Uncertainty abounds as the emerging trade war threatens economic growth, complicates the outlook on inflation, and stokes financial-market volatility, causing investors to weigh a wide range of possible outcomes. In this environment, stocks are under pressure as investors shun expensive U.S. large-cap growth stocks in favour of those with more reasonable valuations.
The heightened activity and lack of clarity threatens to temporarily slow economic growth as businesses and households opt to delay key decisions. With business and consumer sentiment fading and tariffs being applied, recession risk is now substantial for Canada and Mexico, and has mounted a bit even for the U.S., where the probability of recession has jumped to 25% or more from 15%. We have increased the 2025 inflation outlook for two reasons: tariffs are inflationary in the short run, and inflation in the U.S. has proven sticky as of late. U.S. inflation is stuck near 3.0%, while other countries have wrangled inflation rates down to the 2.0% to 2.5% range.
The political winds of change that swept across the world in 2024 have begun to rattle global economies, trade, and markets to start 2025, especially in Canada. The pervasive uncertainty generated by the U.S.’s punitive and at times mercurial trade policy has roiled investors, while driving consumer and business confidence sharply downwards. This has made the path ahead increasingly fraught for the country’s investors and businesses, not to mention firing up nationalist spirits.
These vexing times require a clear-minded approach, coupled with well-earned experience and expertise, to navigate through successfully. As Canada’s leading financial institution and a top-tier global financial services provider, RBC has the international reach and the trusted expertise – from personal to business to corporate – to help you through these challenging times. Your Investment Counsellor can help you access that expertise and advice, while continuing to help you achieve your own personal goals through their portfolio and wealth management expertise.
We thank you, as always, for your trust in us as the stewards of your wealth, and we look forward to seeing you in the ever-warmer days ahead.
Regards,
Vijay Parmar
President, RBC PH&N Investment Counsel
Past performance is not indicative of future results. Counsellor Quarterly has been prepared for use by RBC Phillips, Hager & North Investment Counsel Inc. (RBC PH&N IC). The information in this document is based on data that we believe is accurate, but we do not represent that it is accurate or complete and it should not be relied upon as such. Persons or publications quoted do not necessarily represent the corporate opinion of RBC PH&N IC. This information is not investment advice and should only be used in conjunction with a discussion with your RBC PH&N IC Investment Counsellor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest information available. Neither RBC PH&N IC, nor any of its affiliates, nor any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. This document is for information purposes only and should not be construed as offering tax or legal advice. Individuals should consult with qualified tax and legal advisors before taking any action based upon the information contained in this document. Some of the products or services mentioned may not be available from RBC PH&N IC; however, they may be offered through RBC partners. Contact your Investment Counsellor if you would like a referral to one of our RBC partners that offers the products or services discussed. RBC PH&N IC, RBC Global Asset Management Inc., RBC Private Counsel (USA) Inc., Royal Trust Corporation of Canada, The Royal Trust Company, RBC Dominion Securities Inc. and Royal Bank of Canada are all separate corporate entities that are affiliated. Members of the RBC Wealth Management Services Team are employees of RBC Dominion Securities Inc. RBC PH&N IC is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / ™ Trademark(s) of Royal Bank of Canada. RBC, RBC Wealth Management and RBC Dominion Securities are registered trademarks of Royal Bank of Canada. Used under licence. © RBC Phillips, Hager & North Investment Counsel Inc. 2025. All rights reserved.