Is 'holding the course' putting Canada in recession?

While for obvious reasons the effects are felt most strongly in Alberta, they are being felt across the country.

Solid growth to come

Finance Minister Joe Oliver also appeared on The House this week, denying a recession has taken hold.

He said he believes there will be "solid growth for the full year," in 2015, but concedes the first half will be rough.

"I think people understand the recent economic data is a result of externalevents," Oliver said.

There is no denying that despite being a major economic driver in this country, Canada's oil sands did not cause the collapse in global oil prices.

Similarly, while a great many Canadians can trace their roots back to Greece, this country has no influence over the looming Grexitand the uncertainty it brings but is caught up in the market turmoil nonetheless.

However, that's not to say there's nothing the Conservative government can do but sit back and watch.

"When people are talking about the economy slowing down, everybody is looking at the Bank of Canada to save the day," said Benjamin Tal, deputy chief economist with CIBC.

Virtually the onlytool in the central bank's toolbox to crank up a lagging economy is to cut interest rates.

Tal argues such a move would have limited impact in this environment.

Been there, done that

In January, Bank of Canada Gov. Stephen Polozcaught many off-guard when his bank's key lending rate was cut by a quarter point. However, retail banks didn't pass it along, meaning it made no difference for consumers.

Even if the next potential reduction is passed along,with interest rates already so low Tal doubtsanother 0.25 per cent reduction will bring a flood of new borrowed money into the market.

In the choice between two evils, a narrow deficit or shallow recession, and Tal says the deficit is way to go.

"I believe, when you have the situation where you have this shock ... when you need some help maybe a small deficit is the right thing to do," he said in a recent interview. "Especially when the ability of the Bank of Canada to save the day here is being compromised."

Economy vs. politics

Of course, Tal is an economist, not a politician.

The Conservatives have, and will continue, to campaign hard on the claim of being the strongest stewards of the economy.

The proof they hold up? They balanced the budget this year as promised.

Of course we'll find out in August when the GDP numbers for June are released whether in cinching tight the purse strings to preserve the slim projected surplus, the Conservative government stood by and watched as external factors pushed the Canadian economy into recession.