In this week’s The Seven… 

• Creative Destruction - Nobel winners advance concept
• Say what? More on that shocking jobs report
• The right stock? Housing supply in Alberta
• Interesting Fact #1: Advancing rural innovation
• Interesting Fact #2: Carbon fibre from the oil sands
• Chart of the Week: Under the radar - Surging Canadian propane shipments to Korea and Japan

"But look around
Leaves are brown
And the sky is a hazy shade of winter"

-A Hazy Shade of Winter, Simon & Garfunkel

Who else changed their tires over Thanksgiving weekend? It’s a dreaded (but necessary) task as we brace ourselves for the winter elements.

The Canadian economy is already in the trade storm. Exporters are under pressure, especially in highly tariff-exposed industries like steel, aluminum, autos, lumber and copper. This week, Stellantis announced plans to shift production of the Jeep Compass SUV from its Brampton, Ontario, plant to its Belvidere Assembly Plant in Illinois. The federal government is threatening legal action against the company.

To weather this storm, we need to put on the winter tires, or ‘structural reform’ we’ve heard Bank of Canada Governor Macklem recently talk about.

But how? The most frequently cited ingredients include fast-tracking major project investment, improving internal trade and expanding into overseas markets. 

Let’s add to the mix creative destruction - the process whereby better and more efficient products and production methods constantly displace older ones. 

Sound familiar? It’s a phrase attributed to famous Austrian economist Joseph Schumpeter.

The phrase came back into public discourse this week when Canadian economist Peter Howitt, along with Philippe Aghion, won the Nobel Prize in economics for advancing creative destruction into a formalized model of technology-driven economic growth. Joel Mokyr also shared the prize for understanding the source of sustained growth.

Innovation inputs, check. Outputs, we’re working on it.

Part of the innovation process is ‘standing on the shoulders of others’ who come up with something cool. That’s what I’m doing here with this scatter plot, skillfully created by our economist friends at the Business Council of Alberta. It’s been re-created by us below.

The Global Innovation Index 2025 results show that converting innovation inputs into outputs is something Canada needs to get better at. 

What’s missing? To some, we need more competition. To others, it’s policies that encourage not just ideas, but also those that incentivize scaling and commercialization of said ideas (in a former life, I did a deep dive into how the federal tax system could be better geared to reward innovation). There are merits to both arguments. I constantly hear in my travels that some tech start-ups are selling IP and scaling in the U.S. rather than here in Canada.  

Here’s the good news. We have the inputs - talent and ideas. We just need to convert them into commercial success so Canada (not other countries) realizes the fruits of our ideas. How do we do that?

The right stock? Changing housing needs in Alberta

At a recent housing symposium put on by the Urban Land Institute, one question kept coming up. Will we have the right mix of homes in Alberta?

The surge in housing starts has come from multi-units, primarily purpose-built rentals, aided in part by favourable CMHC financing (e.g. MLI select).

Single-detached home starts are also up this year, but are far eclipsed by multis.  

The supply response likely helps explain why apartment benchmark prices have been falling, while single detached houses have continued to rise. Posted rents have also drifted lower.

The sequencing of new housing starts makes sense. Newcomers to Canada are more likely to rent, according to recent Statistics Canada research. But as immigration patterns shift, so do housing requirements. The number of temporary workers and students is now declining in Canada and in Alberta. That same Stats Can study shows that the longer a newcomer is in Canada, the more they shift to home ownership.

As demographics patterns shift, the question remains - are we building enough single-detached housing?

42,500 new jobs! Good news, but we need more data

I’ve been getting questions about last month’s stunning job gain for Alberta.

On the one hand, it can’t be dismissed. It’s the largest one-month increase outside of COVID on record, and accounted for more than two-thirds of the new jobs in the country. And it was pretty broad-based across sectors, so we can’t trace it to a one-sector anomaly. We did expect a rebound, largely due to unexplained weakness in construction over the summer, but nothing like that. 

On the other hand, it is just one month. And one month doesn’t make a trend. Keep in mind the sample size for the LFS is only 65,000 households in Canada, and just over 4,000 in Alberta, so there is measurement error to consider. Context also matters - September’s jump offset losses the previous two months.

Before changing our forecast (which calls for a moderation) we need more data. Other metrics - population growth, retail sales, exports and manufacturing - point to a slowdown, so we shouldn’t expect the September gain to repeat.

All that said, the longer-term trend is that employment in Alberta has been outpacing the rest of the country. This is in keeping with our view that the province should fare better in the current trade storm due to a few factors, such as a lower effective tariff rate, housing demand, interprovincial migration and energy production.  

The Alberta labour market story has been more jobs, but even more people. With migration slowing, we should see some downward pressure on Alberta’s elevated unemployment rate next year (forecast to average 7.4% vs. 7.8% today). 

Side note:  The Alberta Teachers’ strike should not materially impact the employment or unemployment numbers in October. Statistics Canada's Labour Force Survey (LFS) treats workers involved in a strike or lockout as employed but absent from work. However, we should see a big reduction in hours worked in Education services. As noted last week, the loss of over $70M/week in earnings will weigh on consumer spending, with impacts compounding the longer the strike duration.  

Answer to the previous trivia question: Featuring a sink, a shower, a gas stove, and a solid waste system, the smallest house in the world is a mere 25 square feet.

Today’s trivia question: What is the boiling point of liquid propane?