A report released Tuesday revealed that the United States’ largest trading partner could already be in a recession.
Statistics Canada, a key public sector research arm, said that the country’s gross domestic product decreased by 0.1 percent in April.
Since the new year, the Canadian economy has contracted every month—a trend caused by falling energy prices.
A country is considered officially in recession if its GDP shrinks every month for a half-year.
Any continued stagnation in Canada will spell bad news for American workers. In 2014, Canadians purchased $312 billion worth of American goods—more than any other nationality in the world, according to the Census Bureau. The total volume of trade between US and Canada was worth $658.1 last year.
It could also cause the Federal Reserve to reconsider raising of key interest rates, which it is expected to do later this year. At an event last week, Fed Board Governor Jerome Powell said that “if global growth weakens…that will be a big headwind for the United States economy” and also noted that when “the dollar increases in value, then…we will grow more slowly and monetary policy will react accordingly.”
US policymakers are already grappling this week with economic crises in Greece and Puerto Rico. At a daily press conference, White House Press Secretary Josh Earnest claimed that “US exposure to Greece is small, in terms of our direct exposure,” while saying, in response to another question, that “we do remain committed to working with Puerto Rico and their leaders as they address the serious challenges.”
It is believed that the US commonwealth is unable to pay some $72 billion in debts. Earnest said that a bailout of Puerto Rico isn’t currently on the table.
