to be released next week the first quarter is revised down by that much, or the second quarter up by that much, or the first quarter down by 0.05 per cent and the second quarter up by 0.05 per cent — that technical recession shouted from the rooftops by Harper's opponents for the last several weeks disappears.

In the know

The hints by Harper and Oliver that this may well be the case ought not be dismissed as wishful thinking.

Both remain in their respective cabinet positions during the campaign and members of the Privy Council.

As such, they retain access to the information gathered by government agencies, including Statistics Canada as it prepares next week's report.

In highlighting his discussions with the governor of the Bank of Canada during this campaign, Harper has already reminded Canadians that he remains in regular contact with those whose hands are on the levers of the economy and have the most current information available about it.

None of this is to suggest the Conservatives have "cooked the books" in any way to allow what all politicians hope to do: under-promise and over-deliver.

The NDP and Liberals set the expectations for the governing party; all it's had to do is sit back and watch the numbers trickle out.

The margins of error under debate have always been so narrow that, in economic terms, there really isn't a difference whether the numbers are positive or negative.

It's similar to the posturing on whether the federal government was in surplus or deficit last year.

Much political hay was made as to whether the government posted a $2-billion deficit or a $1.9-billion surplus, but there was little acknowledgement the difference amounts to a margin of error of plus or minus 0.3 per cent of the budget.

Exceeding expectations

The NDP and Liberals hammered the Conservatives repeatedly in the early days of the campaign for running "eight consecutive budget deficits."

The numbers now show that's likely untrue.

Which means Harper now gets to campaign on his economic success because only six of his government's 10 budgets were in deficit.

The NDP and Liberals have warned voters repeatedly that Harper has led us into another recession.

It's looking increasingly likely the numbers won't bear that out, and the Conservatives will be able to boast (weakly) that Canada's economy was flat in the first half of the year.

It's reminiscent of the debate that often takes place at Environment Canada long after the fact as to whether a particularly violent storm met the technical requirements of a tornado.

It matters to those who study such phenomena, but less so to those picking up the debris after one heck of a storm.