30 Quarter 1 2026 BUILDERSDIGEST THE CANADIAN ECONOMY AND CONSTRUCTION PART 2 while CCA suggests that interest rates are projected to remain at 2.25 per cent through much of 2026, providing some predictability in this sea of change. Over the long term, says Carrick, Canada may fare better than expected in comparison to the U.S., for a host of reasons. Whereas Canada has for many decades represented about one- tenth of the U.S. population, our rapid recent growth has brought us up to about one-eighth. Much of the current economic success that the U.S. is experiencing is driven by the corporate sector, particularly tech billionaires who are investing in data centres, AI, robotics and technologies like electric cars. Canada has not yet embraced all these innovations, but we are rich in the electric power, nuclear generation capability and minerals that will be required to keep these sectors in operation. “There’s also the possibility of unintended consequences,” Carrick says. “If you’re a big international firm thinking of locating in North America, maybe it’s better to invest here – where you don’t have uncertainty about the cost of your inputs – than in the United States.” And in the long run, he says, “there’s so much going on in Toronto that I think Toronto’s going to continue to do okay.” WEATHERING THE STORM “The good news is that the sense of urgency around infrastructure remains strong,” says Mollenhauer, “and in the homebuilding sector there is still a pent-up demand” that will eventually start to rebound with growing consumer confidence. On the international front, he says, even if Canada forges new trade agreements with countries like India, we also need to reinstate a viable trade relationship with the U.S. and Mexico. Domestically, says Mollenhauer, “there are pockets of opportunity.” Altus Group’s Insights report identifies a few of these, noting that lower interest rates and flattening prices are making home ownership viable for more Canadians in the short term, while over the longer view, a surge in the population aged 35 to 50 will favour new home sales. In addition, the aging population will need home remodelling to assist aging in place, and innovative solutions to the growing need for seniors’ housing. Demand is also growing for renovation and home improvement; in 2024, residential renovations accounted for $103 billion in spending, compared to just $86 billion in new housing. Taking advantage of new and emerging markets will call for diversification, Mollenhauer says, pointing out that the high-rise sector will take a long time to recover, and “those in the construction community who have historically sourced project opportunities in high-rise residential will have to look elsewhere.” He encourages contractors to “look for parts of our economy that will do well in an otherwise bleak time and go after that.” Now is the time to be nimble and innovative, consider investment in R&D, retooling and retraining. “At the end of the day,” Mollenhauer says, “the message is that the road ahead is going to be challenging.” ◄ what kind of environment we’re going to be faced with?” he asks. “The housing sector has been strong for a long time,” he continues. “CMHC has been saying we need more houses, partly because of the growth in population due to immigration.” High real-estate prices have combined with slowing immigration to bring housing starts down. Nevertheless, he says, “I’m still quite optimistic about how the economy will do and how Canada will do.” CANADA COMPARED TO THE U.S. CCA’s Insights Report points out that the Federal Budget 2025 committed $280 billion over five years in capital investments that will help bolster the construction sector, noting, “This package is built around three core federal priorities: attracting private investment, prioritizing Buy Canadian procurement and supporting unionized labour.” Peter Norman of Altus Group writes that “Canada’s economy is stabilizing with growth near 1.4 per cent in 2026 and inflation moving back within target.” After a series of interest-rate adjustments, inflation is expected to remain within desirable limits of three per cent or lower,
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