Are We Heading for a Recession?

A Calm, Mostly Serious Look at What's Actually Happening (and Why Instagram Is Not Your Financial Advisor)

It's 10:30 on a Tuesday night. The kids are finally asleep. You're on the couch doing that thing where you tell yourself you're going to bed in five minutes but you're actually going to scroll your phone for another 45. And then it hits you: a post from an account called House of Leaders, complete with a photo from Occupy Wall Street, a chain of doom arrows, and the bold claim that "the same sequence" as 2008 is playing out right now.

Oil spike. Inflation. Rate hikes. Stock crash. Layoffs. Housing crash. In that order. Apparently.

The post tells you to sit on your cash because the "biggest buying opportunity of your lifetime" is 12 to 24 months away. It has 145 saves. Which means 145 people are now building their financial strategy around a carousel made by someone whose credentials are a blue checkmark and a Canva subscription.

Look, I get it. The vibes are off. Gas prices jumped 80 cents in a month. There's a war in the Middle East. The news is using words like "historic disruption" and "stall speed" and "stagflation," which sounds like something you'd catch at a campground with bad water.

So let's actually talk about it. What's happening, what it means, and what you should actually do about it.

First Things First: This Is Not 2008

I need to get this out of the way early because every recession scare gets compared to 2008, the same way every snowstorm gets compared to the one in '97 your uncle won't stop talking about.

I was 19 in 2008. Living in Calgary, just starting to figure out what I wanted to do with my life. I watched people around me lose jobs, lose houses, lose confidence. I remember what that felt like, even from the cheap seats. It left a mark. So I don't take the comparison lightly.

But here's the thing: in 2008, the financial system itself was rotten. Banks were stacking bad mortgages into fancy packages, slapping triple A ratings on them, and selling them to each other like kids trading hockey cards, except the cards were worthless and the entire economy was the table they were playing on. When it collapsed, the plumbing of the global credit system nearly failed. Your neighbour's house went underwater. Banks got bailed out. Everyone else got the bill.

That is not what's happening now. Banks are better capitalized. Lending is still functional. Corporate profits are still positive. Nobody is leveraged 30 to 1 on mortgage products they don't understand. The bones of the financial system are solid.

What we have instead is an oil shock. And while that's serious, it's a very different animal.

So What Is Actually Happening?

On February 28, the U.S. and Israel struck Iran. Iran's supreme leader was killed. In response, Iran did what everyone feared they might: they closed the Strait of Hormuz.

If you're not familiar with the Strait of Hormuz, picture the world's oil supply as a highway system. Now picture one interchange that handles 20% of all traffic on every highway on earth. Now picture someone parking a truck sideways across it and daring anyone to move it. That's essentially what happened.

About 20 million barrels of oil per day normally flow through that strait. Plus a massive chunk of the world's natural gas. Insurance companies pulled coverage for ships, which means even if a captain wanted to run the gauntlet, no insurer will touch it. The tankers are just sitting there, anchored on both sides, like a Tim Hortons drive thru that goes on for miles except nobody's getting their coffee.

Oil spiked to nearly $120 a barrel before settling back into the high $80s to low $100s. The International Energy Agency, which is not an Instagram account but an actual global authority, called this the greatest energy security challenge in history. Not "in recent memory." In history.

Okay But Are We Actually Going Into a Recession?

Here's where I'm going to do something that Instagram finance guys never do: give you an honest answer.

Maybe.

I know. Not exactly the bold proclamation you were hoping for. But anyone telling you they know for certain is either trying to sell you a course or hasn't looked at the data.

Right now the numbers are genuinely mixed, like a weather forecast that says 40% chance of rain. You might get soaked. You might have a perfectly nice afternoon. Bring a jacket.

The recession probability estimates from the people who actually do this for a living range from about 29% to 49%. Moody's Analytics is at 49%. Goldman Sachs is at 30%. A few others sit in the 40% to 45% range. In a normal year, the background probability of recession is around 20%. So yes, the risk is elevated. But elevated is not inevitable.

The U.S. economy lost 92,000 jobs in February, which is bad. But the economy is doing this weird thing where it's running at two speeds. Wealthier households are still spending like it's 2019. Lower income households are getting squeezed hard by prices and interest rates. It's like a tandem bicycle where one person is pedaling and the other person's feet slipped off. You're still moving forward, but it's not exactly stable.

Goldman expects U.S. growth to slow to between 1.25% and 1.75% in the back half of 2026. Economists call that "stall speed." I call it "trying to merge onto Deerfoot in a loaded half ton that's got 400,000 clicks on it." You might make it. But you're not comfortable.

Everything Comes Down to One Thing

Almost all of this, the recession odds, the inflation outlook, the Fed's next move, hinges on one question: how fast does the Strait of Hormuz reopen?

If tanker traffic resumes in the next few weeks, oil prices settle, inflation pressure fades, and we probably skate past recession. Markets bounce. Everyone goes back to arguing about AI stocks instead.

If the closure drags into Q2 and beyond, oil stays above $90 to $100, inflation heats up again, the Fed is stuck in an impossible position (they can't fight inflation and stimulate growth at the same time with one lever), and consumer spending starts to crack. In that world, recession goes from "possible" to "probable."

Corporate executives on a recent call basically set a two week deadline. If the strait doesn't reopen soon, they're planning as if this runs through mid year. These are people who run major companies and their mood right now is: cautious, not panicked, but getting the umbrella out of the closet.

What About Us Up Here?

Canada is in its own special kind of limbo. The economy contracted in Q4 2025. Growth for the full year was 1.7%, the slowest since 2016 outside of the pandemic. The Bank of Canada has already cut rates from 5% all the way down to 2.25% and basically said "that's all we've got," though they'll probably find more if things get ugly. Unemployment is creeping toward 7%.

Alberta, as usual, is playing its own game. The provincial budget projects a $9.4 billion deficit, built on a WTI assumption of about $60 a barrel. Here's a fun number: every single dollar that oil moves changes Alberta's provincial revenue by roughly $680 million. Let that sink in. One dollar. $680 million. Our entire provincial budget is basically a bet on a commodity we have zero control over. It's like building your family budget around how many fish your neighbour catches.

The Iran situation creates a genuine paradox for us. Higher global oil prices help Alberta's bottom line in the short term. But if those prices stay elevated long enough to tip the broader economy into recession, the pain circles back: less spending, less demand for services, businesses tightening up, clients getting nervous. BMO expects Alberta to outperform the national average this year, and our housing market has mostly dodged the correction hitting Ontario and B.C. That's the upside. But we've all lived through enough boom and bust cycles to know that feeling good about oil prices is a temporary condition, like feeling good about the Flames in October.

If you were in Calgary in 2015 and 2016, you already know what an oil driven downturn feels like up close. I watched friends lose jobs in the patch. I watched For Lease signs go up on 17th Ave like they were handing them out at Stampede. That one wasn't caused by a war; it was a plain old price collapse. This time the trigger is different but the vulnerability is the same: we're a world class city built on a commodity we don't set the price for.

If It Happens, How Bad and How Long?

Since World War II, the average U.S. recession has lasted about 11 months. The shortest was two months (COVID). The longest was 18 months (the Great Recession). Oil shock recessions specifically tend to run 8 to 16 months.

Those numbers matter, but here's the number that matters more: the S&P 500 has averaged a 20% gain in the 12 months after a recession ends. And the biggest gains almost always happen while the news is still awful. Every. Single. Time. The market starts recovering before it feels like it should. If you wait until things "feel safe" to put money to work, you've already missed the bus.

This is exactly why the "sit on cash and wait for the buying opportunity" advice is so dangerous. It sounds smart. It feels safe. But timing the market requires you to be right twice: once when you get out and once when you get back in. Almost nobody lands both. The people who do well in downturns are boring. They were prepared ahead of time and they stayed the course. They didn't make dramatic moves or call their advisor in a panic at 9:01 on a Monday morning.

Alright, What Should I Actually Do?

Glad you asked. Because this is the part where we stop talking about geopolitics and start talking about your kitchen table. Here's what smart preparation actually looks like.

Build your cash cushion. Three to six months of expenses, sitting in something boring and accessible. Cash in the bank. Not your investment account, not crypto, and definitely not your buddy's restaurant idea. This is the single most important thing you can do because it means you're never forced to sell investments at the worst possible moment. Think of it as the financial equivalent of a full tank of gas before a snowstorm.

Do not panic sell. This is easy to say right now while you're calm and your portfolio isn't down 20%. It is much, much harder in the moment. So do this: write yourself a note. "I will not sell during a downturn. I have a plan. The plan works. The news is not my financial advisor." Put it somewhere you'll see it. Fridge. Bathroom mirror. Taped to the back of your phone. I'm dead serious.

Kill high interest debt. Credit cards, consumer lines of credit, anything north of 7% or 8%. Every dollar of interest you eliminate is a guaranteed return, and it shrinks your monthly obligations if income takes a hit. Nobody ever regretted going into a recession with less debt. Nobody.

Check your coverage. I'll be upfront: I sell insurance for a living, so take this with whatever grain of salt you need. But I got into this business for a reason. In November 2010, I lost my dad, John Cloutier, in a garage fire. I was 21. Nothing prepares you for that. And one of the things that hits you in the weeks and months after, when the fog starts to lift, is how much of a family's stability is tied to things nobody wants to think about. I started in financial services in 2017, and that experience is a big part of why.

Disability insurance, life insurance, critical illness coverage. If your income is the engine that powers your family, you need a plan for what happens if that engine stops. A recession is a spectacularly bad time to discover you're underinsured. It's like realizing your spare tire is flat when you're already on the shoulder.

Make sure your advisors are actually talking to each other. This is the one that quietly costs people the most. You've got an investment person here, an insurance person there, an accountant somewhere else, and nobody is looking at the full picture. In calm markets, that's an inconvenience. In volatile markets, that's where blind spots become expensive. If one hand doesn't know what the other is doing, you've essentially got a hockey team where nobody knows the play. It might work when you're up 4 to 1 in the third. It won't work in overtime.

If you own a business, stress test your numbers. What happens if revenue drops 20% for three months? Can you cover payroll? Can you keep the lights on? Run those scenarios now, while you're thinking clearly and your heart rate is normal. The middle of a crisis is a terrible time to do math for the first time.

The Bottom Line

We are not in a recession today. The data doesn't support it. But the risk is real, it's elevated, and it's primarily driven by an oil shock that is genuinely historic in scale. The next 30 to 60 days will tell us a lot about which direction this goes.

Here's what I believe: the people who come through uncertain times in good shape are not the ones who predicted the future correctly. They're the ones who were ready for more than one version of it. They had cash. They had coverage. They had a plan. And they didn't blow it up because a guy on Instagram told them the sky was falling.

The sky is not falling. It might get cloudy. That's a meaningful difference.

Get your umbrella. Check your tires. Top up the tank. And if someone on social media tells you they know exactly what's coming next, remember: the last guy who claimed to predict the future for a living was the psychic at the Stampede midway, and he didn't see the funnel cake lineup coming either.

You'll be alright. Just be ready.

David Cloutier is the Co-Founder of Five Ridge Financial, an Alberta-based insurance and financial strategy firm that helps families and business owners connect the dots between their advisors, their coverage, and their goals. If you want to talk about what a potential downturn means for your specific situation, reach out at fiveridgefinancial.com.