In this week’s The Seven… 

• Still spending - But consumers to remain cautious
• B.C.’s economic outlook - Tariff exposed
• B.C. LNG - Finally flowing
• Major projects in B.C.
• Trading places - Canadians are chasing affordability
• Interesting Fact: The B.C.-Alberta population pipeline
• Chart of the Week: Needing a lift - GDP per capita by province

Well, I've been afraid of changin'

'Cause I've built my life around you

But time makes you bolder

“Landslide” by Fleetwood Mac

Did anyone predict that Prime Minister Mark Carney’s speech in Davos would steal this week’s economic headlines? In his speech, Carney talked about the world being in the “midst of a rupture,” that the “old order is not coming back” and that “middle powers must act together.”

It seems like, post Davos, everything has changed. Except it hasn’t. Carney’s speech was notable because he said what many were thinking out loud. It also provides more clarity on the path that Canada has chosen: tightening relationships with middle power allies, increasing non-U.S. trade and plans to expedite major nation-building projects. But it is still a continuation of the current path and reinforces the need to execute on all these promises in 2026. So back to Fleetwood Mac - will time make us bolder?

In today’s Seven, we take a closer look at the B.C. economy, including some interesting trends in migration patterns that support our chasing affordability thesis.

Still spending - But consumers to remain cautious

Hot off the press this morning, retail sales rose 1.3% in November nationally, including a 3.7% jump in Alberta. Good news, but caution is warranted. This is just one month. The retail numbers have been choppy and the longer-term trend still points to a consumer that is, more or less, in a holding pattern.

On the upside, lower interest rates, equity market gains and recent improvements in the labour market are providing a tailwind. On the downside, a slowdown in population growth, mortgage renewals at higher rates and ongoing geopolitical uncertainty are pushing overall spending in the opposite direction.

On balance, we forecast a 4.2% retail sales gain in Alberta this year.

B.C.’s economic outlook - Tariff exposed

After spending many years near the top of the growth leaderboard, British Columbia’s economy has slowed in the face of U.S. protectionism, a pullback in business investment, and moderating population growth.

A 45% U.S. softwood lumber tariff and reduced fibre supply have severely impacted the forestry and wood product manufacturing sectors in B.C., pushing employment down to post-pandemic lows. Overall, we estimate that B.C. faces one of the highest U.S. tariff burdens among provinces due to its reliance on lumber exports.  

After real GDP growth of 1.7% last year, we are expecting 1.5% in 2026—a notable drop from the 2.7% average growth seen over the previous two decades.

Growth is being held back by lower business investment, partly offset by a ramp up in government spending. B.C. experienced a wave of major project spending in recent years, including the Trans Mountain Expansion, LNG Canada Phase 1, and the Site C Dam that have wrapped up.

The housing market continued its cooling trend in 2025. Although housing starts saw some growth during the summer months, this momentum didn't last and the expectation is for a further decline in housing starts this year.

Employment hasn’t kept pace with the labour force. Consequently, the annual average unemployment rate climbed to 6.2%, reaching its highest level since the pandemic. A slowdown in population growth should help offset a weak hiring environment, keeping the unemployment rate steady this year.  

Meanwhile, population growth has slowed from its recent peak of 2.9% in 2023, reaching just 0.5% last year (as of July 1). The latest B.C. government forecast has a 0.3% decline in population this year, which is expected to curb consumer spending growth.  

Trading places - Canadians are chasing affordability

In my 2024 paper, I argued that people are moving around the country for different reasons in the past, with affordability taking on an outsized role.

There are a few reasons for this: 1) soaring inflation in 2021-2024 that permanently raised the cost of living; 2) wide variation in housing prices across the country, with rising interest rates exacerbating the differences; 3) two-thirds of Canadians say the rising cost of living is a top issue facing Canada; and 4) the advent of remote work tech which makes it easier to change locations without impacting employment.

Our previous work was focused on Alberta, showing that affordability (namely relatively less expensive housing in Alberta) was playing a key role driving persistent inflows of interprovincial migrants.

But B.C. is also an important case study given that housing prices are much higher in B.C. than other parts of the country.

Like Alberta, B.C. typically gains more people than it loses from other parts of the country. In the last two years, however, B.C. experienced net outflows of interprovincial migrants, primarily to Alberta, cutting into the gains seen over the previous 10 years.  

What’s more, the interprovincial losses include the net outflow of those aged 65+. In previous years of outflows, B.C. generally managed to still attract seniors - supporting the notion that many Canadians (including Albertans) choose B.C. for retirement. In fact, in every year back to 1972 (with the exception of the last three and 1999), B.C. has been a net recipient of seniors from the rest of Canada.  

Why has that trend reversed? One reason is that cost of living pressures have hit everyone, including older Canadians. The other one could be that seniors are following their children, or perhaps more importantly, their grandchildren. Without survey data we can’t confirm, but based on personal anecdotes and conversations, we have a hunch.

Carney at Davos

In case you missed it, here are some takeaways from Prime Minister Carney’s speech at the World Economic Forum in Davos:

• We are in the midst of a “rupture” rather than a “transition,” and middle powers, such as Canada, have no choice but to adapt. “Middle powers must act together, because if we’re not at the table, we’re on the menu.” 
• Nostalgia is not a strategy, and the world cannot wait for previous order to be restored. We must adapt to a reality where “great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.”
• Warned against “performance sovereignty;” true sovereignty must be anchored in the ability to withstand pressure 

As for Canada, Carney’s message is that the country must build “strategic autonomy” through domestic strength, diversified trade, and a new approach to international cooperation that includes a “dense web” of connections.

Interesting Fact: The flow of people between B.C. and Alberta

Given that B.C. and Alberta are Canada’s third and fourth largest provinces by population and neighbours, it’s not surprising that a lot of people move between the two jurisdictions. In fact, between July 1, 1971 and July 1, 2025 over 2.4 million people* moved between the two provinces for an average of about 45K per year. Even though Alberta has been a net gainer from the exchange for the last three years, it has lost 124K people to B.C. since 1971.

*We don’t know how many unique individuals moved over this period as someone who moved to B.C. in, say, 1990 may have moved back to Alberta in 2005 which would be counted as two interprovincial migrants even though it is the same person.

Chart of the Week: All provinces could use a (GDP per capita) lift

Improving the economy is a critical national issue. To see why, our Chart of the Week shows output per person has been stagnant in Canada over the last decade, and the weakness is broad based across provinces. This makes the productivity emergency discussed well before Trump 2.0 something that should concern all Canadians. Somewhat lost in the trade war noise, the fundamental issue for the Canadian economy has not changed - the need to restore labour productivity and with it gains in per person incomes.

In terms of levels, Alberta is still at the top, though the gap with other provinces has shrunk since the 2015-16 recession. Saskatchewan, another major resource producer, ranks second on this metric. Quebec, Manitoba, and the Atlantic provinces rank below the national average.

With population growth slowing to a crawl, and the Canadian economy expected to grow 1.7% this year, we expect to see improvement in this metric in 2026. But there is a long way to go to close the widening gap against the U.S.

We admit - this is a busy chart. It’s much easier to understand using our dynamic user interface.  Check it out here.

Answer to the previous trivia question: Ontario and Quebec account for over 70% of gold production in Canada (as of 2023).

Today’s trivia question: What is the population of Davos, Switzerland?