All that recession talk just got real. Statistics Canada reported that gross domestic product dropped at an annual rate of 1.1 per cent in the third quarter, much weaker than the Bank of Canada predicted in its most recent forecast. 

One bad quarter doesn’t herald a significant downturn, especially with the jobless rate at 5.7 per cent, a low mark by historical standards. That will depend on whether businesses, households and their creditors opt to push through the headwinds from higher interest rates or decide to retrench. 

Here are key numbers to consider to help navigate the months ahead: 

1.4%: That’s the revised annualized growth rate for the second quarter, much better than the small drop in output that StatCan originally reported. The most basic definition of a recession is two consecutive quarters of negative growth. We’re not there yet. 

1.3%: The latest reading for “final domestic demand,” which tallies household consumption, investment and government spending. It’s a cleaner measure than GDP, which is heavily influenced quarter to quarter by inventories and exports—items that are determined by a myriad of factors. StatCan data showed that “final domestic demand” increased at an annual rate of 1.3 per cent in the third quarter, little changed from 1.2 per cent in the previous period. The economy still has momentum. 

5.1%: The household savings rate rose to 5.1 per cent, the highest since the fourth quarter of 2022. Surveys show that consumer confidence is weak, so the elevated savings rate suggests households are preparing for a rough turn of events—like having to reset mortgages at a higher rate over the next year. That’s a drag on growth in the short term, but it signals resiliency over the longer run. Households are creating a buffer. 

5%: The Bank of Canada left its benchmark interest rate unchanged at five per cent at its last two meetings in September and October. Unambiguous evidence of slower growth guarantees the central bank will opt for a pause again at next week’s rate decision. Interest rates probably have peaked, and central bankers soon might be able to consider cuts.