The Twenty-Four
The Seven, October 16, 2026
Hold onto your hats
By Mark Parsons 16 October 2026 7 min read
In this week’s The Seven…
- Decision day - Alberta referendum
- K-shape - Canadian edition
- With or without you - Bond market moving without the BofC
- Chilling out - The Canadian housing market
- Putting the micro in the macro - 2026 winners of the Nobel Prize in Economics
- Mid-term concerns - U.S. inflation
- Interesting Fact: Baby math - 2025 Alberta edition
- Chart of the Week: Still cheaper - but AB-CAN housing price gap has narrowed
The Canadian Finals Rodeo (CFR) was in Edmonton earlier this week. Move over hockey players—these have to be the toughest athletes out there. Also, how do their hats (mostly) stay on?
We’ll need to hold onto our hats with extra grip in the coming weeks. Here are a few things creating a draft:
- The U.S. midterms take place early November, with not-always-reliable polls suggesting the Democrats could take the House.
- The IMF says the global economy is running out of buffers, testing the resilience of the expansion.
- The Bank of Canada is in the hot seat, with pressure to fight elevated inflation even as the economy remains wobbly.
- We’re still waiting for a trade deal with the U.S. as pressure mounts. Stelco and Ottawa are in a dispute over Canadian layoffs at a Hamilton steel mill.
- Albertans head to the polls for a referendum on 10 questions, including whether to have a binding referendum on separation.
Can Canada learn from the ‘get’er done’ CFR attitude amid the push to kickstart major projects? There is a way to go, but this week we learned that executives in the oil patch are becoming more confident that pipeline projects will proceed.
Decision day - Referendum results arrive Monday night
Albertans head to the polls, with advance voting taking place all week ahead of the actual October 19 referendum day.
An Alberta Chambers of Commerce survey released this week shows the discourse around the referendum is the top source of business uncertainty in Alberta, ahead of trade and tariffs. 44% of respondents say the discourse is impacting their business, up from 39% in June, with 96% of those calling the impact negative.
Policy uncertainty is a drag on the economy, as we’ve seen already with on-and-off U.S. tariffs. Despite this, the economic data remains relatively strong in Alberta, with the province leading in employment growth, population growth, and retail sales growth so far in 2026. It appears other economic forces (like lower U.S. tariff rates on Alberta, higher oil prices, and faster population growth) are providing an offset to the uncertainty drag.
According to the same Chamber survey, 64% of respondents said a vote to have another referendum will have a negative impact on their business, while 18% said the impact will be positive. As for the economic and fiscal impacts of separation, the University of Calgary has prepared a detailed report that we’ve previously discussed.
K-shape - Canadian edition
Stateside, a ‘K-shaped’ economic expansion is taking place. That is, U.S. consumption and economic growth is being driven disproportionately by high-income earners - in part driven by AI-driven wealth gains.
Data from the New York Federal Reserve provides compelling evidence. It shows that consumer spending has grown at a much faster rate among the top income earners. Low-income earners are seeing larger cost of living increases.
Is the same thing happening in Canada? The data sets are not nearly as granular (at least I’m not aware of comparable data—ping me if you are), but some recent analysis by the C.D. Howe Institute suggests there are some K-shaped features at play in Canada.
- Low/high income K - Since 2010, the savings rate has risen for the top two quintiles of income earners, but fallen for the bottom three.
- Generational K - The probability of missing a debt payment has jumped for young Canadians aged 18-24, with a lesser (but still noticeable) increase in middle-aged Canadians. However, it has stayed low (less than 1%) for the 55+ age cohort.
- Location K - Highly-leveraged homeowners in expensive markets like Vancouver and Toronto are under more pressure.
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What to do? One of the study’s more interesting takeaways is to “broaden the geography of opportunity.” Specifically, the authors argue to “build the capacity of a small number of mid-sized cities to compete for workers and firms.”
This brings me back to our recent “Who's going to build?” series. The major projects the federal government wants to accelerate are largely in rural areas. How do we attract workers in these regions to meet that demand, including the housing and infrastructure to support them?
Putting the micro in the macro
I’ve always been more of a macro guy. But macroeconomics has gotten a lot more micro over the years. Turns out policymakers need to understand from the ‘bottom up’ how individuals and firms make decisions—not just rely on large-scale statistical models.
Enter the 2026 Nobel Prize in Economics—American economists Robert E. Hall (Stanford University) and Michael Woodford (Columbia University). They won for their groundbreaking work on the micro foundations (i.e., individual decisions) of macroeconomic stabilization (i.e., responding to the business cycle).
Their work builds on that of John Maynard Keynes, but is better at addressing stagflation shocks (i.e., periods of high inflation and high unemployment). It is also behind the use of “forward guidance” whereby central banks signal the likely course of their interest rate policy.
Chillin’ out - The housing market
Canada’s housing market can’t seem to get going. It showed signs of recovery over the spring. But headwinds are blowing: a pullback in population growth, a shaky job market, and rising interest and mortgage renewal rates (see rates discussion below). National home sales dipped 2.3% in September compared to August, while benchmark prices were down 0.4%.
Alberta has more recently shifted from a seller’s market to a balanced market. Out-of-province buyers remain, but have come down from the 2023 peak. A wave of completed construction projects has expanded inventory and restored buyer leverage.
Longer-term fundamentals remain sound—namely better affordability metrics than the national average (see the Chart of the Week) and a stronger demographic pulse (natural increase and interprovincial migration will outpace in Alberta).
But for now, a bit of a soft patch, as the market works down new supply and many buyers remain cautious.
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With or without you - Bond market tightening without the BoC
The bond market is not waiting for the Bank of Canada to raise rates. 5 and 10-year yields have been marching higher since the war in Iran started, alongside a similar trend in the U.S.
Even with the BofC on hold, the 5-year yield (the benchmark for mortgage rates of the same duration) has risen more than 0.5 percentage points since the start of the year.
Culprits include renewed concerns about (energy driven) inflation, higher government debt, and competition for capital from the AI buildout.
In principle, the bond market response can take pressure off the BofC to hike. We still think they will—but not until next year. Our view is that the economy is too fragile to absorb a hike right now. And, with core (i.e., underlying) inflation readings holding near 2%, they have some breathing room…for now.
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Mid-term troubles: U.S. inflation
As in Canada, Americans rank the cost of living as one of the most pressing issues.
This makes the latest U.S. inflation report all the more troubling. The Consumer Price Index accelerated to 3.7% year-over-year in September. It's not just energy prices, as the core CPI (ex food and energy) also ticked higher to 2.6%.
This is the final CPI update before the November 3 elections—potentially influencing swing voters.
The Federal Reserve resumed rate hiking last month. Rising core inflation increases the likelihood of future rate hikes, though a hawkish hold is expected at the October 27-28 meeting.
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Interesting Fact: Baby math - Alberta births and unique names in 2025
According to Service Alberta, there were 53,172 babies born in Alberta last year.
Scanning the official list, there were 14,707 unique names.
That means the typical name had 3.6 babies associated with it—a similar ratio to the previous 4 years.
To my pleasant surprise, there were 32 babies named Mark born last year—a solid choice!
What was the most popular name for babies born last year? That’s our trivia question below.
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Chart of the Week: A narrowing (but still wide) CAN-AB housing price gap
Canadian housing prices have undergone a massive correction since 2022.
Using the MLS composite benchmark, prices are 21% below peak levels from February 2022—just before the Bank of Canada started hiking its policy rate.
The correction has been particularly pronounced in Toronto, with benchmark prices now sitting 27% below their peak.
In Alberta, prices peaked later—in January 2025. Yet, they are only 3% below this level.
The price gap between the Alberta and Canada benchmark has narrowed to $143K (it peaked at $368K).
That’s still a pretty big gap. Our view is that more affordable housing, and more recently a pick-up in the job market, explains persistent inflows of interprovincial migrants to Alberta.
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Answer to the previous trivia question: In 2013, Alice Munro became the first Canadian woman to win the Nobel Prize for literature.
Today’s trivia question: Who is the second Canadian woman to win the Nobel Prize for literature?
Bonus: What was the most popular boy name and girl name among babies born in Alberta last year?