March 31, 2016 11 am eastern time

Statistics Canada reported today that GDP rose a huge (assuming it’s not an annualized figure) 0.6% in January and rose 1.5% year over year.

Some of the figures may be rather puzzling. They report that GDP of the mining, quarrying, and oil and gas extraction sector fell only 1.6% since January of last year. If you thought that the value added dollars generated by those industries must have fallen a LOT more than 1.6%, you are absolutely correct.

GDP is growth is virtually always reported in real terms reflecting volume rather than dollars. For the country overall you then need to add some measure of inflation to get to GDP growth in actual current dollars.

In 2015, the oil and gas industry faced MASSIVE deflation in the prices of their products. The GDP of those industries measured in current dollars has clearly fallen by a HUGE amount (30%? more?).

Even for the country as a whole, I am told that the measure of inflation that they use (and industrial inflation is different than consumers inflation) was probably negative in 2015.

The bottom line is that the GDP figures being reported in “chained 2007 dollars” are overstating the growth in the economy as measured in current dollars and for some industries like oil and gas are vastly overstating the growth (or understating the decline). This is not Statistic Canada’s fault. It is just a result of what is happening in the economy. Also I have looked into it and there are valid reasons why Statistics Canada cannot report GDP by industry in current dollars except after a lengthy lag to collect the data.

So, I’d like to get excited by this positive GDP report, but  the reality is that Canada’s GDP in actual 2016 dollars likely fell in the past year (though it likely rose in January to be sure).