The 10-Minute Take

An enormous U.S. government deficit continues to raise concerns about fiscal sustainability as Moody’s joined other rating agencies in downgrading the U.S.’s credit rating. This raises questions about the implications for U.S. monetary policy, interest rates, and the impact on neighboring economies. In this episode of the 10-Minute Take, RBC Economics’ Claire Fan and Carrie Freestone explore: • Wh...

The U.S. administration reducing tariffs on Chinese imports from a staggering 145% to 30% marked a significant breakthrough in the ongoing trade war. But, the average effective U.S. tariff rate still sits at 13%— and fundamental trade headwinds haven't disappeared. In this episode of the 10-Minute Take, RBC's Economics Claire Fan and Carrie Freestone take you through how our forecasts for U.S. cor...

The trade war is changing travel plans. As tensions simmer, Canadians’ trips to the U.S. dropped substantially in early 2025 compared to last year. But, vacations weren’t cancelled altogether—Canadians are just going somewhere else. And, this trend of travelling less to the U.S. isn't unique to Canada – arrivals to the U.S. from other countries have also slumped this year. In this episode of the 1...

Full-blown reciprocal U.S. tariffs are on pause for 90 days, but sizeable 10% tariffs imposed on most countries on April 5 remains in place, and it, along with steep tariffs on imports from China, could have significant implications for the country’s inflation and growth. The U.S. trade-weighted average tariff rate is currently at its highest since the 1930s, but, in a twist of fate, Canada has em...

More attention is being focused on how Canada can better diversify trade to alternative sources as U.S. tariffs and threats continue to escalate. In the goods trade, Canada's geographical proximity to the U.S. makes it difficult to diversify away from the U.S. But, that is much less of a constraint for services. In this episode of the 10-Minute Take, economists Claire Fan and Carrie Freestone dig...

Consumers and businesses on both sides of the border have been paralyzed with uncertainty related to trade. Confidence has tanked and we've also witnessed a notable deterioration in other “soft” sentiment data in recent months. The extent that recent trade policies have impacted hard data is unclear but matters more for central bank decisions. In this week’s episode, RBC Economics’ Claire Fan and...

Economic data has shown that Canadian inflation was a little firmer than expected in early 2025, especially after considering the impact of the federal tax holiday that pushed prices lower for a few categories including restaurant dining. In the U.S., the picture is a bit “stickier.” Broadly resilient consumer demand has been keeping price pressures at uncomfortably high levels, and not all U.S. h...

As the threat of tariffs has been evolving, economists have been busy assessing the potential economic fallout. In this episode, RBC Economics’ Carrie Freestone and Claire Fan discuss: -What we know about the tariffs announced, what retaliation could look like and how these forces will impact both the Canadian and U.S. economies. -What Bank of Canada Governor Tiff Macklem said in the January meeti...

The looming threat of potential U.S. tariffs is keeping economists and monetary policymakers up at night. In this episode, RBC Economics’ Claire Fan and Carrie Freestone break down: -How RBC Economists are thinking about a U.S. tariff shock- including the multiple stages of passthrough to the economy. -How we think the Bank of Canada could respond to higher prices resulting from tariffs. -Why “res...

Season three of the 10-Minute Take is here, and we’re kicking things off with a deep dive into a hot topic—the Canadian dollar’s dramatic dip against the U.S. dollar, to levels unseen since the pandemic. In this episode, RBC Economics’ Claire Fan and Carrie Freestone break down: • The key drivers behind the loonie’s recent slump. • What this means for inflation in the current economy. • Where we t...

The Canadian economy has been through a whirlwind in 2024. Canada has been in an extended period of underperforming per capita growth compared to the United States since 2019. Still, 2024 was a pivotal year for Canadians with inflation coming down and interest rates finally moving lower. But has inflation truly been tamed? If so, why doesn't it "feel" like affordability has truly gotten better? An...

The U.S. government deficit is unusually large at 6.4% of gross domestic product in 2024—the average over the last five decades is 3.7%. Promises from the new Trump administration on the campaign trail suggest it is likely to grow even bigger over the next four years. Massive fiscal spending has been fueling U.S. growth, but will have important and, ultimately, costly consequences for the economy....

Canadian household balance sheets appear exceptionally strong as disposable income continues to rise alongside savings. But, what the latest economic data tells us is distinctly different from how many households are feeling. There are many signs the average Canadian consumer is suffering. How can both be true at the same time? On this episode of the 10-Minute Take, RBC economists Carrie Freestone...

The Bank of Canada cut the overnight rate by 50 basis points in October—marking the largest reduction since the pandemic. A day later, the federal government announced new immigration targets for the next three years that would drastically alter population growth in Canada. Both of these moves will have an impact on the Canadian economy. On this episode of the 10-Minute Take, RBC economists Claire...

With many Canadian households planning to renew longer-term fixed rate mortgages at higher rates into 2025 and 2026, Canada’s “mortgage renewal cliff” is hardly behind us. Higher mortgage payments mean less money leftover to spend on essentials and non-essentials and on balance, a weaker economic outlook. But we don't think this is a huge risk, as long as interest rates continue to drop and labour...

Headline inflation in Canada dropped to the 2% target set by the Bank of Canada for the first time since the pandemic in August. That means higher interest rates implemented by the central bank since 2022 have worked to reduce price pressures and restore balance back in the economy. But as much as that is good news, a closer look at the data shows today’s 2% inflation is not quite the same as 2% i...

The U.S. Federal Reserve cut the federal funds rate for the first time since the pandemic in September by 50 basis points. The easing of monetary policy was highly anticipated with inflation showing further signs of deceleration and a very gradual, but worrying, rise in unemployment. Still, many were expecting a 25 basis point cut, because overall economic output remains strong–propped up by robus...

The Liberal government recently announced new tariffs on electric vehicles, steel and aluminum imports from China—marking the latest move in the global trend of trade segregation to boost domestic priorities. That’s not the end of it - by the end of the ongoing 30-day government consultation, tariffs could also be imposed on other products including solar cells, EV batteries, chips, and critical m...

Both U.S. and Canadian households are facing recession fears- but for different reasons. Downside surprises to U.S. data in early August triggered a massive equity selloff. And a triggering of the “Sahm rule” in the U.S. was met with recession fears. In Canada, households are feeling stretched and job seekers struggle to find work. Despite not being in a recession, it certainly feels like one. How...

Younger Canadians are bearing the brunt of the softening labour market, accounting for the lion’s share— 80%—of the increase in Canada's unemployment rate since the summer of 2022. That share is much higher than in previous downturns like the global financial crisis. Not having a job results in a big hit to disposable income. That coupled with surging costs to service mortgages and other debt has...

The recent deterioration of the Canadian labour market comes at a time when immigration and population growth have also increased significantly. Many have put the two together, and attributed rising unemployment solely to the increase in the labour force due to newcomers. On that, we have a different view. It is true that landed immigrants are seeing a faster increase in the unemployment rate, but...

The focus is back on former U.S. president Donald Trump’s regressive trade policies after the first U.S. presidential debate and heading into November’s elections. On his campaign trail, Trump has promised to impose hefty tariffs on imports if elected for a second term—suggesting 60% tariffs on imports from China and 10% tariffs on all other imports across the board. in this week’s episode of the...

Canada’s underperformance in productivity has attracted a lot of limelight recently. It’s not a new problem, but the gap (especially when measured against the U.S.) has simply gotten too large to ignore. In the 1970s, the level of Canadian productivity was roughly 90% of U.S. levels. Today it’s more like 70%. That deterioration over the decades leads to an enormous $20,000 earnings gap, between an...

With summer approaching, what can we look forward to this year’s travel season that might be different from before? For one, it took longer for Canadians to feel comfortable with longer distance travel following pandemic disruptions but as of the end of 2023, demand for overseas tourism had finally recovered. That trend will likely continue this summer, as more Canadians travel further away to des...

An aging population has dire economic and fiscal consequences. It means widespread labour shortages, more upward pressure on wage growth and inflation, and potentially a growing funding gap for public social services. Canada is not alone in facing such challenges. What is unique, however, is how the Canadian government has utilized immigration as a tool to combat those headwinds. On this episode o...