Canada Recession 2025: TD Bank Predicts 500,000 Job Losses

Canada is standing at the edge of a potential economic downturn, and the alarm bells are no longer subtle. According to a detailed report by TD Economics, the country could soon experience a significant spike in unemployment and widespread job losses — particularly if current economic challenges persist or worsen.

TD Bank’s economists are projecting a tough road ahead. Their base case scenario suggests unemployment could rise to 6.7% by late 2024, and even higher if a full-blown recession takes hold. In their worst-case projection, the unemployment rate could soar to 9%, translating to over 500,000 lost jobs across the nation.

Why Is This Happening?

Several factors are contributing to the current economic strain:

1. Labour Supply Outpacing Demand

Canada has seen a rapid influx of new workers, including immigrants and young professionals entering the workforce. However, job creation hasn’t kept pace. This imbalance is placing pressure on the job market and slowing wage growth.

2. Rising Interest Rates

The Bank of Canada has kept interest rates higher in a bid to control inflation, but that’s starting to pinch both consumers and businesses. High borrowing costs are leading to reduced investments, fewer business expansions, and overall economic slowdown.

3. Global Trade Pressures

Ongoing trade tensions — particularly with the U.S. — have led to tariffs on major exports like steel, aluminum, and auto parts. These policies are already beginning to affect manufacturing and export-heavy provinces.

The Provincial Impact: Who’s Getting Hit the Hardest?

According to TD, job losses won’t be evenly distributed. Here’s how it breaks down:

Ontario and Quebec: With their strong manufacturing base, these provinces are expected to bear the brunt of the losses.
British Columbia: The construction sector may face cuts as housing slows down.
Alberta: Energy prices and oil sector volatility could lead to reduced hiring or layoffs.
Atlantic Canada: Slower economic growth and limited investment may worsen regional disparities.

Industries Most at Risk

Some industries are more vulnerable than others. TD’s report highlights the following sectors as being at high risk:

Manufacturing
Construction
Retail and Wholesale Trade
Transportation and Warehousing

These sectors are sensitive to consumer spending, interest rate changes, and trade disruptions — all of which are in play right now.

What Do the Numbers Say?

Recent stats reinforce TD's concerns:

Over 33,000 jobs were lost in March 2025, according to national data.
Manufacturing saw 7,000 job cuts in just one month.
Canada’s unemployment rate hit 6.9% in April, its highest in nearly two years.
More than 1.6 million Canadians are now unemployed, up sharply from 2024.

These are not isolated figures — they paint a clear picture of a labour market under serious stress.

What Does This Mean for Everyday Canadians?

This looming recession could affect nearly every household:

Job Security: Even those who are currently employed may face reduced hours or wage stagnation.
Housing Market: As rates remain high and incomes drop, more homeowners may struggle with mortgage payments.
Consumer Prices: While inflation has cooled somewhat, the cost of essentials remains elevated.
Government Benefits: A recession could lead to increased demands for employment insurance and social support systems.

What Is Being Done About It?

The Canadian government has started rolling out targeted support, such as:

Low-interest business loans
Tax deferrals
Enhanced social benefits for vulnerable populations

The Bank of Canada is taking a cautious approach to rate cuts, holding off on any major changes unless the economic situation worsens significantly.

Looking Ahead: Is There a Way Out?

The future is not set in stone. If global trade stabilizes and domestic policies support job creation, Canada may avoid the worst-case scenario. However, TD’s projections should serve as a wake-up call. Now is the time for policymakers, employers, and workers alike to prepare and adapt.

Final Thoughts

The warning signs of a Canadian recession are growing louder. TD Economics’ forecast of up to 500,000 job losses is a sobering reminder of how fragile the current recovery is. Staying informed, preparing financially, and advocating for smart policies could make all the difference in the months ahead.