In the fourth quarter of last year, Alberta added more residents (28,496) than Ontario (10,839) and Quebec (11,380) combined, while three provinces (Newfoundland and Labrador, Prince Edward Island, and Nova Scotia) posted population declines. With that said, Alberta’s growth did slow over the second half of the year.

Net interprovincial inflows to Alberta moderated to 5,300 last quarter, but remained positive for the 14th consecutive quarter.

New federal immigration measures are slowing the pace of net international migration, which fell to the lowest level since the first quarter of 2022 in Alberta (see our Chart of the Week below).

Our forecast was finalized before this latest demographic count, but our current outlook lines up nicely (it doesn’t always work that way). For the census year (July 2025 vs. July 2024), we’re forecasting a 2.5% increase.

Staying put: U.S. Fed

The U.S. Federal Reserve’s rate-setting committee met this week and decided not to lower its policy interest rate. As such, the Fed’s benchmark overnight rate remains 4.25%-4.50%.

The Fed’s outlook for the U.S. economy, however, was revised lower. The median forecast for real GDP growth this year went from 2.1% in the December projection to 1.7% while the forecast for next year went from 2.0% to 1.8%.

Despite the downgrades and “somewhat elevated” inflation, the statement issued after the meeting argued that “recent indicators suggest that economic activity has continued to expand at a solid pace.”

At the news conference, Fed Chair Jerome Powell said tariffs explain a “good part” of higher inflation expectations, but downplayed recession fears—much to the relief of equity markets.

This comes after the Bank of Canada, decided to cut its policy rate again last week, taking it down to 2.75%.

President Trump disagreed with the Fed’s decision, posting on Truth Social: "The Fed would be MUCH better off CUTTING RATES as U.S. Tariffs start to transition (ease!) their way into the economy. Do the right thing."

What’s next for the Fed? The Summary of Economic Projections suggests two cuts to the federal funds rate are forthcoming this year, but the actual decisions will be based on the incoming data.

Champagne order returned - Bank of Canada braces for next challenge

“The Canadian economy managed a soft landing. Unfortunately, we’re not going to stay on the tarmac for long.”

That quote comes from Bank of Canada Governor Tiff Macklem on Thursday, speaking at the Calgary Economic Development event. I attended, and two things stood out:

First, the Governor seems pleased that inflation is largely under control, but his celebration is being cut short as he and the Governing Council brace for trade turbulence.

Second, he was once again clear there is only so much the Bank of Canada can do about the next battle: “Monetary policy cannot offset the effects of a trade war.”

This is a very tricky stagflation-type challenge. The Bank can’t just crank down rates to near zero—they need to balance the recession risks (lower inflation) with the price impacts of tariffs (higher inflation). Macklem did talk in the Q&A about ‘structural’ improvements, which in my view is code for pulling policy levers he doesn’t have access to. For example, he talked about the gains that could come from knocking down interprovincial trade barriers or transportation infrastructure to new markets (his speech cites the Trans Mountain Expansion and Coastal GasLink pipeline projects).

I shared my thoughts with Chris Varcoe from the Calgary Herald. I said that the BofC will be cautious on rate cuts given the above. On balance, we see rates falling further if the trade war continues through the year, but limited by tariff-induced inflation pressures (our current call is for three more cuts to 2% by end of year before holding).

You can read his speech here.

Head’s up - Small business confidence plunges

A key indicator of small business confidence has sunk to the lowest level since its inception in 2000 amid trade tensions.

The Canadian Federation of Independent Business’s long-term Small Business Confidence Index (based on 12-month forward expectations of business performance) plunged 25 points in March. Tariffs are already having a negative impact on 62% of businesses surveyed.

These results agree with survey data released last week by the Bank of Canada that show a marked pullback in investment and consumer spending expectations.

There is no question the uncertainty of on and off again tariffs is eroding confidence. It remains to be seen if sentiment will improve once we get more clarity on tariffs on April 2. Either way, the sharp pullback points to a turning point in the economy.

Pre-tariff resilience - Alberta consumers keep spending

Alberta bucked the national slowing trend in retail sales in January. Sales were up 0.6%, building on a solid increase in December. Compared to the same time last year, they rose 7.1%. Vehicle sales have shifted to a higher gear, accounting for much of the recent gains.

Retailers in Canada saw weaker sales (-0.6%) in January, and preliminary data point to another pullback in February (-0.4%). January declines were concentrated in Quebec, Ontario, and Manitoba.

We think retail strength in Alberta will run out of steam. According to the Conference Board of Canada’s Index of Consumer Confidence, sentiment plunged across Canada (including in Alberta) last month. We see retail sales rising only 1.7% this year in our latest forecast, well below our projection for population growth of 2.5%. In real (inflation-adjusted) terms, we forecast that consumer spending will be up only 0.4%.

On a related note, Hudson’s Bay is in court seeking permission to liquidate its stores across Canada, which include 80 Hudson’s Bay stores, 3 Saks 5th Avenue stores, and 13 Saks off 5th Avenue stores across Canada. The latest (as of this morning) is that Hudson’s Bay is looking to keep 6 of its strongest-performing stores (three are in Ontario and three in Quebec). The iconic and oldest department chain in Canada filed for creditor protection amid financial difficulties and falling department store sales.

A useful resource - A tariff impact hub for the Edmonton region

Business leaders in the Edmonton area have created a Regional Tariff Ad Hoc Working Group to ensure a strong and unified response to the tariffs. The group has put together a Regional Tariff Impact Hub to share news, data and insights regarding the impact of tariffs on businesses in the Edmonton region.

Interesting Fact: Record immigration to Alberta

Canada added 483,591 permanent immigrants last calendar year—the highest number since 1972 (when comparable data became available). Alberta also set a new record for the modern period, adding 66,359 new permanent immigrants in 2024.

Chart of the Week: Still coming to Alberta

As noted above, Alberta’s population gains from international migration slowed over the course of last year, but remained the largest source of growth, outnumbering both net interprovincial migration and natural increase. While down about 44% from the same quarter in 2023, net international migration to Alberta was still more than double the average quarterly gain during the five years before the pandemic disruption.

Our latest forecast for Alberta’s population growth sees the gain from net international migration falling from the record high of just over 145K set last year to about 45K in 2026. Most of the decrease (86%) will be from a falloff in non-permanent foreign residents rather than permanent immigrants. We expect interprovincial migration to also ease, but remain positive given Alberta’s expected outperformance during the trade war and a continuation of the chasing affordability theme.

Answer to the previous trivia question: Not including Pierre Trudeau (who had already been Prime Minister from 1968 to 1979), nine individuals have been Canada’s Prime Minister since 1979: Joe Clark, John Turner, Brian Mulroney, Kim Campbell, Jean Chrétien, Paul Martin, Stephen Harper, Justin Trudeau, and Mark Carney.

Today’s trivia question: In total, how many different individuals have served as Canada’s Prime Minister?