The Twenty-Four
The Seven, August 14, 2026
The final countdown
By Mark Parsons 14 August 2026 6 min read
In this week’s The Seven…
- Clock is ticking - U.S. tariff deadline fast approaching
- Energy upside- Higher rig activity hasn't (yet) translated into more O&G jobs
- Mind the gap - Interest rates and the loonie
- Interesting Fact - U.S. involved in yen intervention
- Downtown revitalization - Big plans for Edmonton City Center
- Chart of the Week - Building permits in Jasper surge
“Will things ever be the same again? It's the final countdown.”
— The Final Countdown, Europe
This song is a bit dramatic, but it does underscore the importance of getting some sort of trade deal by August 19. That’s when the 50% Section 338 tariffs are scheduled to take effect, with disproportionately large impacts on certain sectors (e.g. alcohol, dairy, wood products, cement) and provinces (B.C., Quebec, and Ontario).
Canadian manufacturing has already been hit hard by sector-specific tariffs, even as other parts of the economy have largely skirted tariffs through CUSMA compliance.
A new round of tariffs would add ankle weights to a Canadian economy that has only recently started to find its legs.
Jobs have bounced back in the last three months and the second quarter is looking much better for growth. We’re now tracking 1-1.2% real GDP growth this year for Canada—an upgrade based on expectations of a 3.2% (annualized) Q2 uptick.
But before we get too carried away with the “growth is back” narrative, it’s worth taking a giant step back. Canada has unresolved structural issues around weak investment and productivity and is still in the middle of a trade war. As Trevor Tombe noted this week, the Canadian economy is trending below pre-tariff forecasts by about 2% - or about $1,400 per head.
Tensions remain heated in the Middle East. Despite earlier glimpses of hope, negotiations between the U.S. and Iran are at a standstill over the Strait of Hormuz blockade. The war has driven oil prices higher, but you’re still seeing a cautious approach to oil patch investment in Alberta. Producers are waiting for more certainty on pipeline projects and finalization of outstanding policies and agreements (more on this expected in the fall) under the current MOU before sinking capital into long-term growth projects.
And yet, in the absence of a classic energy investment boom, Alberta is leading the country (by a long shot) in employment growth this year. As I previously discussed, this time is different—broader across sectors, in-migration for more than just jobs, and production (vs. investment) driven energy growth. The upside in our forecast would be a new wave of energy investment synchronized with the growth we’re already seeing.
More activity, fewer jobs?
Here’s a puzzle we’re working on…
Rig activity in Alberta has been trending well above year-ago levels in response to sharply higher oil prices. Over the last three months it was about 22% higher than at the same point last year. Meanwhile, Alberta employment in oil and gas has been falling—down 5% year-over-year over the same period.
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It’s true that the industry has become more cost-efficient. Still, the combo of increased oil patch activity and fewer jobs is a bit of a head-scratcher.
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When the data doesn’t line up with our priors, it’s tempting to point to issues in the Labour Force Survey itself. It is possible that the sample in the survey isn’t capturing actual trends (the sample size afterall, for the entire province, is just over 4,000 households).
But for now, let’s take the data at face value. What does this mean? A couple of things come to mind:
- If oil and gas jobs pick up and the rest of the economy continues at its current pace, the labour market will tighten. In our current forecast, we already see the unemployment rate falling as the pace of labour force entry slows.
- That said, the upside is limited for now, even with higher prices. A durable upward shift in employment will need to come from new growth projects. This will only come when there is more certainty on upcoming pipeline proposals, including implementation of the Alberta-Canada MOU. Canadian Natural Resources Ltd. (CNRL), for example, said they could proceed on its delayed $8 billion expansion if final agreements are cemented.
Mind the gap - Interest rate differentials and the loonie
Currencies are complicated—tricky to monitor and even harder to forecast. Interpreting what’s going on will make your head spin.
The challenge is that you need to keep track of two different prices (say the U.S. dollar and the Canadian dollar) just to get a read on the thing (USD/CAD exchange rate) you’re trying to understand.
That doesn’t mean you should throw your hands in the air and give up.
One of the variables worth watching is the interest rate spread between Canada and the U.S. All things equal, higher interest rates in the U.S. (versus Canada) put downward pressure on the loonie, since money tends to flow where it can get higher yields.
Since the fall of 2022, bond yields in the U.S. have been persistently higher than in Canada. This corresponds to a period when the Federal Reserve raised its policy rate faster and higher than Canada. More importantly, the Fed has been forced to lower rates much slower than the Bank of Canada due to stubbornly high inflation readings. This week U.S. inflation came in at 3.4% for July - well above the 2% target and tracking ahead of Canadian inflation.
What else has kept the loonie limping along? Trade uncertainty/tariffs, tepid Canadian growth, and generalized US dollar strength (in part reflecting flight to safety amid geopolitical instability).
What’s next? Bill Kellett, a currency expert from ATB Cormark Capital Markets, says the loonie could hit 0.725-0.741 under an upbeat Canadian growth scenario in the back half of 2026. In his downside with trade tensions flaring, he provides a range of 0.690-0.699 (all numbers USD$/CAD$ - Bill cites CAD$/USD$ which is the more common convention in exchange rate markets).
Our latest forecast, in collaboration with Bill’s team, has the loonie averaging 0.720 this year and 0.735 next year.
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Interesting Fact: Japan intervenes to support the Yen
The Bank of Japan has intervened to stem the rapid depreciation of the Japanese Yen in recent months. To do this, it sells U.S. dollar reserves and buys yen.
The rapid yen depreciation had numerous causes, including massive interest rate differential between the U.S. and Japan and persistent trade deficits.
While a weak yen improves revenues for exporters and supports the tourism sector, it also makes imported goods much more expensive. The Japanese government is concerned about inflationary risks and destabilizing currency moves.
Fun fact: the U.S. has been involved with the intervention. It joined forces with Tokyo because a solo Japanese defense of the yen might require Japan—one of the largest foreign holders of U.S. Treasuries—to liquidate massive amounts of U.S. debt. This threatened to drive up U.S. borrowing costs and rattle global financial markets.
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Big plans - Edmonton City Center may get revamped
A potentially game changing announcement this week for Edmonton’s downtown.
Local developer Westrich Pacific has received court approval to acquire Edmonton City Centre out of receivership.
Phase 1 targets the former Hudson’s Bay site to build roughly 1,500 housing units, street-level retail, and a rooftop Nordic spa. If it proceeds, it would fundamentally shift the struggling core toward high-density housing and street-level activity.
This is early days and not a done deal, but something to watch out for.
Chart of the Week: Jasper is rebuilding
As a frequent visitor to Jasper, I look forward to seeing the progress in the reconstruction efforts following the devastating wildfires in summer 2024.
Parks Canada provided an update as of August 10, 2026:
- Of the 374 destroyed structures, 54 now have occupancy, 96 are under construction, 37 have building permits approved, 68 are in the permit application process, and the remaining 119 are in the preparation phase.
- 239 development permits have been issued for rebuilding and 163 for recovery.
Our chart of the week shows the dramatic spike in the value of permits in 2025 - mostly residential related.
Keep it up Jasper!
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Answer to the previous trivia question: After the U.S., Canada had its largest goods trade surplus with the United Kingdom in 2025, driven heavily by exports of gold.
Today’s trivia question: When was the last time the U.S. intervened to support the yen?