In this week’s The Seven… 

• Time to execute - Fixing Canada’s investment problem
• Lower walls - Some progress on internal trade
• Retail sales - Not bad all things considered
• Oil egress - Enbridge to add capacity
• Interesting Fact: Mutual recognition in New Zealand and Australia
• Chart of the Week: Export elbows down

A busy week in the economics sphere, and for ATB Economics! We celebrated Women's Entrepreneurship Day by interviewing Jacqueline Jacek, Founder of JACEK Chocolate Couture, then I presented our latest outlook at the Calgary Economic Development 2026 Economic Outlook event.

Economics news-wise, the Globe and Mail reported on a potential MOU in the works on a west coast pipeline. There was also more progress on internal trade with ministers agreeing to a mutual recognition framework for goods.

On the data front, it was a bit light, though we did get a ‘meh’ retail report this morning.

We dig into these topics in this week’s The Seven!

We know the problem, let’s fix it

It was a big day at the annual Calgary Economic Development Economic Outlook event in Calgary on Wednesday with 1,300+ in attendance. As one of the keynote speakers, I sensed energy in the room. It highlighted the diverse economic growth happening in Calgary (and Alberta more broadly). From tech and tourism to aviation and energy, there is lots to celebrate regarding what’s next for the city’s economy.

I discussed, and so did Andrew Coyne (the other keynote speaker), a problem holding back Canada, Alberta, and Calgary: business investment and the productivity growth it enables are simply not where they need to be. The good news is that the federal government has correctly identified the problem (see the chart below taken from federal budget 2025). Now, we can move on to the real work of fixing it. 

It’s one thing to say we want to attract a trillion dollars of new private sector investment, as the federal budget proposes, and quite another to execute on this. Calgary Economic Development President and CEO Brad Parry noted the need for a less cumbersome regulatory process and Andrew Coyne stressed the need for tax reform. We also need to reduce barriers to interprovincial trade (see the section below on the Canadian Mutual Recognition Agreement that was signed on Wednesday) and seek export market diversification while ensuring access to the U.S. market (see our Chart of the Week below).

Like a hockey team in the playoffs, I also discussed the need to play our best players. For example, we know that the energy sector can attract huge amounts of productivity-boosting business investment if it has room to grow, so we can’t keep it on the bench. And it’s not a case of picking a lane. We need energy investment and investment in as many other sectors as possible. Agri-food is another huge opportunity - Canada can be a food superpower, not just an energy superpower. Take Calgary - it can be an energy giant and a tech giant. And a hub for aviation. And so on. AND rather than OR being the operative word. Record inflows of newcomers to Alberta have created more ‘slack’ in the overall labour market, and a pool of labour to grow multiple sectors.

We also need to figure out where we are going to find the skilled labour we need to “build, baby, build.” When I present at construction-sector events (as I did today), builders tell me that, despite Alberta’s growing population and elevated unemployment rate, they can’t find enough workers. Why? Because they need workers with the right skills and experience and those are still in short supply. It’s simply not good enough to worry later about how we will find the skilled workers needed to build major projects. We need to be doing this now via careful planning and action on education, training, and immigration.  

Lower walls - Some progress on internal trade

When the trade war picked up steam in January, I talked about how mutual recognition could be a potential path forward for removing internal trade barriers.

Well, there has been progress on that front.

It doesn’t include the services or food and alcoholic beverages, but the newly-minted Canadian Mutual Recognition Agreement which was signed by federal, provincial and territorial trade ministers in Yellowknife on Wednesday is a positive step toward removing some of the nagging barriers to free trade within Canada. 

This is yet another example of how much more quickly things move in Canada when there is an existential threat - in this case, a sudden surge in U.S. protectionist policies.

What will the agreement do? The idea is that Canadian businesses will no longer have to meet the requirements of 14 different sets of provincial, territorial and federal rules to sell their goods (except for food, live animals, alcoholic beverages, cannabis, tobacco, and plants) Canada-wide. If a good meets the rules one province or territory, it will no longer face additional approvals before it can be sold in the rest of the country. Exceptions can be applied if a government identifies a specific requirement it will retain.

Mutual recognition of goods and services has long been discussed in Canada and was on the work plan of the Regulatory Reconciliation and Cooperation Table (RCT) dating back to 2021-22. In 2022, a study by The Macdonald-Laurier Institute discussed how this arrangement could work. It also quantified the potential benefits. Under the purest form (i.e. no limitations, which is not what was agreed to), authors Ryan Manucha and Trevor Tombe estimated a long-term impact of 4.4-7.9% on GDP, or $110-200 billion a year.

The response from the business sector has been positive with the Canadian Chamber of Commerce saying it will reduce fragmentation and lower costs for Canadian businesses.

Consumer spending - Hanging in there

There are a couple ways to interpret today’s retail report.

On the one hand, consumers have demonstrated resilience in the face of tariff uncertainty, rising unemployment, and cost of living pressures. Inflation-adjusted retail sales in Canada were up by 3% on a year-to-date (YTD) basis through September. Strong auto sales have been key, but even with those taken out, inflation-adjusted YTD sales were up by 2%.

A similar trend is observed in Alberta, but with a slightly larger increase in nominal sales this year.

It hasn’t hurt that fewer Canadians are travelling to the U.S. and spending their retail dollars down there. We’ve also been getting a boost from ongoing population growth and lower interest rates. Whatever the precise mix of reasons, sales are higher than last year and that’s good.

On the other hand, there are signs that at least some consumer fatigue is setting in. Retail sales, adjusted for inflation, in Canada have barely budged since January.

Interesting Fact: Mutual recognition in New Zealand and Australia

The mutual recognition agreement announced in Canada this week is not new. It has happened elsewhere.

For example, there is a mutual recognition agreement inside Australia called the Mutual Recognition Act (MRA) from 1992.

There is also a mutual recognition framework between New Zealand and Australia called the Trans-Tasman Mutual Recognition Arrangement (TTMRA). It ensures that:

• Goods legally sold in one country can be sold in the other.
• Registered professionals in one country are entitled to practice the equivalent occupation in the other.

Chart of the Week: Export elbows down

Confidence is a valuable asset when dealing with a tough situation and trying to make positive changes. But you also have to be realistic. This is the case with the unofficial “elbows up” response Canada has taken to U.S. tariffs. A rallying call in Canada in response to U.S. tariffs has been to buy Canadian and rapidly expand into other markets. (Side note: this was actually a good idea all along, not just in response to U.S. protectionism.)

But, it’s not like we can walk away from the U.S. It’s the world’s largest economy, our largest customer, and our economy is tied to it in myriad ways. As a result, despite the elbows up stance, our trade with the U.S. remains vital to our economic prosperity and the supply chains, relationships and economic opportunities that tie us to the U.S. remain in place.

This is evident in the distinctly “elbows down” trend in our exports to the U.S. As our Chart of the Week shows, Canada’s share of international merchandise sales flowing to the U.S. is down only slightly to 74% so far this year.

Answer to the previous trivia question: Calgary led North America in tech talent growth between 2021 and 2024.

Today’s trivia question: What classic horror film based on Mary Wollstonecraft Shelley's 1818 novel was released on this day in 1931?