Will Ottawa call a recession? What to expect from the feds’ fall economic statement – National

Finance Minister Chrystia Freeland is set to give the government’s outlook for the economy and its own spending plans in the fall economic statement on Thursday as inflation stays hot, interest rates rise and rumblings of recession grow louder.

While Freeland has promised to share a fiscal forecast with “some precision” about the storm clouds gathering on the horizon, experts who spoke to Global News expect the government will “hedge” its bets and avoid big spending commitments heading into uncertain economic times.

Here’s what to know as the feds prepare to chart a course through choppy economic waters.

Heading into the fall fiscal update, the government’s books are “looking very good,” according to Randall Bartlett, senior director of Canadian economics at Desjardins.

The government’s actual deficit for the 2021-22 fiscal year was much improved from the feds’ own projections. In the spring budget, the feds expected a deficit of $113.8 billion for the last fiscal year, but actual figures from Public Accounts Canada released last week came in at $90.2 billion.

Desjardins expects the federal deficit will continue to shrink down to $20.6 billion for 2022-23 — well below Ottawa’s $52.8 billion deficit forecast in Budget 2022. The Parliamentary Budget Office also recently forecast a reduced deficit of $25.8 billion.

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Expect even tougher times in 2023, warns Eurasia Group’s Ian Bremmer

Bartlett says that while some of the improved picture is thanks to lower government spending, a great deal of the boost is thanks to higher tax revenues.

The government has a perhaps unlikely source to thank for the rosier fiscal position — rampant inflation.

As inflation pushes up the costs of goods, the government derives greater revenues from taxes as a portion of those…