Personal Note: This will be the final edition of The Pulse for 2025, and before I sign off for the year, I wanted to take a moment to say thank you. The support this publication continues to receive means a lot to me.

I really do enjoy putting this together each week, and knowing so many of you take the time to read it, think about it, and come back again is what makes it worth carving out the time to keep it going.

Just so you know, I’m working on a few changes and additions in 2026 that I’m genuinely excited about. I’m not quite ready to share the details yet, but the goal is to make The Pulse even more useful, sharper, and worth your time. More on that soon.

With that, I want to wish you and your families a Merry Christmas and a happy holiday season. I hope you get some time to slow down, recharge, and enjoy a well-earned break. Thank you again for reading, and I’ll see you back here in the new year.

Market Recap: U.S. and Canada

Major Economic Stories

Economic Recap

From an economics perspective, the week reinforced a familiar theme: inflation is easing, but not evenly, and the labour market is finally starting to bend. The big question is whether the big picture be calm enough for central banks to relax.

Here’s the latest economic news.

Canada’s Inflation Trend Shows Stability

Headline inflation held at 2.2% in November, coming in below expectations of 2.3%.

Lower gasoline prices continued to help, with energy costs down 7.8% year over year even as monthly prices edged higher due to refinery disruptions. Food inflation moved in the opposite direction, accelerating to 4.7% annually, largely due to a rise in fresh fruit and prepared food prices. Shelter inflation eased modestly, with rent growth slowing to 4.7% from 5.2% in October. Core inflation remained elevated near 2.9%, a sure sign of persistent underlying price pressures.

• Gasoline continued pulling inflation lower on an annual basis

• Food prices accelerated to fastest pace since late 2023

• Rent growth cooled but remains historically elevated

• Core inflation pressures remain above long-term averages

U.S. Inflation Cools Further Into Year-End

Headline U.S. inflation slowed to 2.7% in December, coming in below expectations of 3.1%.

Unlike here in Canada, where energy prices dropped last report, in the U.S., energy prices rose 4.2% over the year, driven by gains in fuel oil at 11.3% and natural gas at 9.1%, while gasoline increased 0.9%. Food prices rose 2.6% and shelter costs increased 3.0% year over year, continuing their gradual deceleration. Core inflation fell to 2.6%, the lowest since March 2021 and well below market forecasts. Data disruptions from the government shutdown limited monthly detail, but the broader trend pointed to easing price pressures.

• Energy inflation driven by fuel oil and natural gas increases

• Core inflation reached lowest level in nearly four years

• Shelter inflation continued gradual but uneven cooling trend

• Shutdown disruptions reduced clarity on monthly price changes

U.S. Unemployment Rate Drifts Higher

The U.S. unemployment rate rose to 4.6% in November, above expectations.

Unemployment is now at its highest level since September 2021. The number of unemployed workers stood at 7.8 million, little changed from September, while overall employment levels remained broadly stable. Labour force participation held steady at 62.5%, so we’re seeing minimal movement in workforce engagement. The broader U-6 unemployment rate increased as involuntary part-time employment rose sharply. These dynamics point to a labour market that is loosening gradually rather than weakening abruptly.

• Unemployment rate now above recent cycle lows

• Participation stability limits upside pressure on labour supply

• Involuntary part-time work signals rising labour market slack

• Labour conditions softening without broad-based job losses

U.S. Job Growth Rebounds Modestly

U.S. payroll growth turned positive in November after a weak October tied to federal workforce reductions.

Nonfarm payrolls rose by 64,000 jobs, beating expectations following a revised 105,000 decline in October. Health care led gains with 46,000 jobs added, while construction employment increased by 28,000 amid ongoing infrastructure demand. Social assistance continued to trend higher, adding 18,000 jobs, while transportation and warehousing shed 18,000 positions. Federal government employment declined again, extending losses tied to deferred buyouts and agency downsizing.

• Payroll growth recovered but remains below long-term averages

• Health care continues driving net job creation

• Federal job cuts remain a persistent drag on totals

• Downward revisions dampen recent hiring momentum

TOP INSIGHTS

Inflation Better on Paper Than at the Checkout

On paper, inflation looks close to “normal” again. A 2.2% headline rate in Canada sounds not too bad, and for big-ticket items like rent, things are finally cooling a bit. That said, for many households, that relief hasn’t shown up where it counts most.

Groceries are still running hot, and food inflation speeding back up is exactly why inflation fatigue hasn’t gone away. When prices rise fastest in the parts of the budget you can’t easily cut, it doesn’t matter much that the overall number looks better. This gap between headline inflation and lived experience is why we’re still seeing fragile confidence, even though we’re hearing a lot about progress.

U.S. Jobs Still Solid, But the Ground is Shifting

The U.S. labour market isn’t breaking, but it’s clearly softening, and an unemployment rate of 4.6% changes how secure people feel about changing jobs, asking for raises, or taking on new debt. The rise in involuntary part-time work is especially telling, because it often hits household income before layoffs ever make headlines.

For consumers, this usually shows up as more caution. And I think that’s what we’re seeing. People don’t stop spending overnight, but they do start holding off on big commitments. That’s one reason confidence surveys often weaken before the economy actually slows.

Spending Isn’t Collapsing, it’s Getting Choosier

Consumers are still marching bravely forward and spending, but much more selectively. The data show people cutting back in areas tied to financing costs, like cars and home projects (think big ticket items) while keeping up spending on categories they can’t avoid.

This kind of behaviour can keep the economy running longer than expected, but it also means any further hit to job security will matter more than usual. If incomes stay steady, we’ll probably see selective spending continue into 2026. If labour conditions weaken more quickly, that careful balancing act can tip pretty darn quickly.

For now, the takeaway is simple: things are improving, but not evenly. And until everyday costs feel meaningfully lighter, consumers are likely to stay cautious, even if the economic headlines keep sounding better. That’s where I’m placing my bet.

TOP STORY
Four Things The U.S. Wants From Canada

• Dairy market pressure is back on the agenda

• Streaming rules irritating Washington again

• Liquor boycotts now framed as trade barriers

• Smaller disputes gaining leverage in negotiations

As the CUSMA / USMCA review quickly approaches, the U.S. is laying its cards on the table, and the message to Canada is pretty direct: free trade continues only if some long-standing irritants are addressed. Testifying before Congress, U.S. trade representative Jamieson Greer made it clear Washington sees the deal as useful but unfinished. Talks are currently stalled, and the U.S. is focused more about leverage at a moment when trade tensions are already high.

Dairy and Digital Rules Sticking Points

Ever a hot topic in media talking points, Canada’s supply-managed dairy system is a constant source of frustration for the U.S., which argues it limits real access. At the same time, Canada’s Online Streaming Act and Online News Act are drawing fresh criticism for forcing U.S. platforms to support Canadian content. From Washington’s perspective, these rules tilt the playing field against American firms in ways that weren’t contemplated when the trade deal was signed.

Tariffs, Liquor, and Pressure Tactics

The U.S. also wants American alcohol back on Canadian shelves after a number of provinces pulled products in response to tariffs tied to Donald Trump. Then you add in electricity disputes, procurement complaints, and customs rules, and the picture that emerges is one of a negotiation that’s sure to be tense, political, and unpredictable.

Read the full story here.

In the current political environment, trade talks can quickly turn political when deadlines slip or one side feels cornered. With the CUSMA / USMCA review coming into focus, both Canada and the U.S. have a real incentive to land something that’s fair, durable, and doesn’t leave businesses guessing quarter to quarter, or even week to week in some cases.

Weigh in with your thoughts on this week’s question:

LAST WEEK’S POLL RESULTS

In last week’s poll, I asked what the Fed’s biggest challenge is right now. Inflation led with 62%, followed by growth at 24% and communication at 14%, which tells me most readers still see prices as the main battleground. As always, thanks to everyone who voted.

READER’S COMMENTS

Growth

"Economic growth is very important today because of the mess created by the inhabitants to the south of us. This economic cancer is spreading around the world. We must grow without any single dependence." — entender1012

Inflation

"Some of the Fed’s members might be feeling pressure from Trump and not be able to make a fair judgment during this economic uncertainty. " — tochitocchi

"The Fed's in a really tough spot right now, especially the Chair IMO...

With that said, I think 'inflation' is the Fed's biggest challenge right now and should be addressed in the coming meetings unless the data changes. Why address inflation? To take the worse case scenario off the board, and to me that's Stagflation...

FWIW... I'm not overly concerned with what the Fed will do with Powell as Chair, but I'm already concerned with the Fed post Powell for what I hope are obvious reasons. The next Fed Chair will have a forced inclination to do whatever the man who's filed for Chapter 11 bankruptcy protection 6 times says. Nothing good will come of that Imo!" — callawayguy"

THE BANK OF CANADA
Macklem on Managing Through Trade Chaos

• Rate decisions shaped by constant uncertainty

• Forecasting took a back seat to scenarios

• Tariff carve-outs limited worst-case outcomes

• Next CUSMA / USMCA review looms large

For Bank of Canada governor Tiff Macklem, the past year was less about precision and more about restraint. U.S. trade policy was shifting so quickly that even well-reasoned debates could be rendered useless within hours. Rather than reacting to every headline, the central bank focused on avoiding overcorrections, cutting rates early to cushion tariff shocks, then waiting to see how the economy actually absorbed the damage.

Why the Economy Proved More Resilient

Although tenuous at times, a big reason things didn’t spiral was the existing CUSMA / USMCA carve-out that kept most Canadian exports moving tariff-free. That limited the pain to specific sectors like autos, metals, and lumber, while inflation stayed close to target and growth rebounded after a weak second quarter. Businesses also adjusted at the margins, sending more goods to existing customers outside the U.S. rather than trying to replace the U.S. market outright.

What Keeps Macklem Cautious

The upcoming review sits at the top of the risk list, especially with U.S. demands on dairy and digital rules resurfacing. Macklem is also watching the AI investment boom carefully, both for the risk of a pullback and the danger that Canadian firms fall behind. His broader point is blunt and to the point: Canada can’t assume open U.S. trade anymore, and that reality will shape economic policy for years.

Read the full story here.

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LABOUR & TRAVEL
Why Airline Labour Fights Keep Coming Back

• Multiple airlines face contract talks in 2026

• Long-expired deals driving pent-up demands

• Government intervention shaping negotiations

• Passengers increasingly managing strike risk

I’ll share a little secret with you. For as long as I can remember, I’ve been plagued with recurring dreams that I’m at an airport and, for a myriad of reasons, I can’t get to my flight. It might be I forgot my passport, maybe the gate changes at the last minute, or in some dreams I forgot my luggage back at the hotel. Whatever the circumstances that particular night, it’s relentless.

And that takes me to real life and the airlines. If it feels like airline labour disputes, like my dreamy flight challenges, never really end. As we head into 2026, several major Canadian carriers including Air Canada, WestJet and Porter are heading into negotiations again, often over contracts signed a decade ago under very different economic conditions. Even when strikes don’t happen, the threat alone is enough to rattle traveller confidence and add stress to the already stressful modern-day adventure we call travel.

Why Tensions Are Higher Now

Back in the day, when airlines were fighting for survival, long contracts once made sense. But inflation, pandemic disruptions, and rising living costs have shifted worker expectations. Labour experts say unions are emboldened by recent wins elsewhere, while management is less used to making concessions. That mismatch is showing up at bargaining tables across the industry.

What Travellers Should Expect

Federal back-to-work orders often limit how long disruptions last, but they can also harden positions and drag negotiations out. Both parties are digging in their heels more than ever. For passengers, avoiding chaos is becoming part of trip planning. Bon voyage.

Read the full story here.

Drug prices back in the spotlight as Trump cuts deals: Agreements with major pharma companies revive pressure on medication costs and signal renewed political focus on household health expenses.

TikTok’s future in the US gets messier: Sale talks drag on as questions around control, data security, and political approval complicate any clean resolution.

Trump Media makes a surprising bet on nuclear fusion: A sharp pivot toward speculative energy technology blends politics, long-term power ambitions, and investor risk.

Dollarama keeps climbing as shoppers hunt for value: Shares hit new highs as analysts point to strong demand from cost-conscious consumers heading into the holidays.

Gold stocks head into 2026 with momentum: Investors weigh inflation protection, central bank buying, and geopolitical risk as drivers of a sustained rally.

Inside Google’s growing concern over AI safety: The company’s AI safety lead warns that deployment is outpacing guardrails as regulators struggle to keep up.

Why eating healthier keeps getting more expensive: A Campbell’s pricing backlash highlights the tension between food company margins and consumer frustration at the grocery store.

Trump takes legal fight with the BBC to court: A massive libel claim escalates Trump’s long-running battle with major media outlets.

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The Relative Strength Indicator (RSI) can provide a signal that suggest a stock is either overbought or oversold.
📈A stock that has an RSI over 70 is considered to be in “overbought” territory. This might suggest that the stock is due for a pullback, however it is not a recommendation to sell.
📉A stock that is trading with an RSI below 30 is considered to be in “oversold” territory. This might suggest that the stock is due for a recovery, however it is not a recommendation to buy. Always perform your own due diligence.

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