In this week’s The Seven… 

• Doubling exports to non-U.S. destinations
• Signal in the retail data noise - Canadian consumers are cautious
• Ahead of the pack, but slowing - Agriculture productivity growth
• Panel says - Canada needs to ‘energize’ its economic ambition
• It takes two to (con)tango - Oil prices
• Heading south - to the Medicine Hat region
• Interesting Facts: CFB Suffield and a major Medicine Hat greenhouse
• Chart of the Week: Small business employment by industry

“To build on this momentum, I am announcing an ambitious goal for Canada to double our non-U.S. exports in the next decade.”

—Prime Minister Mark Carney, Live Address, October 22, 2025

My first reaction when I heard this? I need to build a chart. Here it is, showing Canada’s non-U.S. exports (goods and services) since the 1980s and where they would have to go to double in size in ten years.

Squinting at this chart, you can see it took 17 years - from 2007 to 2024 - for non-U.S. exports to double in the latest go-around. That would mean that Canada would need to shave 7 years off its recent track record - an ambitious goal.

Is this possible? Maybe, but it will require all hands on deck, including building more trade infrastructure to reach overseas markets.

What role can Alberta play? Energy exports are one pathway for Canada to hit its goal, as they are highly concentrated in the U.S. There is recent progress to build off, including the Trans Mountain expansion enabling more Asian-bound oil exports, the Ridley Island Propane Export Terminal boosting propane exports, and now LNG Canada pushing up natural gas shipments. Indeed, energy product exports* to non-U.S. destinations have more than doubled (+155%) over the last decade and are up 82% year-to-date in 2025, far outpacing other export categories. Other opportunities for Alberta include agri-food, critical minerals, wood products, and service exports.

Either way, it’s a mission critical task as President Trump now says he’s called off trade negotiations in response to an Ontario ad. Hope of an imminent trade deal is fading, and attention leading towards the November 4 federal budget is what we can do at home.

As I’ve highlighted and repeated yesterday on an Alberta Securities Commission Connects Panel, solving the investment problem is key to overcoming Canada’s GDP per capita woes, and will be a necessary condition to getting Canada’s economy going. It’s also needed to hit the PM's world series trade aspirations, as more export capacity overseas will require much more investment.

In other news, it’s Small Business Week! This week we have profiled an Alberta-based framing business in a conversation with Dean Ransom, and spoke with one of ATB’s leaders (Tanya Kroeker) on the state of small business in Alberta. We wrap up Small Business Week with our Chart of the Week on employment by business size.

Signal in the retail data noise - Canadian consumers are cautious

On the surface, Canadian retail sales in August looked pretty good, rebounding from a weaker July.

But Statistics Canada’s preliminary reading suggests this momentum stalled heading into September, and as we noted yesterday, consumer sentiment remains weak. And before we get too carried away about the August jump, keep in mind seasonally-adjusted sales have hardly budged since December (+0.5%) and the same holds true in real, inflation-adjusted, terms.

As for Alberta, it’s a similar pattern, though the year–over-year numbers are tracking a tad stronger in Alberta (5.4% vs. 4.9% nationally). August saw a nice monthly bounce back (+1%), but we’re roughly on par with December levels.

Bottom line? Consumers are cautious and trade uncertainty is not helping. This is consistent with our September forecast, and we’re tracking closely with the retail data on this.

Ahead of the pack, but slowing - Agriculture productivity growth

Too often, industries get painted with the same brush, when in fact there is great variation.

For example, in a previous Seven, I have highlighted that the agriculture sector has been a standout performer when it comes to labour productivity growth, even as other industries have struggled.  

Agriculture labour productivity (real GDP per hour worked) in Alberta has increased by 83% since 2000. That represents a compound annual growth rate of 2.4% vs. 0.6% for the Alberta economy overall.

That said, a recent report by Farm Credit Canada (FCC) has talked about the more recent slowdown in productivity in the agriculture sector. And indeed, using the latest 2024 data, we find that labour productivity in the sector has slowed in the last 5 years.

FCC links the slowdown to declining investments in R&D, and commercialization of agriculture research. They urge that this must turnaround for ag productivity to be revitalized, along with widespread adoption of existing farm technologies.

A related FCC report argues that the U.S. has been far more successful in attracting venture capital investment in ag start-ups in areas like A.I., precision farming, and robotics.

Panel says - Canada should ‘energize’ its economic ambition

Canada is the fourth largest producer of oil in the world, and the fifth largest producer of natural gas. Does this make Canada an energy superpower?

To discuss this, and many other issues on Alberta’s and Canada’s economic potential, I joined Studio.Energy Founder Peter Tertzakian and Eavor Technologies President & CEO Mark Fitzgerald on an Alberta Securities Commission (ASC) Connects panel, moderated by Calgary Chamber of Commerce President Deborah Yedlin.

Our conclusion is that, while progress has been made and the right signals have been sent, Canada has a ways to go.

One roadblock to being an energy superpower is that Canada has been essentially tied to a single customer - the U.S. TMX and Coastal Gas Link to LNG Canada represent progress, but it is “baby steps”. Canada’s reliance on the U.S. has, at times, resulted in massive price discounts. It’s hard for Canada to be an energy superpower when we don’t have clout in international markets. According to Tertzakian, true energy ambition means actively seeking out and investing in pursuing new customers.

I provided the macro lens as to why all this is so important, re-iterating my point that Canada’s per capita GDP problem is really an investment deficit. And it’s not just oil and gas. Statistics Canada finds investment weakness is “pervasive across industries”. For example, the manufacturing sector is investing less today (in inflation-adjusted terms) than in 2000.

A relentless focus on competitiveness to bring in private capital will be critical. 

The panel’s conclusion? Be bold and ambitious. The time is now.  

In addition to the broader trends discussed on these pages, I will set the stage for deeper dives into economic opportunities in the southeast region of the province.

The southeast region is a great example of an economy overcoming adversity by diversifying, and growing other industries.

The natural gas industry, the long-time economic heart of Medicine Hat ("The Gas City"), has experienced a dramatic decline, precipitated by the boom in North American shale gas production and the plummeting of natural gas prices at the tail end of the aughts. This shifted the focus to electricity generation profits, renewables (e.g. Saamis Solar Park), and downstream natural gas-based manufacturing such as fertilizer and methanol.

Today, Medicine Hat is actively positioning itself as a diversified services and manufacturing hub with strong pillars in health care, agriculture (supported by new investments in irrigation), unmanned vehicles, renewable energy, modular home construction, petrochemicals (including the world’s largest thermal carbon black production facility; the only commercial-scale methanol manufacturing complex in Canada; and the largest nitrogen manufacturing complex in Canada), and a growing focus on advanced technology (partly influenced by the nearby CFB Suffield's research focus - see below).

Interesting Fact #1: CFB Suffield

CFB Suffield is an economic driver for the Medicine Hat area. In addition to the Canadian military, it has also been a training ground for the British military, though in 2020, the British ended their Large-Scale Armour Training, which brought 5,000-10,000 troops to the region each summer - a setback to local businesses.

At Suffield, there is a $750 million research lab project that has moved into the design phase at western Canada's only Defence Research and Development Centre, a hub for cutting-edge research in chemical, biological, radiological, and nuclear defence, as well as robotics and battlefield technology. With PM Mark Carney pledging to ramp up military spending to 5% of GDP, it will be interesting to see if further investments are made at CFB Suffield.

Interesting Fact #2: Feeding the country…with a Medicine Hat greenhouse

The largest single-site, year-round produce greenhouse operation in western Canada is Big Marble Farms in Medicine Hat, Alberta.

• Size: The facility stands at 3.1 million square feet (or 72 acres) of covered growing space.
• Production: It is primarily used to grow high-tech, year-round produce, such as tomatoes and cucumbers, for western Canadian markets.

Chart of the Week: Small business employment varies by industry

Small businesses with 1-49 paid employees account for the lion's share of businesses in Alberta, at more than 95% of total businesses according to the latest Government of Alberta Small Business Profile report. That same report shows that Alberta has the third highest number of small businesses per capita, after PEI and B.C.

Another way to look at this is the share of people employed by small businesses. Small businesses with less than 50 employees account for about 35% of payroll employment in Alberta. However, as our Chart of the Week shows, that share varies considerably across industries. The highest concentration of employment by small businesses is in accommodation and food, and professional services. Near the bottom of the list is oil and gas and mining, and finance and insurance.

*Energy products is a broad category that includes crude oil and crude bitumen; natural gas, natural gas liquids and related products; coal; nuclear fuel and other energy products; and electricity.

Answer to the previous trivia question: It is about 4,000 kilometres from Toronto to Los Angeles by road (3,500 by plane)..

Today’s trivia question: When did the Dodgers move from Brooklyn to Los Angeles?