Monthly Forecast Update

Our Canadian and U.S. forecasts are largely unchanged despite material trade-related news out of the U.S.

We have upgraded growth forecasts for Canada and the United States with the former expected to benefit from fiscal tailwinds especially in 2026.

U.S. trade agreements are trimming downside growth risks, but the average U.S. tariff rate is still the highest since the 1930s.

We have downgraded our U.S. growth outlook, and expect the Federal Reserve to cut interest rates three times in 2025 with another three cuts in 2026.

Trade risks are set to wipe out early signs of economic recovery in Canada—we expect gross domestic product growth to slow and the unemployment rate to edge higher in coming quarters.

U.S. President Donald Trump backed away from imposing blanket tariffs on Canada at the 11th hour last week, but trade risks are not going away.

With the exceptional run of U.S. data continuing, we no longer expect any further rate cuts from the Fed in 2025.

International trade risks are back in focus as the incoming Trump administration prepares to take office—but for now, economic data is tracking broadly in line with prior expectations.

U.S. government spending will continue to add to growth, but it may come at the cost of higher inflation, interest rates, and less savings for the future.

The stronger-than-expected September U.S. payroll report left the economy on track for the historically elusive ‘soft landing’ and reduced urgency for the Fed to repeat a 50-basis point rate cut.

Softening U.S. labour markets and lower inflation leave the Fed on track to kick of an easing cycle starting in September, one of the last major central banks to do so.

More central banks are committing to cutting interest rates from elevated levels.