As we’ve noted, U.S. trade policy has been in flux for so long, we’ve started to get used to it. As a result, the sense of uncertainty created by tariffs has, while still very high, been falling since March.

In the same way, the normalization of tariffs may be part of the reason business confidence both nationally and provincially in Alberta has doubled since March.

According to the July edition of the Business Barometer® from the Canadian Federation of Independent Business (CFIB), the long-term (12-month) sentiment index went from just 25.5 in March to 50.9 in July. In Alberta, the index went from 25.2 in March to 55.8 in July.

It’s a similar story for the short-term (3-month) confidence index in Alberta falling from 51.6 in February to 12.9 in March only to climb back to 55.2 by July.

The July levels are not particularly strong readings, but the improvement since the spring is an amazing turnaround in a short period—a period during which U.S. tariffs and tariff threats dominated the economic news and Canadian countertariffs were being charged on a wide range of U.S. imports.

Perhaps it was the fact that the Canadian and U.S. economies haven’t performed as badly as feared and the potential of a trade deal with the U.S. that would minimize the damage from tariffs were enough to lift the confidence of small business operators from the depths seen in March?

This could, however, change quickly depending on what the trade deal with the U.S. looks like, especially whether or not the exemption for Canada-U.S.-Mexico-compliant goods will continue and how the sector-specific tariffs will be treated.

So while it is good to see business confidence improving, we are still waiting for more clarity on tariffs and their impact on the economy.

*The long-term optimism index is based on how businesses expect to be performing in 12 months while the short-term optimism index is based on how businesses expect to be performing in 3 months. Measured on a scale between 0 and 100, an index above 50 means owners expecting their business’s performance to be stronger outnumber those expecting weaker performance. An index level near 65 normally indicates that the economy is growing at its potential.

Answer to the previous trivia question: The average size of single-detached homes in Canada (as of 2020) was 1,765 square feet (164 square metres).

Today’s trivia question: What is the origin of the term "confidence man" (a.k.a. “con man” or “con artist”)?