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 maintains modest growth in a volatile time
Alberta’s economy has proven resilient. Banks expect the province to lead the country with roughly 2% growth this year and next, in line with spring forecasts. While 2% is modest, it’s also reassuring — especially after one of the rockiest years in trade policy in memory.
A mix of forces is keeping the province on relatively stable footing. Population growth, though slowing, continues to support spending. Higher oil production and a narrower discount on Canadian crude are helping offset weak global prices. Meanwhile, stronger export sales outside the U.S. are helping cushion modest weakness south of the border. And three consecutive months of stronger-than-expected jobs gains are cause for optimism.
Business activity, however, remains sluggish. Manufacturing output is likely to finish 2025 roughly flat, wholesale trade is shrinking, and the residential construction boom that powered Alberta’s growth for some time is cooling. Agriculture is under pressure from global oversupply and restricted access to China due to canola tariffs. And though the labour market has steadied, job openings are limited.
Looming over all this is uncertainty over U.S. trade and tariff action. While Alberta faces some of the lowest effective tariffs in Canada, largely because most of its exports are CUSMA-compliant, it’s also one of the most exposed to the U.S. market. With policy risks lingering and the U.S. economy losing steam, business sentiment is cautious and hiring and investment plans remain modest.
Despite current headwinds, Alberta’s longer-term prospects look brighter. The recent Canada-Alberta Memorandum of Understanding (MOU) could open the door to real opportunities for the province. Many details still need to be worked out, and challenges remain, but the federal government’s renewed focus on major projects, the energy sector, and Alberta’s broader potential helps set the stage for future growth.
The Landscape: Global Context
Global economy improves—but remains on fragile ground
Despite early fears of a recession, the global economy has held up. The OECD now expects global growth of 3.2% in 2025 — up 0.4 percentage points from April — and 2.9% in 2026.
Several developments have supported this improvement. Tariffs imposed by the U.S., and the retaliatory measures they prompted, have fallen short of initial threats. Strong investment in AI, particularly in data centres and semiconductors, has lifted growth, especially in the U.S. Most recently, the U.S. and China took steps to ease tensions, with the White House releasing a fact sheet pausing many retaliatory tariffs announced earlier in the year.
As a result, the risk of a U.S. recession has diminished. The Federal Reserve’s real-time model now puts the probability of the U.S. being in recession at 24%, while betting markets show recession odds for 2025 have fallen from well over 50% last spring to 36% for 2026.
Still, the global outlook remains fragile. The average U.S. effective tariff rate has climbed from 2% at the start of the year to 18% most recently — the highest in roughly 80 years. And economies are still adjusting to these higher costs — a process expected to weigh on growth for years. Governments also have less fiscal space with which to cushion against future shocks; and the two largest economies, the U.S. and China, are showing early signs of slowing.
U.S. momentum is clearly weakening. Inflation has hovered near 3% since midsummer, and American frustration is building. Analysts warn the AI boom is masking underlying weakness, and could be a bubble in its own right. Labour market strains are appearing: blue-collar employment has slipped; and the unemployment rate, though still low, has climbed to a four-year high.
Concerns about China are growing as well. The country’s ability to further offset lost U.S. demand through exports to other markets is limited, and consumer goods subsidies that previously boosted domestic activity are coming to an end. On top of that, a renewed round of tariff escalation, or new levies on specific industries and products, would spell trouble for the world’s biggest economies.
The Landscape: National Context
Canada weathers tariffs, but growth keeps losing steam
Canada has avoided the worst of the trade war. U.S. tariffs on Canadian goods are only a fraction of the 25% initially proposed, and roughly 90% of Canadian goods still cross the border tariff-free under CUSMA. Most Canadian counter-tariffs have also been lifted.
The economy has held up better than expected: consumer spending has been resilient despite slow immigration; the labour market is stabilizing; and manufacturing has picked back up. The Bank of Canada now characterizes the economy as “adjusting and coping” rather than “threatened and volatile.” Uncertainty has also eased enough that the Bank — after avoiding making traditional economic forecasts in the spring — is once again projecting where the economy is headed.
That said, the economy is far from strong. GDP growth is expected to reach just 1.1% this year and 1.3% next year, down sharply from the 2.0% forecast in January. While third-quarter GDP came in higher than predicted (at 2.6%, annualized), it largely reflects a rebalancing from the second quarter, when imports surged to beat tariffs and weighed on Canada’s trade balance. There are signs household spending and business investment is weakening. And although the overall effective tariff rate remains modest — about 5.9%, up from near-zero pre-trade-war — some sectors are taking meaningful hits.
Automakers face 25% duties on certain vehicles and parts, and steel and aluminum exporters are contending with tariffs of up to 50%. Meanwhile, China has imposed tariffs on canola and seafood products, and more recently, India has reinstated tariffs on peas. Firms in export-oriented industries are cutting back investment, and hiring plans are subdued. Labour shortages are giving way to concerns about weak sales: job vacancies have fallen to an eight-year low, wage growth has cooled, and part-time employment is rising — all signs that household spending could continue to weaken.
Inflation has returned to the target 1-3% zone, allowing the Bank of Canada to lower interest rates to 2.25%. But that easing partly reflects weak demand, as firms cannot fully pass on higher costs to consumers.
Ultimately, Canada’s economic prospects will hinge on U.S. growth. Slowing demand south of the border could further dampen investment and household spending here, and policy risks, such as new tariffs or difficult CUSMA renegotiations, remain elevated.
With these new risks and longer-term structural challenges in mind, the latest federal budget focuses on boosting investment and diversifying trade by expanding non-U.S. exports. But in the short term, even Ottawa expects only a modest economic lift from these measures.
Alberta Outlook
Despite tariff advantage, business activity in Alberta remains tepid
Alberta benefits from a relatively low effective tariff rate on U.S. exports, which helps explain why its growth outlook is stronger than Ontario’s or Quebec’s. The largest tariffs currently in place — on steel, aluminum, and autos or auto parts — have limited impact on Alberta.
Even so, business activity in the province remains tepid. Manufacturing sales improved in August and September, but without a stronger pickup, the sector is on track to finish the year roughly flat relative to 2024 — mirroring the national trend. Exports are weak as well: down 1.4% year-to-date (through August), with gains in non-U.S. markets helping offset modest U.S. weakness. Wholesale trade posted small summer gains but is still headed for a contraction, down 12% year-to-date.
Survey data reinforce this softness. Business sentiment in Calgary has fallen to a two-year low — among the weakest in Canada and comparable to cities hardest hit by tariffs — while Edmonton is faring somewhat better but remains in negative territory. Transportation and warehousing businesses stand out as particularly downbeat: only 32% of Alberta firms report feeling optimistic, compared with 43% nationally.
One factor that could be behind this stronger-than-expected negative sentiment is Alberta’s reliance on the U.S. market. While Ontario and Quebec face higher tariffs on a wider range of exports, a much larger share of Alberta’s economy is directly tied to U.S.-bound exports.
Another challenge is Chinese tariffs. Alberta farmers are facing dual pressures: record global production is pushing crop prices down, and Chinese tariffs on canola meal and seeds have effectively blocked sales to that market just as harvests were coming off the field. This is significant: canola is one of Canada’s largest exports to China and Alberta produces around 30% of the country’s canola.
Looking ahead, even though Alberta is fortunate to have escaped the worst of U.S. tariff action (so far, at least), businesses remain cautious. As of the latest survey, firms still expect both sales and payroll growth to slow. That said, investment sentiment in the province has improved modestly compared to earlier in the year, and the Canada-Alberta MOU offers some long-term optimism, with positive signals for energy, electricity, and AI-related infrastructure.
Alberta Outlook
Energy sector steadies as tailwinds offset low oil prices
The tepidness in Alberta’s business sector is especially evident in energy. Even though the industry has largely avoided U.S. tariffs, it’s still had a turbulent year, navigating low prices, rising export capacity, record-high production, and ongoing uncertainty.
Globally, oil prices continue to weaken. WTI has slipped into the low $60s, down from the mid-to-high $60s this summer and below Alberta’s $68 budget assumption, and are expected to dip further in early 2026. On the bright side, expanded access to non-U.S. markets has narrowed the WCS discount by roughly $8 per barrel. That cushion not only helps producers, but also means that the hit to provincial coffers is expected to be small.
Production, however, remains a clear source of strength. Output is near-historic highs, with the Trans Mountain Expansion (TMX) pushing overall production above 4.1 million barrels per day and tripling exports to non-U.S. markets. While production has eased in recent months, the decline appears in line with annual patterns: output is still about 10% higher than a year ago and roughly 4% higher on a year-to-date basis.
Moderate production growth is expected to continue. Under current conditions, the Alberta Energy Regulator anticipates rising output through 2028, with further gains once additional pipeline capacity comes online.
That added capacity now appears all but certain. Enbridge has finalized investments to expand both its Mainline and Flanagan South systems, together adding 250,000 barrels per day of takeaway capacity. TMX, which already added 890,000 barrels per day, is now pursuing optimization projects — the first and most immediate expected to add up to 90,000 barrels per day of takeaway capacity, and the full suite expected to unlock roughly 360,000 barrels per day in total. Together, these expansions should help ease the bottlenecks forecast for the next few years.
Even so, the short-term outlook remains cautious. Sentiment in the energy sector dipped further in the third quarter and remains negative today. With global demand softening, U.S. growth uncertain, and CUSMA negotiations ahead, new investment in the oil patch is likely to stay modest in the near-term.
Still, there are signs of longer-term opportunity. While many details still need to be sorted out, not least of which are resistance from BC and some Indigenous communities, the Canada-Alberta MOU opens the door for a new pipeline with the potential to add another one million barrels per day of export capacity.
Alberta Outlook
Population growth normalizing, easing pressure on housing even as construction
remains strong
Population growth in Alberta has cooled sharply over the past year. After growing at an annualized pace of nearly 6% at the end of 2023, growth slowed to 2.5% in early 2025 and fell to just 1.6% in Q3. Even so, Alberta is still outpacing most other provinces, as population growth has stalled nationally.
Most of the slowdown is because of fewer non-permanent residents (NPRs) entering the province. Between July 2024 and July 2025, Alberta added only 21,519 NPRs — down from about 100,000 the year before — and the number of NPRs living in the province has actually declined over the past two quarters.
Interprovincial migration has cooled as well, slipping from a net inflow of roughly 11,000 people per quarter in late 2022–2024 to about 6,000 more recently. With the federal government’s new immigration levels plan further ratcheting down the number of newcomers to Canada, future population growth in Alberta is expected to remain modest.
These shifts are already showing up in the economy. Hiring in industries that expanded rapidly to meet last year’s population surge, like construction, has eased, and growth is returning to more typical levels.
The housing market is also starting to soften. Alberta is still building roughly twice as many homes as in 2019 and is on track for a record year, but construction has come down from its peak, and its 12-month outlook is among the weakest of any industry. And new activity shows the market gradually moving toward balance. For instance, in Calgary, the benchmark price for homes purchased in November is down 4.6% from a year ago, and total sales have fallen 13%, led by weaker demand for row and apartment units. Edmonton is stabilizing as well. Prices of new home sales are still inching up (2.7% year-over-year), but sales are down 13%. Prices for new leases are cooling even faster, with asking rents down 6.4% province-wide — the largest drop in Canada — driven by Calgary (-6.8%) and Edmonton (-5.8%).
Overall, these trends point to a housing market that is unlikely to be the major growth driver it has been in recent years. Supply and demand are becoming more balanced, population growth has normalized, and key indicators, from rents to sales, suggest pressures are easing as the province adjusts to the surge of the past two years.
Alberta Outlook
Consumer spending holds steady
Meanwhile, consumer spending in Alberta has held up well. Total retail sales are up 5% from last year, with seven of nine major retail sub-sectors posting gains. On a per-person, inflation-adjusted basis, however, spending is roughly flat, meaning much of the growth reflects population gains and higher prices, rather than individual Albertans spending more.
Even so, recent consumer trends may be masking underlying strength. Spending surged in March as consumers rushed to “beat the tariffs,” likely pulling some demand forward. That suggests the current softness may be temporary. Early indicators show spending in Alberta holding steady through the fall: RBC cardholder data point to October spending up about 6% year-over-year, broadly in line with the national trend.
Looking ahead, several factors should support consumer demand.
Lower interest rates is one. Early in the trade dispute, there were concerns that the Bank of Canada might delay rate cuts due to tariff-driven inflation. But inflation has since settled — especially in Alberta, where lower natural gas prices have helped keep overall price growth down. The policy rate has fallen from 2.75% to 2.25%, where it’s expected to stay barring any major surprises. This will give indebted households some breathing room.
Higher after-tax income is another factor. Tax changes implemented in July — both provincial and federal — are boosting annual take-home pay by up to $1,170 per person. Wage growth remains moderate, but the tax reductions are meaningful and likely contributed to the bump in August spending.
Finally, despite high unemployment over the past year and moderating business activity, Albertans are showing few signs of financial strain: insolvencies — including bankruptcies and proposals — remain subdued. Survey data show a similar pattern: while Albertans remain concerned about the broader economy — 43% say conditions are getting worse — more than half now rate their personal finances as good, an improvement from the previous survey.
Risks remain, however. In particular, a reversal of recent strong jobs gains could quickly weigh on consumer spending. For now, though, retail activity in the province continues to chug along.
Alberta Outlook
Hiring holds up despite uncertainty
Likewise, Alberta’s labour market has been holding up surprisingly well. Since January, the province has added jobs at more than twice the national pace, and in the past quarter, growth has been nearly seven times the national average.
While Alberta’s story to date has been one of population growth outpacing job creation, recent gains have flipped that trend. Manufacturing — and, to a lesser extent, oil and gas — has rebounded from earlier weakness, while service industries like retail and hospitality have benefited from strong consumer spending.
As a result, Alberta’s overall unemployment rate, which peaked at 8.4% in August, has fallen to 6.5%, roughly where it stood at the start of the year. Unemployment among younger Albertans has improved substantially: after spiking to 20.3% for 15- to 24-year-olds in July — second only to pandemic levels — it has eased to 13.5%, now closer to the national average and pre-COVID norms.
Other signs are encouraging as well. Labour force participation has remained steady, and long-term unemployment has inched down.
But strength varies across the province. Lethbridge, home to large agriculture and manufacturing industries, has the highest unemployment rate at 7.4%, up from 4.7% in January. A couple other regions remain above the provincial average, while the Banff–Jasper corridor, driven largely by tourism, stands out with a comparatively low rate near 5%.
Looking ahead, hiring is likely to remain constrained by continued uncertainty. Job vacancies have returned to historical norms across most major industries, and despite recent strength in the labour force survey, third-quarter surveys suggest most Alberta businesses expect employment to hold steady. Many firms report that policy uncertainty and a shaky U.S. outlook are prompting them to delay both hiring and investment, and most major bank forecasts expect Alberta’s unemployment rate to remain elevated next year.
While Alberta’s labour market has shown resilience despite protectionist pressures — a huge relief in a trade-dependent province — global forces are likely to keep a lid on growth.
Alberta Outlook
Risks temper outlook,
yet investment opportunities remain
Business sentiment slipped again in the third quarter — especially in Calgary and in export-oriented industries like oil and gas, transportation, and manufacturing.
Much of this caution likely reflects global and domestic uncertainty. A cooling U.S. economy could reduce demand for Alberta exports and weigh on oil prices. Although Alberta has largely avoided the worst of U.S. tariffs, businesses still face the risk of renewed trade actions, an unfavorable outcome from the CUSMA review, and ongoing tariff and trade challenges with China and India. Slower population growth also means local demand won’t provide the lift it did over the past two years. With these risks stacking up, many firms are holding off on hiring and major investments.
But over the longer term, Alberta has clear opportunities to attract investment and drive growth. Calgary continues to punch above its weight in early-stage investment, now ranking third in Canada for venture capital activity.
Recent policy changes could also help. Federal tax measures announced in Budget 2025, accelerated write-offs and full expensing, are designed to spur capital spending and could help move projects forward. Most notably, renewed federal focus on enabling large-scale infrastructure and energy development could generate real economic momentum and help diversify Alberta’s export markets across sectors. The Canada-Alberta MOU still requires work and many details to be finalized, but growing oil and gas production to fill new pipelines and LNG facilities would give both the energy sector and the broader provincial economy a significant boost.
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