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 economy slows as global challenges loom
Alberta’s economy wasn’t on rock-solid footing coming into 2025 but now is more clearly faltering. Most indicators—from jobs to investment to population growth—point to a cooling economy, and some warning lights are flashing. Recent private-sector forecasts that expected Alberta to grow at about 2% this year and next (leading all other provinces) are likely too optimistic.
Global volatility and tariff uncertainty are to blame. We’re living in a world where so much changes so quickly that economic forecasts are almost immediately out of date the moment they’re published. Some organizations have even abandoned making traditional forecasts, opting to publish a range of possible scenario-based outcomes instead.
For Alberta, it’s global volatility (especially in oil and gas) that’s hitting harder than tariffs alone. Policy uncertainty is placing a drag on investment and hiring decisions in the energy industry and beyond.
Even if things stabilize, it might be too late to avoid a major slowdown or recession.
Things could swiftly change.
The threat of a global recession is unusual in that it is human created—driven by tariffs from the US on the world and the world’s response.
But given the pace and magnitude of recent disruptions, and the impact to global supply chains and commodity markets, even a rapid policy reversal may not be enough to fully restore investor confidence or restart hiring plans in the province.
The Landscape
Global economy braces itself for protectionist impact
Last October, the IMF flagged “rising protectionism and continued geoeconomic fragmentation” as a risk to an otherwise mediocre global outlook. Clearly, they were onto something.
Over the last few months, the Trump administration has upended free trade and globalization, imposing high and broad-based tariffs on almost every single country on the globe. Though initial rates announced have been reduced, the US’s average effective tariff rate was briefly estimated at 27%—a sharp rise from just 2.4% in 2024. China, the EU, and Canada have all responded with their own counter-tariffs. Since then, some tariffs have been scaled back, and the trade war with China has been put on pause. But the dust is far from settled and more levies may still be on the way–from tariffs on critical minerals to pharmaceuticals.
With policy in flux and uncertainty high, both business confidence and consumer sentiment remain low. In April, global supply chains showed anticipation of slowing consumer demand and a sharp decline in purchasing from Asian manufacturers. There are signs that demand has picked up since then: bookings for ocean shipping containers surged following the announcement of the 90-day “pause” on Chinese tariffs. But it’s unclear if demand will fully recover, or where the trade war goes from here.
So how much will tariffs weigh on global growth? Unfortunately, no one knows. How long tariffs will last, whether US courts can successfully overrule any tariffs, what new ones will be added, and how other countries will respond are all key factors to determine the global outlook and are all very uncertain. Some new trade agreements have reached, but whether they have any teeth or staying power remains unclear.
Increasingly, the biggest drag on the global economy is not tariffs but uncertainty itself. As businesses delay plans for new plants, facilities, and investment, and consumers postpone big purchases, growth will continue to stall.
This plays out in the IMF’s latest forecast—one of the first since the Trump administration’s April announcement—which reduced its outlook for global growth for this year from 3.3% in January to 2.8% in April and refers to it as a “reference forecast” to emphasize the uncertainty. The US (-0.9% pts), Mexico (-1.7% pts), Canada (-0.6% pts), and China (-0.6% pts) are expected to see the biggest hit. While other countries are expected to fare better, they are not immune—virtually every country faces a weaker outlook. Meanwhile, inflation—which had yet to normalize in most countries—will remain high as tariffs drive prices up, not reaching normal levels (i.e., central bank targets) until 2026.
As American business and consumers begin to feel the impact, some trade barriers may be rolled back or repealed. But for now, a shifting mix of protectionist policies appears likely to persist. And that’s a problem: the longer the tariffs remain either in place, or threatened, the greater the risk of a global recession. Though the risk of a recession has been reduced as protectionist rhetoric and policies have been dialed back, it remains high, with some analysts still putting it at 40%.
The Landscape
Canada dodges worst of tariffs but will not be spared from global slowdown
While Canada may have managed a soft landing, as the Governor of the Bank of Canada put it, it’s “not going to stay on the tarmac for long.” Given the global outlook, the biggest threat to the Canadian economy isn’t tariffs—it’s a slowdown in the US.
If the US economy—which already showed a slump in GDP in the first quarter—slips into a recession, it is likely to pull Canada, and much of the global economy, down with it. Though the risk of a US and global recession has eased as tariffs have come down, financial and commodity markets remain on edge and a slowdown remains possible.
As well, several product-specific duties on Canadian exports will take their toll. Though Canada has largely avoided broad-based tariffs (i.e., those imposed across all imports), a 25% tariff on steel and aluminum—two key Canadian exports—is in place. Meanwhile, duties on softwood lumber—another major Canadian export—are set to double due to disputes preceding recent events. The most damaging trade barrier is still yet to come: a 25% tariff on car parts expected in early May (a similar tariff already applies to finished vehicles, but that represents a relatively small share of cross-border trade in the sector). And the US is not the only country imposing tariffs on Canada. In response to Canada’s tariffs on China last fall, China levied tariffs on Canadian agriculture in March (specifically, a 100% tariff on Canadian canola oil and meal and peas, and 25% on seafood and pork).
How is the Canadian economy holding up? GDP numbers in the first quarter actually came in reasonably well. An early read on retail sales and credit card transactions through April shows consumer spending has held up as well. But other signs are more worrying: the labour market is showing cracks, as private sector employers seem wary of adding staff. And, though consumer confidence rebounded in April and May after plummeting in March, it remains below its recent trend. Meanwhile, a survey of businesses suggests those affected by trade tensions are holding back on capital investment.
Underscoring the level of uncertainty, the Bank of Canada backed away from its usual practice of making economic growth forecasts, offering a number of growth “scenarios” instead. Back in January, the Bank expected GDP to grow at a cool 1.8% this year and next. Its more moderate tariff scenario (where few tariffs remain in place) will shave 0.2% and 0.4% off those numbers while its more serious scenario (where tariffs are extensive and permanent) would cut 1.0% and 2.0% off growth, tipping Canada into a recession.
As with the global economy, Canada’s outlook could quickly change. Domestic economic consequences could compel the US to scale tariffs back or repeal them entirely. But at the same time, the threat of new barriers is likely to continue for some time, such as those on critical mineral and pharmaceutical exports, both of which have been flagged as future targets.
Alberta Outlook
O&G industry showing resilience, but warning signs are growing
Crude oil accounts for nearly 25% of Canada’s goods exports to the US—and 75% of Alberta’s—so naturally the industry has been a key concern amid rising protectionism.
However, following President Trump’s April 2nd announcement imposing tariffs on virtually all countries, the top concern has changed. The industry is far less worried about tariffs on energy (USMCA-compliant goods such as energy are exempt) and more concerned about weak consumer demand.
Following that announcement, oil prices plummeted. A subsequent OPEC announcement indicating plans to ramp up production didn’t help, and, so far, OPEC members appear committed to following through. The benchmark West Texas Intermediate (WTI) oil price collapsed from $72 per barrel to less than $60. While there has been a very modest recovery since, oil prices remain well below the Government of Alberta’s budget forecast of $68 (every $1 dip in oil prices translating to a $750M hit to the budget).
On the positive side, increased export capacity and a narrower “discount” for Canadian crude are helping to offset lower headline oil prices. The completion of the Trans Mountain Expansion project, which sends crude oil to tide water, has supported both. Production remains high, up about 4% year-to-date. And, thanks to this new export capacity, the discount price at which Alberta’s oil is sold into the US, is unusually low—around $13 for the month of April compared to the $17 forecast in the Budget (every $1 decrease in the “discount” increases government revenue by $740M).
The narrower differential also signals that markets no longer expect tariffs on energy. After exemptions were announced for USMCA-compliant goods, the briefly widened discount—reflecting expectations that producers would absorb part of the tariff through lower prices—quickly disappeared.
But there are some warning signs for the energy sector.
One is employment. Though surveys from earlier this year suggested employment in oil and gas would remain stable, recent announcements suggest cuts may be necessary. The Labour Force Survey shows employment in the oil and gas sector fell by about 5,000 jobs in April and is now down around 18% since last September, when two years of steady jobs gains came to an end.
Another is capital investment. As of last year, the industry planned to deploy around $34 billion in capital investment in Alberta, an 11% increase versus 2024 and 40% above pre-COVID levels. Companies are reporting possible cuts to capital spending in the oil patch if low prices were to persist. The longer they do, the more strain there will be on the industry, future capital investment plans, and provincial finances.
Alberta Outlook
Global turmoil weighing on other Alberta businesses, too
So far, any decline in Alberta’s exports to the US amid tariff chaos has been limited to crude oil (as of March)—likely a result of lower prices and possibly some stockpiling by US buyers ahead of potential tariffs. Exports of other major products have not experienced a meaningful decline.
For industries outside the energy sector, uncertainty remains the biggest challenge. A first-quarter survey of Alberta businesses revealed growing concern about consumer demand and supply chains. Many are adopting a wait-and-see approach, delaying investment and hiring decisions amid the turbulence. And it’s not just large, export-oriented companies feeling the strain: small business confidence, although it has improved somewhat in recent months, remains at a historic low.
Adding to this uncertainty are looming cost pressures. Businesses are likely to face higher input costs due to both counter-tariffs on US imports and disruptions to global supply chains. For instance, Alberta imports over $600 million worth of steel and aluminum annually from the US. But the extent of the impact—whether businesses can find alternative suppliers or pass higher costs onto consumers—remains uncertain.
Given this mix of policy uncertainty and rising costs, capital investment outside of oil and gas is likely to decline as well. Last year, non-resource industries had expected to increase capital investment by 6%, but that outlook now seems overly optimistic. Petrochemical manufacturing was expected to drive this growth, yet a major project in that sector—DOW’s Path2Zero Petrochemical project—has just been put on hold due to market conditions.
Two export-oriented sectors stand out as particular areas of concern which suggest Alberta was seeing some economic weakness beyond the trade dilemma with the US.
One is manufacturing. Employment in this trade-exposed industry has slipped, with jobs growth slowing at the end of 2024 and turning negative this year. Over the first quarter, about 12,000 jobs have been lost—a decline not seen since the onset of COVID. A slight rebound in April offers some hope that part of this drop might be temporary, but the overall trend is concerning.
Another is agriculture. The sector faces tariff threats not just from the US but from China as well. Although current Chinese tariffs target canola meal and oil—not seeds—the situation could escalate. Historically, the majority (63%) of Alberta’s canola exports to China are in seed form, but a tariff on canola seeds is expected soon. As US–China tensions intensify, Canada—and particularly its agricultural sector—risks being caught in the middle.
Alberta Outlook
Housing still playing catchup from population growth, but sector activity is set to slow
Another change in the provincial economy is slower growth in its booming population.
Alberta has seen two years of extraordinary population growth—topping 4% per year—but that is waning. Instead of adding an average of 10k people from other provinces and 34k from across the globe each quarter, the most recent quarter (Q4 2024) shows those numbers are now just 5k and 22k. With the cut in federal immigration targets for 2025-2027, that second number is set to fall even further.
All told, the province’s population is expected to grow at a fraction of its previous level: 2.5% in 2025 followed by just 1.4% in 2026 and 2027. With growth likely to remain concentrated in Alberta’s urban centres, some pockets of the province could see their populations stabilize or even decline.
With population growth decelerating, so too is growth in demand for local business and industries. For instance, there has been a notable slowdown in job growth in hospitality—an industry that had been driving Alberta’s jobs gains since 2022.
That said, the province will continue to see more population growth than elsewhere in Canada. National population growth is expected to stagnate—and could even decline—depending on the federal government’s success in reducing the number of non-permanent residents (NPRs) in Canada. Alberta has proportionately fewer NPRs than the national average and provinces like Ontario.
For its part, residential construction in Alberta is still trying to catch up to the recent population boom. Construction employment is up and, as of April, the province was building at a rate of around 63,000 housing starts per year. That’s more than double the rate back in 2019. In fact, Alberta accounts for nearly a quarter of all new homes under construction in Canada (nationally, housing starts have cooled to previous levels).
But there are signs that the battle might soon be won. The province has added 378k people over the last two years and has seen about 95k housing starts over that period, bringing the available housing stock close to what’s needed to absorb those individuals.
Other signs support this conclusion. Growth in rents and housing prices, which are up about 20% and 15% since 2023, are slowing. The Consumer Price Index suggests rent increases have stalled since November while asking rents for new apartments are down versus last year in Calgary and flat in Edmonton. Meanwhile, housing market activity in Calgary is showing resilience in May after a weak April and remains strong in Edmonton, but it’s unlikely to persist. At the same time, higher costs for essential inputs for building—much of which comes from the US—could further dampen activity in the industry.
Alberta Outlook
Consumers continue to spend, providing modest tailwinds for local business
Retail sales activity in Alberta continues to chug along. Spending in March was up about 7% versus a year ago with sales up across seven of the nine sub-sectors (sales were flat at food and beverage retailers and gas stations). Better still, the overall growth was not just driven by population increases; individual consumer spending recovered from last year’s slump and has shown moderate growth.
That said, March was an unusual month with the flurry of tariff announcements and threats. At that time, Albertans reported high angst about tariffs and their potential impact. Consumer spending could reflect stockpiling and trying to “beat the tariffs” rather than reflecting consumer confidence levels which were at an historic low. For instance, consumers increased their spending the most (+18% versus last year) at car dealerships—passenger vehicles were among the goods expected to see the biggest prices increases from tariffs. As such, there may be a pullback in spending in the coming months.
Beyond trade uncertainty, a couple of factors will affect Albertans’ ability and eagerness to spend in the coming months.
One is higher interest rates. If the Bank of Canada continues to delay interest rate cuts (as US tariffs and retaliation push up prices in Canada), Albertans will find themselves paying more in debt. Nationally, Canadians are already struggling to pay down credit card debt and auto loans. Also concerning, the majority of outstanding mortgages across Canada are set to be renewed over the next couple of years. Even if rates have come down a bit, they’re still well above where they were five years ago.
Though higher mortgage payments would dampen consumer spending, a slower reversal of high interest rates alone is unlikely to be devastating. Albertans have yet to show serious signs of financial trouble: insolvencies and bankruptcies both remain low. And, thanks to less mortgage debt, the province is likely to be less sensitive to interest rates than Ontario or BC.
Another factor is a provincial tax cut as well as a federal one. Though recent wage growth in Alberta has been minimal, the income tax cut announced in Budget 2025 will boost after-tax income by as much as $750 per year and the federal tax cut will boost incomes by another $400. Low- and middle-income households are likely to spend a significant share of these dollars, providing a lift to the Albertan economy.
All that said, if the provincial labour market continues to weaken, it will eventually bring consumer spending down with it.
Alberta Outlook
Labour market showing signs of trouble
When it comes to Alberta’s labour market, cracks are beginning to show. The province added 15,000 jobs in April, with 11 of 16 sectors posting modest gains. However, this follows a weak first quarter, and at least some of April’s new jobs—about 5,000 in public administration—may be temporary, coinciding with the federal election.
Overall, Alberta’s labour force hasn’t grown since the start of the year, and employers are less eager to hire. The job vacancy rate—the percentage of jobs that are unfilled—has fallen sharply to 2.8%, down from 3.8% a year ago. Unemployment has edged up to 7.1%, and labour force participation continues to decline.
Sluggish private sector job growth has driven recent weakness. Manufacturing has led the decline, while resource industries—and oil and gas in particular—have also shown weakness, shedding about 20,000 jobs since peaking last September. Based on recent announcements mentioned earlier, weak private sector job growth is likely to continue.
Already, it’s taking longer for those who are unemployed to find work, with some individuals searching for over a year. Young adults and recent immigrants (those who arrived within the last five years), in particular, are struggling, with unemployment rates now at 17.2% and 12.7% respectively—both sharp increases over the last year.
Regionally, unemployment has increased most in Lethbridge (from 4.7% to 7.3%) and the Banff/Jasper economic region (from 4.4% to 6.2%) since the start of the year, while Edmonton’s labour market remains the most stable.
It’s worth noting that Alberta may see a modest uptick in hiring as the policy environment stabilizes. First-quarter survey data indicated that, despite subdued sales expectations, Alberta businesses generally expected employment levels to be strong. Some businesses, therefore, may simply be putting hiring on hold temporarily.
Nonetheless, if protectionist policies continue to fuel global uncertainty, labour market weakness is likely to persist. Previous forecasts—many of which assumed a broad-based tariff on Canada—expected unemployment to rise only slightly to 7.4% next year. However, a global economic slowdown would pose a more significant threat to the provincial economy and labour market.
Alberta Outlook
Despite some resilience, a cooling economy highlights Alberta’s exposure to global risks
The trends described above in exports, jobs, population, and, to a lesser extent, consumer spending, all point to a weakening Alberta economy. Recent trends in oil and gas, in particular, underscore how Alberta is more vulnerable to the whims of the global economy than to tariffs on Canada.
That said, the provincial economy has enough underlying strength that, if trade policies were to find more stability and the world were to avoid a recession, Alberta’s economy would continue to move forward—albeit slowly.
Despite a likely overall pullback in capital investment, there are a couple major projects set to move forward or already complete, which will help to support growth: the Trans Mountain Expansion already online but soon to be at capacity; phase one of the LNG Canada export facility soon to be completed; and phase two of that project—plans to double the plant’s capacity—is promising though a final investment decision hasn’t yet been reached.
Another factor that will help the province move forward is a steady flow of venture capital (VC) investment, which has consistently totaled around $700 million annually. Impressively, first-quarter results show the province increasing its share of VC investment to 11%, up from 9% last year, and ranking second in Canada for average deal size. Individual deals—such as Nanoprecise Sci Corp’s, which offers predictive maintenance to increase business efficiency while reducing carbon emissions—demonstrate Alberta’s ability to attract and scale innovative businesses.
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