A message from Rob Roach at ATB Economics:
It's a truism that businesses do not like (and tend to struggle) when uncertainty runs high. The less you know about what's coming, the harder it is to plan ahead.
Sometimes you get knocked sideways because you are not looking hard enough at what's going on around you (Blockbuster comes to mind). But often, and this is the case at the moment with U.S. trade policy, the uncertainty is so great that following what's happening almost makes it worse!
How long is this going to last? Which tariffs will be imposed and which will be changed in some way? What, if anything, can be done to get the tariffs lifted? What is the President's endgame? How will other countries respond? How will all this flow through the billions of daily transactions that form the economy and push it in one direction or another? How will it affect my business, my industry, my organization, my job, my friends, my family?
That uncertainty is indeed running high (and not just a preoccupation of anxious economists) is evident in the recent readings of the Economic Policy Uncertainty Index for Canada.
Developed by Scott Baker, Nicholas Bloom, and Stephen Davis and published by the Federal Reserve Bank of St. Louis, the Index is based on media references. While not perfect, it is correlated with other proxies like stock market volatility. It also foreshadows investment and employment declines.
The Index has spiked to its highest level on record, well above the previous peak seen during the early days of COVID — 85% higher in fact, as the chart shows.
Learn more about what to do with that information in this edition of The Twenty-Four.
For more number-crunching on Alberta's economy, visit The Twenty-Four Seven by ATB.