In this week’s The Seven…

• We’ll take it - Finally some good Canadian jobs data
• Let’s get less technical - Keep your eye on structural issues
• Youth unemployment - Why is it so persistently high?
• Interesting Fact - IPO frenzy
• Chart of the Week - Where is the job growth in Canada this year?

Wait 24 hours. In today’s geopolitical storm, that’s been my message.

My point is that we all need to take a step back and appreciate the big picture—not just the news of the day. For example, reading the news you’d think the trade environment has never been this bad, but it was worse in 2025 by most measures (e.g., effective tariff rates, trade policy uncertainty).

You may counter that just this week President Trump announced new tariffs on countries importing from ‘forced labour’ countries, including Canada. But it’s not a sure thing and, even if successful, it’s an attempt to replace ‘liberation day’ tariffs struck down by the U.S. Supreme Court. The proposed 10% tariffs, moreover, will not apply to CUSMA-compliant goods.

We also can’t forget that the AI boom has been operating in the backdrop amid all the geopolitical noise, driving earnings growth and the U.S. economy.

That said, there are some things that don’t get better with age (OK, more than a few things).

I’ve waited more than 24 hours after receiving last week’s GDP Q1 report, and my assessment hasn’t gotten any better since my BNN Bloomberg interview. That said, today’s positive jobs report makes me feel slightly more hopeful than I felt 24 hours ago.

When you take a giant step back, it becomes more clear: amid the global geopolitical flurry, the ball is in Canada's court, and the upside comes from within our borders.

That’s better - Canadian jobs roar back to life

No need to rehash in detail here, as we covered this morning, but this is a much better way to end the week with 88K Canadian jobs added in May. It’s even better in Alberta, which is leading the charge so far this year (see chart of week below).

Keeping the good vibes going, the U.S. also smashed expectations with a 172K payroll job gain in May, and previous months were revised higher.

Last week was rough with all that ‘technical recession’ talk. This week ends with shockingly good job gains. Life is funny—just when you’re about to get down, something positive happens.   Remember, wait 24 hours.

Let’s get less technical - Focus on structural stuff, not ‘technical recession’ arguments

You can’t sugarcoat last week’s GDP report—it was disappointing. Q1 annualized GDP growth was a full 1.6 percentage points below the Bank of Canada’s estimate from April. Some have pointed to one-off factors like gold imports or a pullback in government investment. But if you’re playing that game, what about the one-time surge in inventories that propped up GDP, the continued decline in business investment, and weaker-than-expected consumption growth?

But too much oxygen has been spent on debating whether it’s a recession or not. The final “R” word will come from the C.D. Howe Institute looking at the breadth and depth of the pullback, not just the “two straight negative quarters” technical recession rule. Our sense is it likely won’t come out as an actual recession when they’ve cranked through the math.

What really matters, in our view, is that the Canadian economy ran out of steam, and some longstanding structural problems have reared their ugly heads.

Most notably, the consumer is going to find it harder to support Canadian growth now that the population isn’t growing and energy costs have surged. Investment needs to take the baton, but that hasn’t happened yet. Indeed, business investment has been trending lower, and remains below the 2014Q4 peak. Exports could also use a kickstart, but that won’t happen without investment. It’s the ‘under the hood’ growth problem that needs to be fixed, as shown before and now updated in our chart below.  

If this all seems dismal to you, take comfort in the fact that the country (provinces, the federal government, and business community) recognizes that we need to fix the investment and export problem to restore growth.

There are glimmers of hope. In our neck of the woods, recent talk of pipeline expansions and LNG developments (Shell’s purchase of ARC, the agreement signed by Canada and Germany for the sale of Canadian liquefied natural gas (LNG) to Europe) give us cautious optimism that we could be entering a new energy growth cycle.

We’re just in that tough spot where targets and actions to date (major projects office, MOUs, etc.) are not yet showing up clearly in the GDP data.

So if there is a time to fix the problem, it is now. Our view is that we should see some improvement in investment in line with the recent Bank of Canada business survey, and that trade will start adding to growth. Expect a modest improvement in Q2. Clarity around CUSMA will help following the summer review. But considering Canada’s investment/export challenge pre-dates Trump 2.0, landing a trade deal is only a start. We’ll  need to go beyond ‘modest’ gains, as we look for that “made in Canada” upside.

For now we wait…at least for the next 24 hours. 

Youth unemployment - What’s going on?

A nagging issue in Canada is persistently high youth unemployment. It looks even worse when you consider the fact that the share of youth with a job (the employment rate) is sitting near record lows (outside the pandemic) - see chart.