Forecasts
March 21, 2025
Long-Term Forecast
Canadian economic growth is expected to run below trend in 2025 and 2026, before finding greater balance in 2027. Slowing population growth and the impact of tariffs on business and consumer sentiment are the drivers of lower growth. Consumer spending had been improving on lower interest rates, but we expect this to act as a drag on growth as higher prices cut into spending power. This has the unemployment rate moving above its long-run level until 2027.
March 19, 2025
Provincial Economic Forecast
We’ve slashed our real GDP growth forecasts for this year from coast-to-coast, reflecting the impact of the Canada-U.S. trade war. Solid Q1 activity across regions will buffer annual averages, but we foresee a mild recession unfolding for Canada in the middle-part of this year.
March 18, 2025
Canadian Quarterly Economic Forecast
Once again, policy shifts from the Trump administration are the main forecast theme this quarter, underpinning a downgrade to the global outlook. There is no way of knowing with certainty what tomorrow will bring in this on-again, off-again policy environment, forcing us to lay out a balanced set of assumptions to underpin this forecast cycle.
February 19, 2025
Questions? We've Got Answers: Addressing Issues Impacting the Economic and Financial Outlook
*As of March 4th, the U.S. has moved ahead with 25% tariffs on Canada and Mexico. We address economic implications within this Q&A, with forecasts available in Table 1. President Trump has issued a record number of executive orders (EOs) and is spinning markets with new tariff announcements by the day. No surprise, this quarter's Q&A is dominated by discussions on potential impacts. We have changed our forecasts for interest rates and economic growth, most notably for Canada.
January 29, 2025
Reality Bites: Finding the Next U.S. Growth Dividend
With executive orders flying fast and furious from President Trump, investor optimism of an unleashing in animal spirits is kept in check by the reality of simple arithmetic on the economy. The median consensus forecast remains anchored towards 2% economic growth for this year and next. This marks a step down in momentum from the administration years of both Biden and Trump’s first term. Each of those three-year periods had near identical real GDP growth, averaging 2.7%, excluding the exaggerated results from the pandemic period (2020-2021).
December 19, 2024
Canadian Housing Outlook: Sunnier Skies Ahead
A major change relative to our September projection is the steep upside surprise that we’re tracking for Canadian home sales growth in the fourth quarter of 2024. Indeed, sales probably chalked up a gain of about 12% q/q in Q4, lifted by B.C. and Ontario.
December 05, 2024
Economic Outlook Gets Trumped!
Starting points matter for a new administration. President Trump will be inheriting a strong economy that has been beating forecasts by a statistical mile! This works to the advantage of Republicans in 2025. Households have more cushion to absorb some economic pain from a tariff war compared to the economies of trading partners that are treading water.
November 01, 2024
Canada’s interest rate conundrum: Too much of a good thing
A call for a jumbo cut to head off mortgage reset rates must be assessed carefully. Surprisingly, roughly a quarter of mortgages will reset at a LOWER interest rate next year. For those renewing into higher rates, the shock might be milder than expected, given a 30% increase in home prices and wages. Years of debt repayments have also built equity room, which homeowners, including those with variable-rate-fixed-payments mortgages, can use to lower payments if needed.
October 25, 2024
Is 50 the New 25?
No, I’m not talking about age, although I’d greatly benefit from that view! I knew I would eat crow on Wednesday’s Bank of Canada (BoC) call with the high market pricing for a 50 basis point (bp) cut. There’s no regret in having conviction that risks need to be managed when the Bank delivers a rate cut that historically aligns to emergency periods. It could condition Canadians to expect data misses to be met with large monetary responses. I was hoping this would be clearly addressed in the press conference. Unfortunately, it was not, and there was little indication on where the bar is set for another 50 bps in December
August 26, 2024
Dollars and Sense: Ready… Set... Cut! Cut! Cut!
The Fed is finally ready to cut interest rates, but questions remain on the speed and magnitude. We penciled in 25 basis points per meeting, with over 250 bps in cuts over this year and next. However, now that the Fed is confident that inflation will return to target, it will prioritize a little more of the other side of its dual mandate – developments in the job market – to ultimately determine the speed and size of rate cuts.
