Show Notes
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. Lower corporate taxes could also hurt Canada’s competitiveness, at a time when the economic divergence with the U.S. is already large. In this 10-Minute Take, RBC economists Claire Fan and Carrie Freestone dive into the growing government deficit in the U.S., and its ripple effects on Canada.
More from The 10-Minute Take
Affording a home in Canada remains challenging for most, but has improved slightly over the past years as prices cooled, economic headwinds mounted, and interest rates dropped. That brief reprieve, however, is about to run its course. As bond yields rise on expectations that the Bank of Canada will hike rates, that will push homeownership further out of reach. Not all markets can expect the same—affordability trends, as in the past, will vary significantly across provinces, while also bringing important implications for the rental market. In this episode of The 10-Minute Take, Claire Fan invites back economist Rachel Battaglia to discuss what's driving housing affordability, and what lies ahead. Watch or listen to our newest episode here or wherever you get your podcasts.
Government bond yields are surging around the world. France's 10-year yield hit levels not seen since 2002, and five-year government bond yields are up 20 basis points in Canada, and 50 in the U.S. over the past month—driven by shifting interest rate expectations and growing fiscal concerns. The U.S. deficit is ballooning, though strong growth offers some cushion. Canada's softer economy and stable debt outlook are carving out an entirely different path. In this episode of The 10-Minute Take, Carrie Freestone and Claire Fan break deep dive into the global bond sell-off, and how rising yields are already reshaping borrowing costs before central banks even act.
The Federal Reserve raised interest rates for the first time since 2023—and markets are wondering if the Bank of Canada will follow. The 25-basis-point hike was widely expected after strong U.S. growth and persistent inflation, and it's unlikely to be a one-and-done. Canada's story is different. Inflation excluding energy sits near the 2% target, and a weak economy is still constraining price pressures. In this episode of The 10-Minute Take, Claire Fan and Carrie Freestone look at diverging central bank paths in Canada and the United States, and what could derail forecasts.
Business investment in Canada rebounded in Q2 after stagnating for more than a year as AI infrastructure related spending ramped up, and weak oil and gas spending recovered. An unprecedented AI buildout continues to power private investment in the U.S., though rising bond yields are pushing up borrowing costs. In this episode of The 10-Minute Take, RBC Economics’ Claire Fan and Carrie Freestone discuss investment trends reshaping Canada and the U.S., and what to expect heading into 2027.
U.S.-Canada trade talks have broken down followed by new tariffs from each side. At the same time, 30-year U.S. Treasury yields hit their highest level since 2007—driven by persistent inflation concerns, and a national debt crossing US$40 trillion. In this episode of the 10-Minute Take, RBC Economics' Claire Fan and Carrie Freestone discuss: What the latest tariffs and the counter measures mean for the broader Canadian economy. Why 30-year Treasury yields are at two-decade highs, and what its buyback program can and can’t fix. How inflation, fiscal deficits, and rising interest costs are creating a challenging bind for the U.S.