Strategy & Economics

Frances Donald: Why the economy has to lose 100 pounds

Frances Donald unpacks the paradox of Canadian retirees holding record wealth while appearing in the bottom income bracket, makes the case for why productivity remains Canada's most urgent economic challenge, and walks through the deeply uneven regional consequences of a potential CUSMA collapse.

Listen to the full episode – Frances Donald on The Herle Burly Podcast

US CPI: One month buys the Fed time but it doesn't buy a trend

The June CPI report gave the Fed a welcome surprise, as both headline and core reported below expectations. Headline inflation declined -0.4% m/m, helped in large part by the drop in gas prices. More notable was the core inflation reading — at 0.0% m/m it was a welcome reprieve. Tariff pressures appear to have peaked in H1, and we did not end up seeing any pressures from FIFA as expected. Still, recent geopolitical events present upside risks to both headline and core inflation and importantly, there remains a notable gap between the y/y pace of PPI and CPI, meaning there is pressure in the pipeline.

It is too soon to declare victory on inflation even as we saw a retracement in June. Much of prior price pressures stem from external shocks — geopolitical, trade-related, and a structural AI buildout — and the situation remains extremely fluid with oil prices rising above post-MOU levels. Spending continues to be underpinned by high-income households and retired Baby Boomers, who are benefiting from non-labor income growth, even as lower-and-middle-income cohorts remain squeezed.

Read the full article — "US CPI: One month buys the Fed time but it doesn't buy a trend"

Where could CUSMA joint review go from here?

The first Joint Review of CUSMA is underway. With U.S. tariffs still in place and trade tensions high, there’s significant anxiety about what happens next.

The good news: No extension on July 1 doesn’t mean a termination. CUSMA won’t expire until 2036, and meantime, the agreement and its related exemptions will keep functioning as is. What follows is likely a lengthy negotiation with key trade irritants like Rules of Origin requirements and potential demands for strategic alignment with U.S. trade goals emerging as focal points.

In this episode of the 10-Minute Take, RBC Economics’ Carrie Freestone and Claire Fan discuss:

• How much protection CUSMA is currently providing Canadian exporters.
• Why the worst-case scenario of a termination has grown less damaging to Canada’s economy.
• Key pain points that could surface during the negotiations.
• What this review means as a precedent for future U.S. trade agreement renewals.