Economic trends are very difficult to predict accurately – which is why they are sometimes wrong. What we do know however is that since World War 2, recessions have generally occurred every 5-10 years, following general business cycles.
Below is a chart I assembled that shows the unemployment rate in the Province of Ontario for every month since January 1976.
The red line represents Ontario’s unemployment rate, while the grey blocks represent the duration of recessions since the 1970s. What is clear is that there have been 4 recessions, roughly 10 years apart from each other since 1976. During the recessions, we see the unemployment rate rising, with some fairly pronounced spikes in the early 1980s, the early 1990s and the recession of 2008/2009. Interestingly enough, the dot com bubble of the 2000s wasn’t as severe in terms of its impact on the unemployment rate in Ontario.
- One positive trend I take away from this chart is the consistent and resilient recoveries following each recession
- One potentially ominous trend I take away from this chart is that it appears like a recession is right around the corner, and could occur in 2018 or 2019
But as the first line of this article states, economic trends are very difficult to predict accurately, and I didn’t undertake any technical analysis to arrive at my assumption/prediction, therefore keep in mind that I could be wrong.