Canada is headed toward a recession that could end up in loss 100,000 jobs, according to a new forecast from TD Bank. The bank’s Chief Economist, Beata Caranci, said in a recent report that economic indicators point to a downturn beginning in the second half of 2025; largely driven by persistently high interest rates, weakening consumer spending, and an overall loss of economic momentum.
Caranci noted that Canada is already displaying many signs of a pre-recession economy, including slowing job creation, a rising unemployment rate, and a pullback in housing and business investment. TD’s projection estimates that the national unemployment rate could climb to 6.5% by early 2026, up from the current 5.7%. The most vulnerable sectors are forecasted to be industries highly sensitive to shifts in consumer demand and borrowing costs including construction, manufacturing, and retail.
The report also reflects concerns about a broader global slowdown and geopolitical risks, including trade tensions with the United States. Caranci warned that a full-scale tariff war with Washington, following former President Donald Trump’s renewed push for protectionist policies, could further weaken Canada’s export-driven economy.
TD’s internal restructuring, announced in parallel with its economic forecast, has only added to concerns. The bank said it plans to cut around 3,100 jobs as part of a cost-saving initiative projected to save $400 million this year and $600 million annually thereafter. This comes amid a broader slowdown in the financial sector and declining profits. TD recently reported a sharp year-on-year drop in quarterly earnings, due to rising credit loss provisions and reduced lending income. While TD’s outlook does not predict a deep or prolonged recession, Caranci stressed that the damage to consumer confidence and labor markets could be significant.
With economic pressures mounting both domestically and globally, TD’s forecast underscores a growing sense of urgency among Canada’s financial and political leaders to brace for what could be a turbulent end to 2025.
