United States: Despite accelerating 4.3% annualized in the third quarter, U.S. real GDP growth likely moderated to an estimated 2.2% rate in 2025 from 2.8% in 2024. The effects of the trade war, federal government cuts, and immigration curbs more than offset rapid AI-driven business spending, record equity values, and stimulative fiscal, regulatory, and monetary policies. Still, the economy outperformed expectations last year and growth looks to hold roughly steady at around 2.3% in 2026 as tailwinds persist while headwinds subside.
Canada: The best that can be said about Canada's economy in 2025 is that it likely skirted a recession, thanks to the duty-free status of USMCA-compliant goods, supportive fiscal and monetary policies, and the TSX's blistering 28% rally. Still, real GDP growth likely slowed to 1.7% from 2.0% in 2024. Moreover, the annual average figure likely understates the true deceleration in activity, with GDP likely rising just 0.8% on a Q4/Q4 basis after surging 3.1% in 2024. We expect stronger 1.9% growth in 2026 (Q4/Q4, or 1.4% annual), assuming no nasty surprises on the trade front.