From the Fraser Institute

By Jock Finlayson

The dawn of a new year is an opportune time to ponder the recent performance of Canada’s $3.4 trillion economy. And the overall picture is not exactly cheerful.

Since the start of 2025, our principal trading partner has been ruled by a president who seems determined to unravel the post-war global economic and security order that provided a stable and reassuring backdrop for smaller countries such as Canada. Whether the Canada-U.S.-Mexico trade agreement (that President Trump himself pushed for) will even survive is unclear, underscoring the uncertainty that continues to weigh on business investment in Canada.

At the same time, Europe—representing one-fifth of the global economy—remains sluggish, thanks to Russia’s relentless war of choice against Ukraine, high energy costs across much of the region, and the bloc’s waning competitiveness. The huge Chinese economy has also lost a step. None of this is good for Canada.

Yet despite a difficult external environment, Canada’s economy has been surprisingly resilient. Gross domestic product (GDP) is projected to grow by 1.7 per cent (after inflation) this year. The main reason is continued gains in consumer spending, which accounts for more than three-fifths of all economic activity. After stripping out inflation, money spent by Canadians on goods and services is set to climb by 2.2 per cent in 2025, matching last year’s pace. Solid consumer spending has helped offset the impact of dwindling exports, sluggish business investment and—since 2023—lacklustre housing markets.

Another reason why we have avoided a sharper economic downturn is that the Trump administration has, so far, exempted most of Canada’s southbound exports from the president’s tariff barrage. This has partially cushioned the decline in Canada’s exports—particularly outside of the steel, aluminum, lumber and auto sectors, where steep U.S. tariffs are in effect. While exports will be lower in 2025 than the year before, the fall is less dramatic than analysts expected 6 to 8 months ago.

Although Canada’s economy grew in 2025, the job market lost steam. Employment growth has softened and the unemployment rate has ticked higher—it’s on track to average almost 7 per cent this year, up from 5.4 per cent two years ago. Unemployment among young people has skyrocketed. With the economy showing little momentum, employment growth will remain muted next year.

Unfortunately, there’s nothing positive to report on the investment front. Adjusted for inflation, private-sector capital spending has been on a downward trajectory for the last decade—a long-term trend that can’t be explained by Trump’s tariffs. Canada has underperformed both the United States and several other advanced economies in the amount of investment per employee. The investment gap with the U.S. has widened steadily since 2014. This means Canadian workers have fewer and less up-to-date tools, equipment and technology to help them produce goods and services compared to their counterparts in the U.S. (and many other countries). As a result, productivity growth in Canada has been lackluster, narrowing the scope for wage increases.

Preliminary data indicate that both overall non-residential investment and business capital spending on machinery, equipment and advanced technology products will be down again in 2025. Getting clarity on the future of the Canada-U.S. trade relationship will be key to improving the business environment for private-sector investment. Tax and regulatory policy changes that make Canada a more attractive choice for companies looking to invest and grow are also necessary. This is where government policymakers should direct their attention in 2026.

MxM News

A Minneapolis day care that went viral last week as a symbol of alleged state-funded fraud suddenly appeared busy on Monday — a sharp departure from what neighbors say is its usual state of near-total inactivity.

The Quality “Learing” Center Minneapolis, flagged in a widely shared video by YouTuber Nick Shirley, had cars filling its parking lot and roughly 20 children coming and going as reporters observed the site. But a nearby resident said the scene was anything but normal.

“We’ve never seen kids go in there until today,” the local resident told the New York Post, describing the center as typically so quiet it appeared permanently closed. “That parking lot is empty all the time. I honestly thought the place was shut down.”

NEW: The Quality Learing Center in Minneapolis is now "trucking" in children after Nick Shirley's viral video, according to the New York Post.

The Post reports that the parking lot at the infamous Quality Learing Center is now "bustling with kids."

"We’ve never seen kids go… pic.twitter.com/K578UTvLXG

— Collin Rugg (@CollinRugg) December 30, 2025

The sudden activity stood in contrast to Shirley’s footage, posted Friday, which showed what appeared to be a dormant facility. In the clip, Shirley confronts a man at the door, pointing out that the center is reportedly approved for nearly 100 children but appeared completely empty at the time. No children were visible during his visit.

The center lists its operating hours as Monday through Thursday from 2 p.m. to 10 p.m. Ibrahim Ali, 26, who identified himself as the manager and said he is the owner’s son, told reporters Monday that Shirley arrived before the center opened. He dismissed the video as misleading.

“You don’t go to a coffee shop at 11 p.m. and say, ‘They’re not working,’” Ali said, arguing the timing explained the empty building. He claimed around 16 children were inside later that afternoon.

Ali also addressed the misspelled word “Learing” on the facility’s exterior sign — a detail that fueled online skepticism — blaming it on a graphic designer. He said the error would be corrected and downplayed its significance, though it was unclear how long the sign had been displayed.

While Quality Learning has not been publicly identified by federal authorities as a target, the center has drawn scrutiny amid a sprawling investigation into what officials say could be a multibillion-dollar fraud scheme involving government-funded programs meant to serve vulnerable populations. Estimates have put the alleged fraud as high as $9 billion, with businesses accused of billing the state for services never rendered.

When asked about the accusations, a woman opening the center at 2 p.m. Monday forcefully denied any wrongdoing. “We don’t have fraud. That’s a lie,” she said before refusing further comment and saying she wanted to speak with an attorney. Another employee became confrontational with reporters outside the building, recording on his phone and demanding they leave the area.

Elsewhere in Minneapolis, ICE agents visited ABC Learning Center, several miles from Quality Learning, requesting attendance records as part of the broader probe. Ahmed Hasan, the center’s director, said agents asked for two months of documentation to verify compliance.

Hasan said the heightened scrutiny has created fear within the local community, particularly among Somali immigrants, who he said feel unfairly targeted. He recalled a recent visit from Shirley’s team that initially caused panic among staff, who believed masked individuals at the door might be federal agents.

“That time ICE was coming for the Somali community. We were scared to open the door,” Hasan said, adding that the allegations surrounding day care fraud have become “a political game.”

As investigators continue digging into the alleged misuse of taxpayer dollars, the sudden appearance of children at a center long described as empty has only intensified questions — and skepticism — surrounding Minnesota’s oversight of publicly funded child care programs.