The Alberta Snapshot is an executive summary we publish twice a year to help you stay on top of what’s happening in Alberta’s economy: the good, the bad, and the urgent. We created it because we know there’s a flood of economic data out there, and you want a clear, forward-looking snapshot — not just a look in the rearview mirror.
Topline
Alberta’s outlook: further ahead, but with more riding on it
Banks had already expected Alberta’s economy to lead the country with roughly 2% growth this year and next. The war in the Middle East has widened that gap: Alberta’s economy is now expected to grow 2.7% while most other large provinces have seen their outlooks worsen. Higher energy prices are lifting activity in the oil patch, and Alberta businesses — whose confidence had been meek last fall — are now more optimistic than their peers elsewhere in Canada. The fiscal picture could shift just as dramatically: if oil prices average in the $80s this year, provincial coffers would swing from a projected $9.4 billion deficit to a $6 billion surplus, representing a turnaround of $15 billion.
Several other things are going Alberta’s way. TMX is expected to hit full capacity ahead of schedule, and President Trump’s recent signing of a permit for the Bridger Pipeline could eventually unlock another 550,000 barrels per day. Population growth and residential construction are easing, but industrial projects are moving in to fill the gap, and the labour market has largely stabilized after a long period of adjustment.
There are nonetheless some areas of weakness. In addition to residential construction cooling from its peak, oilpatch employment has not kept pace with record production. Consumer spending is holding up for now, but rising inflation could lead Albertans to cut back, even if their balance sheets remain relatively strong. Meanwhile, young Albertans, newcomers, and those in Alberta’s biggest cities are finding the job market tougher than the provincial unemployment rate suggests.
Looming large over Alberta’s outlook is global uncertainty. How long the Middle East conflict lasts and how much damage it does to the global economy remain central unknowns. A ceasefire that reopens the Strait of Hormuz quickly could see energy prices fall considerably, narrowing the province’s fiscal windfall and dampening activity in the energy sector. CUSMA negotiations, likely to extend well into the second half of the year, add another layer of uncertainty for Alberta’s exporters.
All that to say, things are looking better in Alberta. But a lot could change and change quickly. The province’s near-term economic outlook depends heavily on forces beyond its control.
The Landscape: Global Context
The outlook improved and then the war began
Coming into 2026, there had been reasons for optimism: tariffs were lower than initially feared, and AI investment was providing a boost to capital expenditures. Things weren’t great, but they were better than expected — to the point where the IMF had been prepared to upgrade its global growth forecast. Then the war in the Middle East ended that.
The IMF now expects global growth of 3.1%, down from 3.3% in January. If the conflict drags on and energy infrastructure is damaged, that could fall to just 2%, which would be in line with the weak growth during the 2008 global financial crisis but with headline inflation above 6%.
Disruptions to the Strait of Hormuz — through which roughly 20% of global oil trade flows — have already strained supply chains and sent energy prices soaring. Even a swift resolution wouldn’t immediately translate to normal shipping: clearing mines and rebuilding confidence among producers and shippers will take months. Energy executives’ best guess is that traffic will not normalize until August or later.
Governments are responding by cutting fuel taxes, capping prices, or restricting exports, but these measures only provide partial relief and already-high debt levels limit how much more governments can do. Central banks have little room to help either. With the supply shock pushing inflation higher, cutting rates to support growth risks making matters worse.
The pain will be felt unevenly. The Middle East and Central Asia, which face the worst of it due to their proximity to the conflict and exposure to oil markets, are expected to see growth cut roughly in half. The world’s two largest economies face a more modest hit of just 0.1 percentage point each on paper, assuming the conflict doesn’t drag on. But that figure overlooks some real underlying strain.
The U.S. has been faltering for some time. Despite weathering the trade war better than anticipated, manufacturing hasn’t come back as hoped, inflation remains above target — headline CPI is running at 3.8%, pushed higher by gas prices — and business investment outside of AI remains muted. The labour market has been cooling for months, and fresh global instability won’t help.
China has stayed afloat through export diversification and industrial policy support. Industrial production has grown since last year, as have corporate profits, and the country has some insulation from the energy shock through discounted Russian oil, domestic coal, and strategic reserves. But domestic demand remains weak and consumer confidence low, leaving growth increasingly dependent on external demand as the global outlook deteriorates.
As of now, the global economy is holding up, but on shakier ground than it was. Three things will shape how the rest of the year unfolds: when the war ends and how long it takes for the Strait of Hormuz to normalize; how much the energy shock weighs on consumers and growth; and whether trade tensions and tariffs heat up again. With policy buffers worn down by five major shocks in just six years, the longer uncertainty persists, the deeper the damage and the harder it will be to undo.
The Landscape: National Context
Canada is holding steady, but the risks are growing
In Canada’s case, the bigger challenge predates the war. The overall outlook is broadly in line with expectations before the conflict, but the trajectory is bleak: growth has slowed from 2.0% in 2024 to 1.7% in 2025 and, according to the Bank of Canada, is expected to slow further to just 1.2% this year — an expectation broadly in line with other recent forecasts.
Tariffs and trade uncertainty have taken their toll. Canada has avoided the worst thanks to CUSMA, but Section 232 tariffs continue to weigh on steel, aluminum, and autos, while a new 10% tariff is now in place on goods that don’t qualify under the agreement. Many businesses have adapted remarkably well — finding new markets, rerouting supply chains, shifting what they sell — but adaptation is costly. The joint review of CUSMA is set to begin sometime after July 1, but a full resolution is unlikely before the US midterm elections in November.
Population growth, which had masked underlying weakness in the Canadian economy for some time, has slowed sharply, and the effects are noticeable. Total employment declined in the early months of 2026, and the housing market, which had been propped up by strong demand, is cooling.
Being a major energy exporter gives Canada a leg up. Higher prices squeeze consumers and businesses, but the boost to national income from energy exports helps cushion the blow. And while a wait-and-see approach to new capital investment was widely expected, there are early signs of increased reinvestment in the sector.
The mood among businesses and consumers reflects both the upside and the challenge. Business sentiment had been improving, but firms are already feeling the pinch of higher costs for energy, fertilizer, and freight. Consumers, already anxious heading into the year, worry the conflict will make things worse. Spending is holding up, but credit card data shows a shift toward spending on essentials as gas prices climb. The Bank of Canada held its policy rate at 2.25% in late April and, as with other central banks, has limited room to cut without risking the possibility of stoking the flames of inflation.
The federal government is working to improve conditions for investment — including fast-tracking major projects and once finalized, the Canada–Alberta MOU — but those efforts will take time, and meaningful progress will require regulatory reform. The federal government is also carrying a significant deficit, limiting its ability to call on fiscal policy to support growth if the situation were to worsen. All told, the war in the Middle East hasn’t changed Canada’s trajectory much, but growth remains weak, policy options are limited, and the risks around Canada’s outlook have grown.
Alberta Outlook
Alberta’s energy sector gets an unexpected boost and is ready to deliver
Since our last Snapshot, the energy sector’s outlook has improved dramatically. Last year, a survey showed confidence hitting a five-year low. The war in Iran changed that. With the Strait of Hormuz disrupted, the world is scrambling for more oil, and Alberta is eager to provide it. As a result, this year is set to see increased production, investment, and merger and acquisition activity.
High prices are a boon for local producers. Benchmark WTI climbed from the high $50s per barrel — where it had been expected to stay amid global oversupply — to $115 following the outbreak of war. It has since bobbed around between the mid-$90s and low $100s, with forecasts pointing to around $83 by year-end, assuming traffic through Hormuz begins to recover in June. But if traffic doesn’t return until later this year, prices will be pushed higher, though the slowdown could also be worse, making the net impact on the industry harder to predict.
That said, production is set to grow. Nearly all exploration and production companies plan to increase output this year as well as increase capital investment with a focus on expanding existing operations. Some of that spending will flow through to oilfield services companies and industrial manufacturers, where activity has been more muted.
More takeaway capacity is on the way too. TMX, which is likely to hit full capacity ahead of schedule, is set to see expanded capacity. Vancouver port dredging — which will enable tankers to load fuller — is expected to begin in September, while the first TMX optimization project is expected to add up to 90,000 barrels per day by early next year. Further out, expected expansions of the TMX and Enbridge Mainline pipelines could add roughly 550,000 barrels per day within a few years. And recently, President Trump signed a permit for the Bridger Pipeline which revives parts of Keystone XL and could unlock another 550,000 barrels per day, with potential for further expansion. While much work remains, the Canadian side is already permitted, and the project is closing in on the required shipping commitments to move ahead.
Investor interest is returning, too, especially in natural gas. Shell’s acquisition of ARC Resources, new long-term supply deals, and European interest in Canadian LNG all point to renewed confidence in the sector.
Longer term, the Canada-Alberta MOU could support further export growth and diversification, with a pipeline to the West Coast. Several commitments have already been delivered, and a carbon pricing agreement for industrial emitters, one of the key remaining items, is expected to be finalized soon. However, work remains, including an agreement with the Oil Sands Alliance — the proposed CCUS project aimed at reducing oilsands emissions — which the federal government has identified as a key priority under the MOU.
Alberta Outlook
High oil prices flip Alberta’s fiscal picture but how the windfall is used will matter
Beyond the energy sector itself, oil prices have also given the province’s fiscal picture a boost.
If per-barrel prices average in the $80s this year instead of the $60.5 assumed in the budget, provincial coffers would swing from a $9.4 billion deficit to a $6 billion surplus — a turnaround of more than $15 billion. Every dollar that oil prices run above expectations translates to an additional $680 million in revenue. If WTI were to remain in the $90s, that surplus could reach closer to $9 billion. And while less certain, the next couple of years could wind up looking considerably rosier than the currently projected billion-dollar deficits suggest.
To be sure, the situation could swiftly change. If a slowing economy or demand destruction were to depress prices, the province’s fiscal reality may be more in line with initial expectations.
If high prices were to continue, however, what this means for Albertans depends on how the windfall is used. Under the province’s fiscal rules, half of any surplus must go toward paying down its more than $90 billion in debt, while the other half can be directed toward additional debt repayment, a one-time expense, or the Heritage Fund.
The Heritage Fund, which currently sits at $32 billion with a target of $250 billion by 2050, wasn’t expected to receive contributions for the next three years given expectations of persistent deficits, but a surprise surplus would change that. Growing the fund won’t replace resource royalties overnight, but it could meaningfully improve the province’s revenue stability longer-term.
The bigger concern is a familiar one: that a windfall leads to permanently higher spending, deepening the province’s reliance on resource royalties to balance the books in future years. And as mentioned above, high prices would quickly adjust. The fiscal rules exist precisely to prevent that, limiting how much spending can grow from one year to the next and how much it can be increased within any given fiscal year. But with some rules already set aside and per-capita spending at its highest level on record, higher spending is a legitimate concern. Prior to the shift in its fiscal fortune, the government had signalled its intention to review the fiscal framework. How this review unfolds will set an important policy direction for the province.
Alberta Outlook
But Albertans’ consumer confidence is set to be tested
Meanwhile, for Alberta households, high oil prices and inflation will be a challenge, but underlying fundamentals suggest they may fare better than most.
Consumer spending in Alberta isn’t setting any records, but it isn’t falling off either. After some weakness earlier in 2025, spending was on the mend heading into 2026. Total spending is up compared with last year: there are more Albertans than there were a year ago, even though population growth has slowed. But on a per-person basis, after accounting for inflation, spending is roughly flat. Nationally, spending has been stronger, but part of the recent gain was driven by auto sales, which is a volatile category that’s not always a good indicator of underlying strength.
February was a weaker month for Alberta, but that should be taken with a grain of salt. Spending in discretionary categories like sporting goods, vehicles, and furniture, areas where anxious consumers typically cut back first, held up well compared with a year ago, pointing to underlying resilience. And it’s too early to connect February’s numbers to the current crisis. March data will be more telling. While early RBC credit card data point to some softness in Alberta, official estimates won’t be available until later in May.
Inflation is the real wildcard. Already, more dollars are being spent simply to cover higher prices, not to buy more goods and services. If oil prices moderate as expected, inflation is likely to peak around 3% in April before gradually easing, but an extended Middle East conflict would push that higher and longer, stretching household budgets further.
Consumer sentiment is mixed but not alarming. A recent survey of Albertans shows most (56%) believe the provincial economy is worsening — up 10 percentage points since December. Yet a remarkable 43% describe their own financial situation as good, down only 3 points since December and well above the 14% who describe it as bad. Albertans also report higher confidence than other Canadians and are less worried about the war’s economic impact — though they still expect it to sting.
Household finances are in reasonable shape, too. Insolvencies and bankruptcies remain low, and while mortgages in arrears have ticked up slightly, debt loads are more manageable than in most other provinces. A few policy measures will offer modest additional cushion: interest rates, held at 2.25% in April, are unlikely to rise, so long as inflation doesn’t become entrenched; the Canada Groceries and Essentials Benefit, which is worth up to $1,890 for a family of four, begins flowing to eligible households in June; and the federal fuel tax has been suspended until Labour Day. If WTI holds above $90 through mid-May, Alberta’s own fuel tax relief will kick in automatically in July.
Alberta Outlook
Alberta’s labour market has found its footing, though not for everyone
Over the first quarter, Alberta’s labour market held up well. Following a period of strong private sector job growth and even stronger population growth in recent years, the market had come back into balance and the unemployment rate had finally settled in line with the national average.
The most recent April Labour Force Survey shows unemployment ticked up in Alberta, as it did across Canada, from 6.5% to 7.0%. This may be less alarming than it seems: part of the increase was driven by more prime-age workers entering the labour force rather than job losses, a sign of confidence rather than an early signal of deterioration.
Nonetheless, there are some pockets of weakness worth noting. Youth unemployment is one. Though this is a national concern as much as a provincial one, young adults across Canada are struggling to find work. In Alberta’s case, job losses among young adults have been concentrated in retail where youth employment is down 16% over the last few years. While the rate has improved significantly since last year’s record level, youth unemployment remains elevated at 14.4% (3-month average). Another is recent immigrants. The unemployment rate of those who landed in Canada in the last five years remains elevated compared to both the broader workforce and historical norms.
There’s also a regional dimension. Calgary and Edmonton, which experienced disproportionate population growth, have a tougher job market for those looking for work. By contrast, Banff and the Wood Buffalo-Cold Lake region face the opposite challenge, with some businesses struggling to find workers.
There’s variation across industries as well. Since the start of the year, retail and health care industries have driven gains while hospitality, construction, and professional services have seen modest declines. Overall, seven industries added positions while nine cut jobs.
Over the longer term, the composition of job growth in the province has also shifted as health care, construction, and childcare have all seen outsized growth. Meanwhile, in oil and gas, production and exports have grown but employment growth has been more limited.
Looking ahead, the latest business expectations among Alberta employers remain tepid at 98 (100 is neutral) but better than the national average of 93. Assuming overall sentiment translates into hiring, jobs growth is likely to continue in health care, retail, and finance, while manufacturing and oil and gas could see weaker gains or losses. As well, the province’s education announcement is set to see hiring increase for teachers and educational assistants.
Alberta Outlook
The building boom shifts gears — from homes to major projects
Alberta’s population growth has cooled considerably, and residential construction, which was previously a major contributor to growth, is cooling with it. Over the first quarter of 2026, Alberta’s population grew by less than 1% on an annual basis, down considerably from the 5 to 6% rate of growth seen in 2023 and 2024 with only a modest pickup expected for the rest of the year. The housing market is responding accordingly, with new home starts easing to around 47,000 units annually from a 2025 peak of 65,000. That’s still well above the recent norm of roughly 30,000, but a noticeable drop from peak levels.
Industrial and commercial construction is increasingly filling the gap. While investment in residential construction is down 10%, investment in non-residential construction is up 22% versus a year ago. That shift shows up in the province’s Major Projects Dashboard: of 532 major projects currently under construction, 68% are industrial or commercial. Among the 447 projects proposed but not yet underway, that figure is 93%: just 32 projects are residential.
So far though, strength in industrial activity hasn’t fully offset the residential slowdown. Because of the sheer size of residential compared with non-residential building, total investment and employment in construction is about the same as it was a year ago.
That could change as a number of big projects are on the horizon. In addition to the Bridger Pipeline and other pipeline expansions covered above, three dozen data centre projects are currently applying to connect to Alberta’s electricity grid, a sign of growing industrial interest in the province that will eventually require significant infrastructure buildout. AltaLink is already responding, piloting technology that increases capacity on existing transmission lines without new infrastructure. Meanwhile, E3 Lithium is advancing Phase 2 of its Clearwater Project — a process that extracts lithium from water underground using technology similar to oil and gas — which could enable Alberta to compete in a growing market for battery inputs. If successful, it could eventually become one of the most significant new industrial construction projects beyond the energy sector. And a little farther out, Dow’s $10B Path2Zero project in Fort Saskatchewan, Canada’s largest net-zero industrial investment, is set to begin in 2029, after a pausing construction in 2025 amid uncertainty. Defence could increase construction as well: 4 Wing Cold Lake, one of Canada’s largest air bases, is set to receive federal funding to build out the necessary infrastructure to support the arrival of new fighter jets, with construction to start this fall.
Policy could also help move these along. A new federal-provincial impact assessment agreement — a commitment under the Canada-Alberta MOU — reduces duplication in environmental reviews, while new provincial legislation sets a 120-day approval timeline for major projects. These changes should move projects from ideas to shovels in the ground faster than Albertans are used to. As well, the federal government just announced its intention to reform the federal review process, with a goal of cutting approvals down to one year after all information is received from the proponent.
The Outlook
The outlook: better than it was, but built on shaky ground
Beyond the sharp improvement in energy sector confidence, business sentiment more broadly has recovered since our last Snapshot. After sitting below the national average, Calgary and Edmonton are now both tracking above it. Meanwhile, policy uncertainty Canada-wide, as measured by the Economic Policy Uncertainty Index, has eased from its post-Liberation Day peak, but remains extraordinarily high — on par with the levels seen in the immediate aftermath of COVID.
Alberta businesses are not immune to what comes next. Energy prices depend heavily on the Middle East conflict’s trajectory — and no outcome is without risk. If the conflict drags on, high energy prices will continue to weigh on global demand, eventually pulling prices lower. The IEA’s April report already projects oil demand will contract this year for the first time since COVID. If instead a ceasefire holds and the Strait of Hormuz normalizes, supply could return to a market where demand has already been depressed by months of high prices and slowing growth. Either way, prices could fall well below the levels currently supporting Alberta’s fiscal windfall.
Non-energy sectors face a different set of risks. CUSMA will remain in place regardless of what happens after the July 1 review. But unless all three countries commit to a 16-year extension, which seems increasingly unlikely before the end of the year, the result is ongoing annual reviews and persistent uncertainty about the rules of North American trade. For Alberta’s agriculture, forestry, and manufacturing exporters, that uncertainty increases the risk of long-term investments that rely on North American market access.
Closer to home, the provincial referendum in October adds another layer of unpredictability for investor confidence and federal-provincial relations.
All that is to say, Alberta is on firmer footing than most provinces. But it remains exposed to global turbulence and policy uncertainty that no provincial government can fully control. Alberta’s economy and fiscal situation typically ebb and flow with the energy sector. Today, that’s even more true than usual.
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